Thailand Tax Treaties with China

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Manager Paul, Speak in Thailandese English
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CN-Q-10:
中國母公司在泰國 是否可以依DTA申請沒有常設機構(PE)下零稅率?
China Parent Company, can apply for zero tax rate without PE under DTA in Thailand?

CN-A-10:
Yes.
China has DTA with Thailand, and if China 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, the China Legal Resident company still needs to send zero-tax application to Thailand Tax Bureau for being approved.
That means if a Thailand Subsidiary pays service fee to non-Thailand Parent Company through service contract signed between subsidiary and non -Thailand Parent company.
as an investor, a non-Thailand 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.

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

CN-A-20:
According to DTA Article 5 item 7, A Thailand subsidiary will not be treated as PE of China Parent company as an investor because it is a separate legal entity.
That means if a Thailand Subsidiary pay a service fee to China Parent Company through a service contract signed between the subsidiary and China Parent company.
as an investor, China 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.

CN-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?

CN-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.

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

CN-A-40:
China 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 China and Thailand are as below:

*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.

CN-Q-50
當中國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 China Tax Resident having Thailand domestic sourced income, what is Thailand’s application procedure based on the DTA preferential tax rate?

CN-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 CHINA

The Government of the Kingdom of Thailand and The Government of the People’s Republic of China 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 27 October 1986 and take effects from 01 January 1987.

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 consultancy services through employees or other personnel for periods aggregating more than 183 days.

Withholding Tax

*Article 7 of DTA between Thailand and China explained, Thailand may not tax payments on business profits rendered by China 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 15% if Taiwan enterprise holds directly at least 25% of the capital of Thailand enterprise. In other cases, tax charged shall not exceed 20%.

*Article 11 does not limit the rate of withholding tax on interest except in certain circumstances. 10% applies to interest paid to a financial institution includes insurance company.
The exemption applies to interest paid to the Chinese Government.

*Article 12 explained royalties means payment for the use of, right to use of any copyright, patent, trademark, design or model, plan, secret formula, or process or for the use of, or the right to use industrial, commercial, or scientific equipment, or for information concerning the industrial, commercial, or scientific experience.

*Technical services are covered by the business profits in Article 7. Thailand corporations may not tax payments for technical services rendered by a China 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 or other activities provided by individuals of an independent character as explained in Article 14.
Thailand corporations may not tax payments for professional service rendered by a China resident unless the China resident has a fixed place or stay in Thailand for 183 days or more. An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants.

Elimination of Double Taxation

Article 23 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 26 states that the competent authorities of the territories shall exchange such information (including documents or certified copies of the documents) 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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Bangkok Evershine BPO Service Limited Corp.
Email: bkk4ww@evershinecpa.com
Manager Paul, Speak in Thailandese English
WeChat: Paul0864580532

or
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