Paying Foreign Suppliers from Thailand (2026): Withholding Tax (PND 54), PP 36 VAT and Tax Treaties

“Do we need to withhold tax when we pay our supplier abroad?” is one of the questions Thai companies with foreign links ask us most. It comes from software companies paying a US cloud vendor, from Thai subsidiaries invoicing or paying their Singapore parent, from founders who license a brand held offshore, and from new clients whose previous accountant never filed a PND 54 or a PP 36. Often the question only comes up when a bank asks for documents, an auditor asks for the returns, or a foreign supplier refuses to accept a net payment.

The rules are not new, but they are easy to miss. Two separate taxes apply to money leaving Thailand: withholding tax on some types of income paid to a foreign company, and VAT that the Thai buyer must self-assess on services bought from abroad. They follow different tests, they use different forms, and a payment can trigger one, both or neither.

This guide explains, in plain English, how both work in 2026: which payments are caught, the rates, how tax treaties reduce or remove the tax, how to file the PND 54 and PP 36, what happens if you miss them, and how to set up payments to a foreign parent company. It ends with costs and the questions we hear most.

The two taxes at a glance

Part 1: withholding tax on payments abroad

Which payments are caught

Section 70 applies when a Thai company pays certain types of income to a foreign company that does not carry on business in Thailand. The payer must deduct the tax from the payment, file a PND 54 and pay the tax to the Revenue Department. The types of income caught are those listed in Section 40(2) to 40(6) of the Revenue Code:

• Fees for services and work done (Section 40(2)), such as management, consulting or technical service fees.
• Royalties (Section 40(3)), including fees for the right to use a trademark, a patent, know-how or software.
• Interest and dividends (Section 40(4)), including interest on a loan from a foreign parent.
• Rent (Section 40(5)), for example equipment leased from abroad.
• Professional fees (Section 40(6)), such as legal, accounting or engineering fees.

Payments for goods are not caught. Buying stock, machinery or raw materials from a foreign seller does not trigger withholding tax, although customs duty and import VAT apply at the border.

The rates without a treaty

The tax is calculated on the gross amount paid. If your contract says the supplier must receive its fee in full, “net of any taxes”, your company carries the tax as an extra cost. Agree who bears it before you sign.

Services: the question that causes the most confusion

Service fees are where most of the questions and disputes are. Three points decide the answer.

1. Where the service is performed. Withholding is clearest when the foreign company's staff do the work in Thailand. Some Revenue Department rulings have treated services performed entirely outside Thailand as outside Section 70, for example a 2013 ruling on satellite services supplied from Laos. Practice is not uniform, though, and other guidance treats offshore service fees as caught. Do not assume that “the work was done abroad” settles it without checking your own facts.
2. Whether a tax treaty applies. Most of Thailand's tax treaties treat ordinary service fees as business profits, which Thailand cannot tax unless the foreign company has a permanent establishment here. With a treaty and no permanent establishment, the withholding tax on a genuine service fee can often fall to zero.
3. Whether the payment is really a royalty. A fee for technical know-how, for “industrial or commercial experience” or for the right to use software is often treated as a royalty. Royalties keep a withholding tax under most treaties, at a reduced rate.

Software, SaaS and cloud services

The Revenue Department has long treated payments for the right to use software as royalties under Section 40(3), including standard application software. On that basis, a licence fee paid abroad is subject to 15% withholding, or the treaty rate on royalties.

A tax ruling issued on 19 March 2025 (Gor.Kor. 0702/1626) took a narrower view for some technology payments. It treated cloud infrastructure services from a US provider as business profits rather than royalties, and treated custom software developed on a work-for-hire basis as service income. In both cases the income was not taxable in Thailand without a permanent establishment. Tax rulings apply to the facts of the taxpayer that asked and are not binding in other cases, but the ruling shows how much depends on the contract: what is supplied, who owns the result, and whether any right to exploit a copyright is granted.

In practice, read the contract and the invoice before the first payment, classify each recurring foreign payment once, and document the reasoning in your files.

Reducing the rate with a tax treaty

Thailand has a wide network of tax treaties. The table shows the main treaty rates for interest and royalties for the countries our clients deal with most. Where several rates are shown, the lower ones apply to specific categories, set out in the treaty.

Source: PwC Worldwide Tax Summaries, Thailand, reviewed August 2026. Dividends paid abroad are taxed at 10% in most cases. The 10% rate on interest usually applies to loans from banks and financial institutions, and the 5% royalty rate under several treaties applies to copyright. Under the US treaty, the 5% copyright rate covers software.

To apply a treaty rate or the business profits exemption, collect the foreign company's certificate of tax residence for the year of payment before you pay, and keep it with the contract and the invoice. Without it, apply the domestic rate.

How to withhold and file the PND 54

1. Classify the payment: service, royalty, interest, dividend or rent, and check the treaty.
2. Convert to baht at the exchange rate on the payment date and calculate the tax on the gross amount.
3. Pay the supplier the net amount and keep the transfer record.
4. File the PND 54 and pay the tax by the 7th of the following month, or by the 15th if you file online. The eight-day online extension currently runs until 31 January 2027, so check the deadline again in 2027.
5. Send the supplier proof of the tax paid (the PND 54 receipt) so it can claim a credit in its own country.

A PND 54 is filed for each month in which a payment is made, so a company with one annual software invoice files once a year, while a company paying monthly fees to its parent files every month.

Part 2: VAT on services bought from abroad (PP 36)

How the reverse charge works

When a foreign supplier provides a service that is used in Thailand, the supplier does not charge Thai VAT. Instead, Section 83/6 makes the Thai buyer pay the VAT itself. You calculate 7% on the amount paid, file a PP 36 and pay the VAT by the 7th of the month after the payment, or the 15th if you file online.

The test is where the service is used, not where it is performed. A US consultant working from New York on your Bangkok project, a Singapore parent that provides finance and IT support to your Thai team, and a foreign software subscription used by your Bangkok staff are all used in Thailand. The 2013 Laos satellite ruling shows the difference: no withholding tax because the service was performed abroad, but VAT because it was used in Thailand.

Can you get it back?

If your company is VAT registered, the VAT paid on the PP 36 is input VAT. You claim it in your PP 30 for the month in which you paid it to the Revenue Department, so the cost is mainly cash flow and paperwork.

If your company is not VAT registered, you still have to file the PP 36 and pay the VAT, but you cannot claim it back. It becomes a real cost of 7%. This catches many small foreign-owned companies, holding companies and companies whose income is VAT exempt.

What about Google, Meta and other digital platforms?

Since 1 September 2021, foreign providers of electronic services that sell more than THB 1.8 million a year to customers who are not VAT registered must register for VAT in Thailand and charge it themselves. This system targets sales to consumers and unregistered businesses. Sales to VAT-registered Thai companies stay under the normal rule, where the Thai buyer self-assesses through the PP 36. Give the provider your 13-digit Thai tax ID in your account settings, and check each invoice to see whether Thai VAT was charged before deciding whether a PP 36 is needed.

Paying a foreign parent company

Payments to a foreign parent deserve extra care, because they combine all of the above with transfer pricing. Management fees and royalty payments between related companies are among the areas the Revenue Department currently focuses on in audits.

• Management and service fees: put a written agreement in place before the first invoice, describe the actual services, and keep evidence that they were received (reports, emails, timesheets). Price them on an arm's length basis, for example cost plus a markup supported by a benchmark. Apply withholding tax and VAT as explained above.
• Royalties for a brand or technology: withholding tax applies at 15% or the treaty rate, plus 7% VAT through the PP 36.
• Interest on a shareholder loan: withholding tax at 15% or the treaty rate. Interest is a financial service, so check the VAT and specific business tax treatment with your accountant.
• Dividends: 10% withholding, filed on the PND 54, and paid only out of retained profits after the financial statements are approved.

Companies with related-party transactions and annual revenue of THB 200 million or more must also file the Transfer Pricing Disclosure Form with their annual corporate income tax return. Smaller companies are not exempt from the arm's length rule, so the agreement and the pricing basis still matter. Our tax consultancy page explains the transfer pricing rules in more detail.

A fee that is not documented or not at arm's length can be refused as a deduction for corporate income tax, while the withholding tax and VAT paid on it remain due. That is the most expensive outcome, and it usually appears two or three years later in an audit.

What happens if you miss a PND 54 or PP 36

• Surcharge: 1.5% per month or part of a month on the tax paid late, capped at the amount of the tax (Section 27).
• The payer is liable: if you fail to withhold, your company is jointly liable for the tax with the foreign supplier (Section 54). In practice, the Revenue Department collects from the Thai company.
• Fines and penalties: late returns attract fines, and an assessment after an audit can add a penalty on top of the tax.
• Lost deductions and input VAT: an auditor who finds unfiled returns will also question the expense itself and the input VAT claims.

If you discover missed returns, file them before the Revenue Department asks. The surcharge still runs, but voluntary filing is treated far better than tax found in an audit. When we take over a new client, reviewing foreign payments for the past years is one of the first checks we do.

Practical checklist

• List every recurring payment to a foreign company: software, cloud, advertising, consultants, parent company, loans.
• For each one, record the type of income, the treaty position and whether the service is used in Thailand.
• Collect certificates of tax residence from suppliers where you apply a treaty.
• Agree in each contract who bears the withholding tax.
• Set a monthly reminder for the 7th (15th online) and file a PND 54 and a PP 36 for each month with foreign payments.
• Keep contracts, invoices, transfer slips and returns together for at least five years.

Costs

There is no government fee for filing a PND 54 or a PP 36: you pay only the tax due. Plizz handles both returns as part of the monthly accounting package.

All Plizz fees exclude 7% VAT. Full details are on our tax filing page, our bookkeeping page and the pricing page.

Frequently asked questions

We pay a US company for a SaaS subscription. Do we withhold 15%?

It depends on what the contract gives you. A licence to use software is usually treated as a royalty, taxed at 15% or at 5% under the US treaty for software copyright. Some cloud and infrastructure services have been treated as business profits, with no Thai tax without a permanent establishment. In every case, if the service is used in Thailand, you self-assess 7% VAT on the PP 36.

The supplier refuses to accept a reduced payment. What can we do?

You can agree to bear the tax, but then it becomes your cost, and it should be written into the contract. First check whether a treaty removes or reduces the tax and ask the supplier for its certificate of residence.

Our company is not VAT registered. Do we still file PP 36?

Yes. The reverse charge applies to any Thai buyer of a service used in Thailand. You pay the 7% but cannot claim it back.

Do we withhold tax when we buy goods from abroad?

No. Goods are not covered by Section 70. Import duty and import VAT are collected by Customs when the goods arrive.

We have never filed a PND 54. How far back should we go?

Start with a review of all foreign payments since the company was set up, or at least for the years still open to audit. Then file the missing returns, oldest first. The surcharge is capped at the amount of the tax, so the cost of waiting keeps growing until it reaches that cap.

Is the reimbursement of costs to our parent company a service fee?

A pure reimbursement of costs paid on your behalf, at cost and with the original invoices, is not the same as a service fee. Once a markup is added or the parent charges for its own staff time, it is a service fee and the rules above apply. Keep the original documents.

How Plizz can help

Plizz keeps the books and files the monthly returns for foreign-owned companies and Thai subsidiaries of international groups. Our team classifies each foreign payment, applies the correct treaty rate, files the PND 54 and PP 36 every month, and keeps the supporting documents ready for your auditor. For parent company fees, we draft the pricing basis with our tax advisers so the deduction holds in an audit. When we take over from another firm, we review past foreign payments and correct missing returns before they turn into an assessment.

See the monthly packages on our tax filing page, build a quote in two minutes with our online quote, or ask us in writing and get an answer within one business day.