On 25 September 2020, the Ministry of Finance issued a Notification of the Ministry of Finance Re: Exchange Rate of Foreign Currency into Thai Currency under Section 9 of the Revenue Code (“Notification”), which prescribes the method for converting foreign currencies into Thai Baht when remitting withholding tax under Section 3 Quattuordecim of the Revenue Code. The Notification took effect on 17 July 2020.
The Notification adds a fourth clause to a previous Notification on exchange rates for foreign currencies dated 8 February 2005. Under the new Clause 4, when a taxpayer is required to remit withholding tax under the Revenue Code, the exchange rate will be calculated according to the daily reference rate set by the Bank of Thailand two business days prior to the date that withholding tax is paid. For instance, if withholding tax is paid on 3 October 2020, the taxpayer will use the reference exchange rate issued on 1 October 2020.
Withholding tax is deducted from payments to service providers and remitted by the payee. Certain types of revenue are subject to withholding tax at source, although whether withholding tax applies and the rate of deduction will depend on the service provided, the type of income, and the tax status of the recipient. Withholding tax must be deducted from expenses exceeding THB 1,000, and expenses less than THB 1,000 that are incurred under a long-term contract; however, withholding tax is not applied to payments to non-taxpayers (e.g. the government). Companies are required to file the return (form PND 53) and submit the amount of tax withheld to the District Revenue Offices within the 7th day of the following month in which the payment is made.