Thailand’s International Tax Landscape

A Closer Look at Double Taxation Agreements and Global Tax Initiatives

Thailand has a comprehensive network of Double Taxation Agreements (“DTAs”), with agreements in place with over 60 countries to prevent double taxation and promote international trade and investment.

Double Taxation Agreements are bilateral agreements established between two countries to eliminate or reduce the tax obstacles that arise when a taxpayer’s income is taxable in both countries. The agreements typically cover various types of taxes, including income tax, capital gains tax, and corporate tax.

Based on our experience, the key provisions commonly found in a DTA may include:

1. 1. Resident and Non-Resident Status: A DTA outlines criteria to determine an individual or company’s residency status for tax purposes. It helps determine the country that has the primary right to tax specific types of income.
2. 2. Permanent Establishment: A DTA establishes guidelines for determining whether a permanent establishment exists in one country, which can subject a business to taxation in that country.
3. 3. Income from Employment: The agreement usually provides rules to allocate taxing rights on employment income, considering factors such as the place of employment, duration of stay, and citizenship.
4. 4. Dividends, Interest, and Royalties: A DTA typically sets the maximum withholding tax rates on dividends, interest, and royalties paid between the two contracting countries.
5. 5. Capital Gains: A double taxation agreement may specify how capital gains are treated, including whether they are taxed in the country of residence or the source country.
6. 6. Avoidance of Double Taxation: The DTA establishes mechanisms to avoid double taxation. This may include allowing taxpayers to claim a tax credit or exemption in one country for taxes paid in the other country.
7. 7. Exchange of Information: The agreement includes provisions for the exchange of tax-related information between the tax authorities of both countries to combat tax evasion and promote transparency.

1. Thailand as a country is actively involved in the global tax community. It has been working on aligning its tax system with international standards and best practices. It is a member of various international organizations, such as the Organization for Economic Co-operation and Development (OECD) and the United Nations (UN), which play important roles in shaping international tax policies.

Thailand has also been implementing measures to combat base erosion and profit shifting (BEPS) and enhance tax transparency. It has adopted BEPS Action Plans and is a participant in the Automatic Exchange of Financial Account Information (AEOI) under the Common Reporting Standard (CRS).

Author: Fabian Doppler