Our company will engage a consultant (Japanese resident) and he will come to Thailand for working twice a year for 4-5 days each. We will make the payment to him by transferring the money to his private bank account in Japan. We will deduct the withholding tax by 15% when we will make the payment to him. Is it correct? Please advise.
Panwa: Refer to your query, we would like to inform that your understanding is correct that the company needs to deduct the withholding tax at 15%.
In case that Japanese consultant is not the employee of the company, the assessable income (consultancy fee) that he receives from the company shall be considered as the assessable income under the section 40(2) in accordance with Thailand Revenue Code where it is considered as independent personal service and shall be taxable in Thailand under section 41 in accordance with Thailand Revenue Code.
Due to this consulting fee will be recognized as company expense, it shall not be tax exempted in Thailand in accordance with the article 14 of Double tax agreement between Thailand and Japan. Thus, the company needs to deduct the withholding tax by 15% under section 50(1) in accordance with Thailand Revenue Code.