Thailand To Impose Withholding Tax On Business

by Mary Swire, Tax-news.com, Hong Kong

15 June 2001

The Thai government is planning to introduce a withholding tax on companies and other legal entities, it was revealed recently. The move, which will be used to fund the Thai Rak Thai's campaign pledges, is likely to affect around 100,000 businesses in the initial stages.

'The new measure is necessary because our country is badly in need of cash to pay for the various development projects,' said Deputy Finance Minister Suchart Jaovisidha. When introduced, the tax will initially be levied on six types of activity. Withholding tax will be payable at a rate of 3% on commissions, discounts and holding fees, and also on fees for copyright and patents, transport and warehouse fees, and prize or award money. A rate of 1% will be payable on interest on loans, stocks and debentures, and on payment of assurance and insurance premiums. At present, withholding tax is only levied on personal income such as wages and salaries.

The Deputy Finance Minister believes that as well as providing a fillip to ongoing development projects, the proposed measures will help to prevent tax evasion, and will create a more fair tax collection system. The new rules will be put into action after they have been published in the Government Gazette. The Finance Ministry is reportedly looking into a whole host of revenue boosting measures, and the land and property taxation laws are said to its next target.

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