The core answer
When a Thai company pays a foreign provider for software subscriptions, online advertising or consulting, there are two separate Thai tax questions. The first is VAT: did the provider charge Thai VAT, or must you self-assess it on form PP 36 (ภ.พ.36)? The second is income tax withholding: is the payment income that Thai law taxes at source when a foreign company receives it, which would mean form PND 54 (ภ.ง.ด.54)? The answers can differ for the same invoice.
The rule (Revenue Code, Revenue Department). Under section 83/6(2), when you pay a foreign provider whose service is performed abroad but used in Thailand, you remit the VAT the provider would owe. The Revenue Department's rulings put it at 7% of the total fee. Under section 70, a payer withholds tax from certain income (section 40(2) to (6)) paid to a foreign company that does not carry on business in Thailand. The Revenue Department states the general rate as 15% and 10% for dividends.
Our practical view. Treat PP 36 as the default check on almost every foreign service invoice, and treat PND 54 as a characterisation question. Before the first payment, decide what you are buying (a service, or a right to use software or content), who is the contracting party, and what the provider will show you about its tax status. Rulings and treaty rates vary, so confirm the rate with your accountant before you pay.
This guide covers payments to foreign providers. For the wider compliance calendar, see the compliance calendar of a Thai company with a foreign parent. For dividends, interest and royalties paid up to a foreign shareholder, see structuring a Thai subsidiary so profit can move.
1. When must we pay Thai VAT on a foreign service?
Section 83/6 makes the payer responsible for remitting VAT in certain cases. Item (2) covers a foreign operator who provides a service from abroad that is used in Thailand, limited to two groups: (a) electronic services supplied to VAT-registered users, and (b) other services supplied to any user.
The Revenue Department's Instruction Por. 104/2544 explains the logic. A service performed abroad but used in Thailand is treated as a service in Thailand. The Thai payer files PP 36 within seven days after the end of the month in which it paid. Its examples include consulting, software and licence fees, web hosting and server co-location. It lists advertising in overseas TV, in-flight magazines or foreign print as not triggering Thai VAT, because the service is used abroad.
Three points from Revenue Department rulings:
- Timing. In ruling Kor Kor 0706/10129, a company that filed PP 36 before it actually paid the foreign provider was told it had no right to do so. The liability arises when payment is made, so the VAT is remitted after payment, not on the invoice date.
- Base and rate. In ruling Kor Kor 0702/3370 (software bought from Singapore), the VAT base was the total value paid for the service, not only the part the company thought of as a service. In ruling Kor Kor 0706/10491, online advertising, hosting and similar services were taxed at 7%.
- Exchange rate. Ruling Kor Kor 0706/10129 says to use the section 9 rate on the date of actual payment.
Whether a non-VAT-registered payer must also file PP 36 is not clearly answered in the Revenue Department material cited here. Section 83/6 speaks of "the payer", but a non-registered company cannot credit the tax. Ask your tax adviser before assuming either way.
2. Can we claim the PP 36 VAT back as input tax?
A VAT-registered payer can. Instruction Por. 104/2544 says the VAT remitted under section 83/6(2) is input tax under section 82/3, in the tax month in which PP 36 is filed and the Revenue Department receipt is obtained. Ruling Kor Kor 0702/3370 relies on the same credit.
Section 82/5 still applies: input tax cannot be credited without proof that the tax was actually paid, and some categories of input tax are barred. Keep the filed PP 36 and the receipt with the invoice. Input tax unrelated to the business is also barred, so the cost has to relate to the business.
3. What did the 2021 e-Service rules change?
Since 1 September 2021, a foreign operator that supplies electronic services to Thai users who are not VAT-registered, with service revenue above 1.8 million baht, must register for Thai VAT through the Revenue Department's VES system, and file and pay monthly by the 23rd of the following month. This is aimed at consumer sales.
Revenue Department News 47/2564 says that where the Thai user is already VAT-registered, that user files and pays VAT on PP 36 and can use the Revenue Department's receipt as input tax, as before. It also says registered foreign e-Service operators cannot issue tax invoices. The Revenue Department published a list of registered foreign operators on its site.
So for a VAT-registered company, a platform being "registered for Thai VAT" does not by itself end your PP 36 duty. If a platform bills you Thai VAT anyway, check the invoice terms and your VAT status on the account. Do not credit that charge as input tax without advice.
4. When does PND 54 apply?
Section 70 applies to a foreign company or partnership that does not carry on business in Thailand and receives assessable income under section 40(2), (3), (4), (5) or (6) paid from or in Thailand. The Revenue Department states the rates as 15% generally and 10% for dividends and similar items under section 40(4)(b). The tax withheld is final tax. You file PND 54 and pay within seven days after the end of the month of payment, and no filing is needed if no money is sent abroad.
What the rulings show is that the answer depends on the type of income:
| Payment | What the ruling says |
|---|---|
| Online advertising fees to a foreign party | Section 40(8) business income, so no section 70 withholding (Kor Kor 0706/10491, 0811/02158) |
| Web server and SSL certificate fees to a US company | No section 70 withholding (Kor Kor 0706/10491) |
| Software licence keys from a Canadian company | Royalty under section 40(3); 15% withheld under the treaty article (Kor Kor 0706/10491) |
| Support contracts from a Canadian company | Treated as business profits under the treaty, no withholding where there is no permanent establishment in Thailand (Kor Kor 0706/10491) |
| Software from a Singapore company | Royalty under section 40(3); 15% under section 70 (Kor Kor 0702/3370) |
| Stock-photo licence fees to foreign rights holders | Rights payment; treaty rates listed as 5% (Canada, France, UK) and 15% (USA) (Kor Kor 0702/3805) |
These rulings are from 1998 to 2010. They are useful as examples of how the Revenue Department reasons, not as a guarantee for your contract. A fee for the right to use software or content tends to be analysed as a royalty. A fee for work done for you tends to be analysed as business profits or services. Real contracts mix the two, and the Revenue Department decided each ruling on its own facts.
5. Does a tax treaty change the withholding?
It can. The rulings above apply treaty articles on royalties and on business profits. The general idea is that business profits of a treaty-country resident with no permanent establishment in Thailand may not be taxed in Thailand, while royalties are taxed at the treaty rate, which differs by treaty (the rulings list 5% and 15% for different countries).
We cannot say which applies to your payment without the treaty text and your contract. Check the treaty with the provider's country, and ask for a certificate of tax residence from that country's tax authority. Our practical view is that treaty relief is argued before payment with documents, not after. If tax was over-withheld, ruling Kor Kor 0702/3805 refers to a refund claim on form Kor.10 within three years under section 27 ter, but that is a slow route.
If the consultant works physically in Thailand, or the provider has a permanent establishment here, the analysis changes. Take advice first.
6. Which invoice are you looking at?
| Invoice you receive | What to check | What to do |
|---|---|---|
| Foreign company, no Thai VAT shown, no Thai tax ID | Is the service used in Thailand? Is it a service or a right to use software? | File PP 36 at 7% after payment. Decide PND 54 by income type (section 4 above). |
| Foreign provider registered for Thai e-Service VAT, invoice or receipt shows 7% | Are you VAT-registered? Is the provider on the Revenue Department's VES list? Does it issue a tax invoice? | If registered, the Revenue Department says you still file PP 36. Ask the provider and your adviser how to treat the VAT shown. Do not credit it automatically. |
| Thai subsidiary of the platform issues a Thai tax invoice | Who is the contracting and supplying entity named in the contract? Is the document a proper tax invoice? | Treat as a domestic purchase. Credit input tax. No PP 36, no PND 54. Domestic withholding may still apply (for example on advertising), so check the rate. |
| Foreign consultant company, work done abroad | Contract scope, where work is done, whether the consultant has a permanent establishment in Thailand | PP 36 (consulting is a listed example in Por. 104/2544). PND 54 only if the income is taxed in Thailand under section 70 and no treaty relief applies. |
| Foreign vendor invoice for a software licence | Wording of licence, any right to copy or reproduce | PP 36, and likely a PND 54 royalty analysis. |
7. What should we prepare before we pay?
- Contract or order terms. They show what is being bought, which entity supplies it, where the work is done and who owns the output.
- The invoice, with the provider's legal name, address, tax or VAT number, and a description of the service.
- Evidence of the provider's status. For a treaty claim, a certificate of tax residence. For a platform, a screenshot of the billing page showing your VAT status.
- Payment evidence: bank remittance advice, the date of payment and the exchange rate.
- The filed PP 36 and PND 54 (if any), with the Revenue Department receipts.
- A short file note recording why you treated the payment as you did (service or royalty, treaty article, rate).
Checklist before you pay
- What are we buying: service, software licence, or advertising?
- Which entity is the supplier, and is it Thai or foreign?
- Is the service used in Thailand?
- Are we VAT-registered? Does the platform show our VAT status?
- Is PP 36 due, and have we planned to file after the payment month-end?
- Is the income caught by section 70 (40(2) to (6)), or is it business income outside it?
- Does a treaty apply, and do we hold a residence certificate?
- Are the documents above on file?
Hypothetical example. A VAT-registered Thai company pays a foreign ad platform 100,000 baht in March, and the platform does not charge Thai VAT to the company. Following the rulings above, the company files PP 36 for 7,000 baht VAT by 7 April (15 April if filed online and the extension applies) and claims it as input tax. It records why no PND 54 was filed (advertising, section 40(8)). The numbers are for illustration only.
Further reading
- The compliance calendar of a Thai company with a foreign parent
- Structuring your Thai subsidiary so profit can move
- BOI for SaaS founders: overseas IP and client revenue
- Holding structure for Thai investment by a foreign parent
- The complete guide to foreign investment in Thailand (2026)
Check PP 36 on every foreign service invoice, decide PND 54 by the type of income, and keep the contract, invoice, residence certificate and payment evidence before you pay.
We help companies set up this checking routine and review their contracts with foreign vendors. Initial consultation is free — call +66 92 254 2045 or send us the details. See also accounting and tax compliance and contracts and documents.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
