Royalties to include rentals under new Thailand-Singapore double tax rules
The New Double Tax Agreement between Thailand and Singapore becomes effective on January 1, 2017. If a Thai resident company has an outstanding rental payable to a Singaporean resident company, they should consider settling the debt before the end of 2016 in order to utilise the tax relief under the current DTA. Under Section 70 of the Thai Revenue Code, a Thai payer of income is required to deduct 15 per cent withholding tax on certain types of income paid out, including rental payments. Under the current DTA, a rental payment by a Thai resident to a Singaporean resident who does not have a permanent establishment in Thailand is not subject to withholding tax in Thailand, as currently rental payments are defined as “business profits”. However, the new DTA defines the term “royalties” to include “the use of, or the right to use, industrial, commercial, or scientific equipment” and be subject to tax at a rate no greater than 8 per cent.
