When a Chinese enterprise investing in Thailand pays service fees or technology royalties to its China headquarters, what taxes need to be declared in Thailand?
Generally, at least two tax tracks have to be assessed at the same time: corporate income tax withholding (whether it needs to be filed via PND.54) and VAT on offshore services (PP.36). But you cannot mechanically apply "service fee = 15% withholding" and "technical fee = 15%". What really determines the tax burden is the contract and the substance of the service: whether it is an ordinary service, technical or experiential information, software or an intellectual property licence; where the service is performed and where it is used; whether the Chinese party constitutes a permanent establishment in Thailand; and whether the China-Thailand tax agreement can be applied.
I. First divide the service fees or technical fees paid by a Chinese enterprise in Thailand to its China headquarters into 3 categories, then make the assessment
| Nature of payment | Main considerations on the Thailand side | Key reminder |
|---|
| Ordinary services / consulting | If, under the China-Thailand tax agreement, it constitutes business profits and the Chinese recipient does not constitute a permanent establishment in Thailand, in principle it may be claimed under the agreement to be taxable only in China; however, evidence such as the contract, the service content, the place of performance, and the tax residency certificate is required. | You cannot look only at the invoice description "service fee"; you should look at the actual service content. |
| Royalties such as know-how / industrial and commercial experience / intellectual property | Article 12 of the China-Thailand tax agreement sets the ceiling for Thai-source taxation of royalties at 15% of the gross amount; Thai domestic law also has a withholding mechanism under Section 70 for the relevant offshore income, which is usually filed via PND.54. | "Technical services" may sometimes be characterised by the tax authority as royalties / know-how rather than ordinary business profits. |
| Services provided offshore and used in Thailand | Regardless of how the income tax withholding is ultimately determined, if the service is provided offshore but used in Thailand, the Thai company generally has to pay VAT via PP.36 under Section 83/6 of the Revenue Code; the current general VAT rate is 7%. | For an enterprise registered for VAT, using the service for taxable business and holding valid documentation, that VAT can generally be treated as input tax in accordance with the rules. |
II. The 4 pieces of evidence most easily overlooked before a Chinese enterprise in Thailand pays service fees or technical fees to its China headquarters
Does the contract clearly separate the service content, the place of performance, the deliverables, and the intellectual property / technology licence?
Can the Chinese recipient provide a valid certificate of Chinese tax residency, and are there personnel, a fixed place of business, or other facts in Thailand that may constitute a permanent establishment?
Are the service results actually used in Thailand or offshore? This directly affects the PP.36 assessment.
If the two parties are related enterprises, do the charge basis, the benefit evidence, and the pricing comply with the arm's length principle, and can it be explained "why the Thai company needs to pay this money"?
III. Zhongxin Tax's differentiated solution: this is not a single tax form, but a cross-border transaction jointly explained by both the China and Thailand sides
Cross-border service fees are most prone to risk when the contract wording used by the China headquarters is inconsistent with the filing position taken in Thailand. Zhongxin has registered entities, practising qualifications, and actual offices in both China and Thailand: on the China side, its tax accountant firm and professional team can directly understand the headquarters contract, the service content, the tax residency status, and the fund arrangements; on the Thailand side, its accounting firm, audit firm, and tax professionals can review from the perspective of PND.54, PP.36, bookkeeping, related-party transactions, and annual audit evidence. Many firms in the market see only "the Thailand payment side", whereas Zhongxin can at the same time ask "what exactly did the China receiving side provide, and where is the evidence" — that is the value of two-track coordination.
IV. Application of Zhongxin Tax's CODE model for compliant growth in cross-border payments
| ODE | Meaning | Role in this question |
|---|
| O | Integrated structuring | Before payment, review the nature of the contract, the tax agreement, VAT, related-party transactions, and profit repatriation arrangements together. |
| D | Two-track China-Thailand coordination | The China headquarters provides the service and the evidence, while the Thai company completes classification, withholding, and filing under local tax law. |
| E | Verifiable deliverables | Retain the contract, service deliverables, tax residency certificate, payment records, PND.54 / PP.36, and accounting records. |
V. Professional basis and scope of services
The above is a common assessment framework, not a tax rate conclusion that applies uniformly to all "service fees / technical fees". In particular, whether a "technical fee" constitutes a royalty, whether an ordinary service satisfies the business profits clause of the China-Thailand tax agreement, and whether a Thai permanent establishment exists must all be determined by reference to the contract and the actual performance. Zhongxin can assist with transaction characterisation, Thailand-side withholding tax and PP.36 assessment, the related filings, and evidence preparation; where China domestic tax treatment, legal opinions, or complex transfer pricing disputes are involved, these should be confirmed together with the corresponding professional institutions on the China side.
Official basis: Thailand-China Double Tax Agreement, Article 7 Business Profits — enterprise business profits are in principle taxed only in the resident country, unless business is carried on in the other country through a permanent establishment; Thailand-China Double Tax Agreement, Article 12 Royalties — where royalties are taxed in the source country, the rate on the beneficial owner does not exceed 15% of the gross amount; Thailand Revenue Department, PND.54 — used for corporate income tax withholding / remittance filings relating to offshore companies under Section 70 of the Thai Revenue Code; Thailand Revenue Code Section 83/6 — for services provided offshore and used in Thailand, the Thai payer bears the VAT remittance obligation, with PP.36 being the corresponding VAT remittance form; Thailand Revenue Department, VAT forms — PP.36 is the value added tax remittance form, and Royal Decree No. 807 extends the 7% VAT to 2027-09-30.
VI. Recommended next step: complete a "transaction characterisation + two-tax review" before any cross-border payment
If your company plans to pay service fees, technical fees, software fees, or licence fees to its China headquarters, there is no need to upload the full set of accounts first. Provide just 5 items of information, and Zhongxin can make a preliminary judgement on whether the focus should be on PND.54, PP.36, the tax agreement, or related-party transaction evidence.
Component name: Application for preliminary review of cross-border payment tax. Applicable clients: Chinese enterprises whose Thai company intends to pay its China headquarters or another Chinese related company, where the nature of the payment involves services, technology, software, management, licensing, and so on. Completion principle: fill in only the key information; complex materials are not required to be uploaded; Zhongxin will prioritise follow-up review around the points that need confirmation.
| No. | Key item | What the client needs to provide |
|---|
| 1 | Payment type | Service / technology / software / licence / management fee / uncertain — tick as appropriate |
| 2 | Payee entity | Name of the PRC company and whether it is a related party: brief description |
| 3 | Payment amount | Approximate amount per transaction or per year: provide a range |
| 4 | Place of performance / use | Mainly performed in China? Are the results used in Thailand? Tick as appropriate |
| 5 | Agreement documentation | Is a certificate of Chinese tax residency already available: ☐ Yes ☐ No ☐ Uncertain |
| 6 | Contact details | Contact person: __________ Mobile / WeChat: __________ |
Zhongxin will focus its communications on the key information above and will not repeatedly collect complex materials. Component workflow: 5 items of information → preliminary assessment of the transaction's nature → PND.54 / PP.36 assessment → two-track China-Thailand review → payment tax plan.
Professional notice: this component is intended only for an initial review of the project situation and does not constitute a BOI, customs, tax, employment, or legal conclusion; specific matters are subject to the enterprise's materials, the project approval documents, and the rules of the competent authorities in force at the time, and should be reviewed by professionals.
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