Companies often engage individuals for services (e.g., consultants, freelancers, casual labor).

Since individuals are generally not VAT-registered (unless their annual income exceeds THB 1.8 million from a business or profession subject to VAT), they typically cannot issue a tax invoice.

The company’s primary responsibility becomes complying with withholding tax and ensuring proper documentation for CIT deductibility.

General Criteria CIT Deductibility

• Service is genuinely for company’s business purpose.
• Expense is reasonable and at a market referable price.
• Proper withholding tax has been deducted and remitted together with a withholding tax certificate.

Payments for services from individuals are generally subject to withholding tax (P.N.D. 1 or P.N.D. 3), depending on the nature of the service and the individual’s income category.

Documentation Needed For CIT Deduction

• Receipt or payment voucher, signed by the individual, stating their full name, ID card number, date, nature of service, and amount received.
• Copy of individual’s ID card, signed by individual.
• Proof of payment (bank transfer slip or internal cash voucher).
• Withholding tax certificate (P.N.D. 1 or P.N.D. 3) as evidence that WHT was deducted and remitted.
• Further backup:
• Service agreement or work order, scope of work, rate and duration of work completion, if available.
• Evidence of service delivery (completed work, reports, photos, etc.).

References

• Thai Revenue Code, Section 65 ter (3)
• Thai Revenue Code, Section 40
• Thai Revenue Code, Section 50
• Ministerial Regulations and Notifications of the Director-General prescribing WHT rates for different categories of individual income (e.g., professional fees, hire of work).