🇹🇭 Thailand · reviewed 2026-10-09
Tax on royalties and franchise fees in Thailand
A Thai franchisee withholds 15% from every royalty and franchise fee it pays abroad and pays VAT on the same fee itself. Marketing spend a foreign franchisor requires can be taxed the same way.
Withholding tax
- Royalties and franchise fees paid to a foreign company not carrying on business in Thailand are subject to 15% withholding tax under the Revenue Code. A tax treaty can reduce this; the rate depends on the treaty and the type of royalty. Official · Revenue Department, royalty withholding rates, 2014-01-29
- Advertising and marketing spend that a foreign franchisor requires the franchisee to make can be treated as a franchise fee and attract the 15% withholding tax. Secondary · Tilleke & Gibbins, ICLG Franchise 2025: Thailand, 2024-11-01
VAT
- When a foreign provider supplies a service from abroad that is used in Thailand, such as a trademark or franchise licence, the Thai payer self-assesses and remits the VAT under Revenue Code section 83/6, using form P.P.36. Official · Revenue Code s.83/6, Revenue Department
- The statutory VAT rate is 10%, but a Royal Decree reduces it to 7%. Royal Decree No. 807, published on 20 August 2026, keeps 7% from 1 October 2026 to 30 September 2027. Official · Revenue Code s.80, Revenue DepartmentSecondary · HLB Thailand on the 7% VAT extension, 2026-08-20
Planning points
- Agree in the contract whether fees are quoted gross or net of the 15% withholding tax.
- Be careful when requiring the franchisee to spend on local marketing: it can be taxed as a fee to you.
- Check the treaty between Thailand and your home country, and collect a certificate of residence before the first payment.
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