Set up Thailand withholding tax

You must complete the following tasks before you can calculate withholding tax for
transactions for a legal entity in Thailand:

1. Set up tax registration numbers on the Legal entities page.

2. Set up withholding settlement periods on the Withholding tax settlement
periods page.
3. Set up withholding tax authorities on the Withholding tax authorities page.
4. Set up withholding tax codes on the Withholding tax codes page.
5. Set up withholding tax groups on the Withholding tax groups page.
6. Set up withholding tax revenue types on the Withholding tax
revenue typespage.
7. Set up withholding tax groups on the Item withholding tax groups page for an
item or service.
8. Select the Calculate withholding tax check box on the Vendors page.
9. Select the Calculate withholding tax check box on the Customers page.
10. Select the Calculate withholding tax check box on the Released
products page.

Payments that include withholding taxes

Any payment that is made to a vendor is taxable, and the legal entity pays tax on the
withholding tax. The tax that the legal entity pays on the withholding tax is also taxable.
This additional tax amount is paid by the vendor. You can use either the single iteration
method or the perpetual gross-up method to gross up vendor payments. For example,
for a purchase order amount of THB 4,000 and a withholding tax (WHT) rate of 15
percent, here is how the tax amount, the tax on the tax amount, and the total payment
amount are calculated:

Single iteration method In this method, part of the withholding tax is paid by
the legal entity, and the other part is paid by the vendor.
o Tax on tax amount = Tax amount WHT rate = 600 0.15 = THB 90
o Total payment amount = Purchase order amount + (Purchase order amount
WHT rate) (Purchase order amount WHT rate) (Purchase order
amount WHT rate) WHT rate = 4,000 + 600 600 90 = THB 3,910
o Tax amount = Purchase order amount WHT rate = 4,000 0.15 = THB
600
Perpetual gross-up method If the number of iterations to calculate the tax on
the tax amount increases, the amount that is grossed up (the purchase order
amount) decreases in value. In the perpetual gross-up method, a perpetual
 gross-up rate percentage is calculated by using the WHT rate. The perpetual
gross-up rate percentage is then rounded to two decimal places to calculate the
grossed-up amount.
o Total payment amount = Purchase order amount Perpetual gross-up rate
percentage = 4,000 117.65% = THB 4,706
o The withholding tax at 15 percent is deducted from the total payment
amount of THB 4,706. In other words, (4,706 [4,706 0.15]) = THB 4,000.
In this manner, the vendor receives the original payment amount after
withholding tax is deducted.
o Perpetual gross-up rate percentage = 100 (1 WHT rate) = 100 (1
15%) = 100 0.85 = 117.65%

Withholding tax for item or service purchases

Use the Journal voucher page to enter and post payments that you make to a vendor
for the purchase of items or services. When you post a vendor payment journal, the
withholding tax group that is set up for the vendor is used to calculate the withholding
tax on the transaction.

Withholding tax for item or service sales

Use the Journal voucher page to enter and post payments that you receive from
customers. You must post a customer payment journal or general journal for
withholding tax transactions that include the tax branch code.

Making a withholding tax payment on behalf of a vendor

Performance awards that are given to vendors are taxable and can be withheld by a
legal entity. You can make withholding tax payments on behalf of the vendor. In this
case, the tax that you pay is treated as an expense for the company. This process is
referred to as payment gross-up. You can generate the withholding tax reports after
you post a payment journal for a vendor.

Generate withholding tax reports

You must generate the Withholding tax certificate report after you've settled
payments and before you post a vendor payment journal. On the Withholding tax
slip page, select to generate the Withholding tax certificate report. You can also
generate the Withholding tax (Por Ngor Dor 53), Withholding tax (Por Ngor Dor
3), Withholding tax special, Withholding tax accounts receivable journal,
and Withholding tax accounts payable journal reports after you post a payment
journal. You can mark transactions that should be excluded from withholding tax
reports.

Generate the Withholding tax special report

When you submit the Withholding tax (Por Ngor Dor 53) or Withholding tax (Por
Ngor Dor 3) report, and you pay the withheld tax to the Revenue Department of
Thailand, the department issues a receipt number. You must enter this receipt number
in the Receipt number field on the Posted withholding tax page. Then, at the end
of the month, you must generate the Withholding tax special report and submit it to
the Revenue Department of Thailand. This report is generated in a format that is
specified by the Revenue Department of Thailand.