Withholding Tax on Dividends: The 10% You Need to Know

When you're ready to take profits out of your Thai company, you'll encounter dividend withholding tax. This 10% tax is often overlooked in initial planning—but it significantly impacts your take-home amount.

 

What is Dividend Withholding Tax?

When a Thai company distributes profits to shareholders, it must withhold 10% tax and remit it to the Revenue Department.

This applies whether you're:

• A foreign individual shareholder
• A foreign corporate shareholder
• Taking dividends domestically or internationally

 

How It's Calculated

Simple formula:

• Company has 1,000,000 THB profit (after CIT)
• Declares dividend to shareholders
• Withholds: 100,000 THB (10%)
• You receive: 900,000 THB

 

The Full Tax Journey

Let's trace 1,000,000 THB from revenue to your pocket:

Step 1: Corporate Tax

• Revenue: 1,000,000 THB
• CIT (20%): -200,000 THB
• After CIT: 800,000 THB

Step 2: Dividend Withholding

• Dividend declared: 800,000 THB
• Withholding (10%): -80,000 THB
• You receive: 720,000 THB

Total tax: 280,000 THB (28% effective rate)

 

When Withholding Applies

The 10% rate applies to:

• Cash dividends
• Stock dividends (in some cases)
• Profit distributions of any kind

It does not apply to:

• Salary payments (different tax treatment)
• Loan repayments (if structured properly)
• Capital returns (under specific conditions)

 

Strategic Alternatives

Option 1: Take Salary Instead

• Advantage: Salary is deductible from CIT
• Disadvantage: Subject to progressive PIT (up to 37%)
• Best for: Lower income levels where PIT < 20%

Option 2: Reinvest in Company

• Advantage: Defer dividend tax entirely
• Disadvantage: Money stays in company
• Best for: Growth-focused businesses

Option 3: Loan to Yourself

• Advantage: No immediate tax
• Disadvantage: Must be genuine loan with repayment
• Risk: Tax authorities may challenge if not properly documented

 

BOI Impact

For BOI-promoted companies with 0% CIT:

• No corporate tax layer
• Only 10% withholding on dividends
• Effective rate: 10% (vs. 28% for normal companies)

This is one reason BOI is so valuable.

 

Documentation Requirements

When paying dividends, your company must:

• Issue dividend payment vouchers
• File withholding tax return (Por Ngor Dor 54)
• Remit withheld tax within 7 days
• Provide tax certificates to shareholders

 

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Related Service: Accounting & Tax Compliance — Optimize your profit distribution strategy.