Thailand Tax Treaties with Taiwan

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Tw-Q-10:
台灣母公司在泰國是否可以依據DTA申請沒有常設機構(PE)下零稅率?
Taiwan Parent Company, can apply for zero tax rate without PE under DTA in Thailand?

Tw-A-10:
Yes.
Taiwan has DTA with Thailand, and if Taiwan Legal Resident company is without PE (Permanent Establishment), it will be redeemed as “non-Thailand Domestic Sourced Income”.
That means Thailand will levy zero-tax.
However, Taiwan Legal Resident company still needs to send the zero-tax application to Thailand Tax Bureau for being approved.

Tw-Q-20:
台灣母公司在泰國設立了泰國子公司， 台灣母公司替子公司服務收入能否申請零稅率?
When Taiwan Parent Company as an Investor, set up a Thailand subsidiary, and provide services from Taiwan to Thailand Subsidiary, can apply for zero tax rate without PE under DTA in Thailand?

Tw-A-20:
According to DTA Article 5 item 7, A Thailand subsidiary will not be treated as PE of Taiwan Parent company as an investor because it is a separate legal entity.
That means if a Thailand Subsidiary pay service fee to Taiwan Parent Company through service contract signed between subsidiary and Taiwan Parent company
as an investor, Taiwan Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by Thailand Tax Bureau.

Tw-Q-30
泰國依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for Thailand to apply for zero tax rate under DTA without PE?

Tw-A-30
Below are the relevant documents necessary required to be sent to Revenue Department.

*PND 54 form and receipt.
*The evidence of payment.
*A No PE declaration letter
*Certificate of residence granted by a tax agency of the country of residence.
*Relevant invoice and receipt and contracts signed with Thailand organizations that are certified by the taxpayer.
*Describe the details about the usage and service with Thailand organizations.

Tw-Q-40
台灣母公司有泰國來源所得的各項所得扣繳稅率為何?
When Taiwan Resident company having Thailand domestic sourced income, what are the withholding tax rates for various incomes in Thailand?

Tw-A-40:
Taiwan has DTA with Thailand, and if you are with PE (Permanent Establishment) in Thailand, your income will be considered as Thailand domestic sourced income.
As for levying Tax Rate, please be aware:
if Thailand Tax rate > DTA Rate, adopt DTA Rate; if Thailand Tax rate < DTA Rate, adopt Thailand Rate.

If DTA is applied, the DTA rates between Taiwan and Thailand are as below:

*Business profits (without PE) will be considered as non-Thailand sourced income with zero tax, please refer TW-Q10.
*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

Tw-Q-50
當台灣稅務居民有泰國來源所得，依DTA優惠稅率申請的程序為何?
When Taiwan Tax Resident having Thailand domestic sourced income, what is Thailand’s application procedure based on the DTA preferential tax rate?

Tw-A-50:
Below are the relevant documents necessary required to be sent to Revenue Department.

*PND 54 form and receipt.
*The evidence of payment.
*Certificate of residence granted by a tax agency of the country of residence.
*Relevant invoice and receipt and contracts signed with Thailand organizations that are certified by the taxpayer.
*Describe the details about the usage and service with Thailand organizations.

Summary of Tax Treaty between Thailand and Taiwan

The Thailand Trade and Economic Office in Taipei and The Taipei Economic and Trade Office in Thailand concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 19 December 2012 and generally applies from 1 January 2013.

Permanent Establishment

Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:

*A place of management

*A branch

*An office

*A factory

*A workshop

*The furnishing of services, including consultancy services through employees or other personnel for periods aggregating more than 6 months.

Withholding Tax

*Article 7 of DTA between Thailand and Taiwan explained, Thailand may not tax payments on business profits rendered by Indonesian corporations unless it is attributable to the permanent establishment situated in the relevant territory.

*In Article 10, dividends paid by a Thailand Resident enterprise to Taiwan Resident enterprise, the tax charged shall not exceed 5% if Taiwan enterprise holds directly at least 25% of the capital of Thailand enterprise. In other cases, tax charged shall not exceed 10%.

*Article 11 states that where the beneficial owner of the interest is a non-resident, shall be taxed in the territory in which it arises at the rate not exceeding 15% of the gross interest.

*Article 12 explained royalties means payment for the use of, right to use, copyright of literary, artistic, or scientific work, information concerning the industrial, commercial, or scientific experience.

*Technical services rendered are covered by the business profits article.
Thailand corporations may not tax payments for technical services rendered by a Taiwanese enterprise unless it is attributable to PE.
Technical services rendered in an independent capacity should be covered in Article 14 (see professional services) instead.

*A professional service is defined to include an independent professional such as physicians, lawyers, engineers, architects, dentists, and accountants. Thailand may not tax payments rendered by Taiwanese residents unless it is attributable to a fixed base that the Taiwanese resident has for performing his/ her activities.

Elimination of Double Taxation

Article 22 of the DTA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory.
It shall be credited against the tax levied in the first-mentioned territory on that resident.
However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 25 states that the competent authorities of the territories shall exchange such information relevant to the provision of this Agreement.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

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WeChat: Paul0864580532

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