Date: August 12, 2026

What is withholding tax and why did my Thai client pay me 97% of my invoice?

Withholding tax is a tax your Thai customer deducts before paying certain invoices. If you received 97% of the invoiced amount, your client has most likely withheld 3% and paid it directly to the Thai Revenue Department on your behalf. This is a normal part of doing business in Thailand

What We See In Practice

My client didn't pay my full invoice. Have they short-paid me?

WHAT CLIENTS ASK US

Usually not. Many foreign business owners assume the customer has underpaid the invoice, when in fact they are undertaking a legal requirement. For certain types of payments, Thai businesses must deduct withholding tax and pay it directly to the Revenue Department instead of paying the full amount to the supplier.

Withholding tax is collected by the payer rather than the supplier. For many service payments between Thai businesses, the customer must deduct 3% from the invoice and remit it to the Revenue Department. For example, if you issue an invoice for THB 100,000, your client may pay you THB 97,000 and pay the remaining THB 3,000 to the tax authorities. Once the payment has been made, they should issue a withholding tax certificate showing the amount deducted. This certificate should be sent to the service provider for their bookkeeping.

The amount withheld is not an additional cost. Instead, it is considered as a credit against your company’s corporate income tax when you prepare your annual tax return. To claim that credit, you will need the withholding tax certificate issued by your customer. If you do not receive one, it is important to request it promptly, as proving the tax has been withheld can become much more difficult later.

Author: Vincent Birot

Vincent Birot is a French-trained international business lawyer based in Bangkok. He holds a Master’s degree in International Business Law from La Sorbonne and an LL.M in International Commercial Law from the University of Exeter (UK), and has passed the Paris Bar examination. He is the Founder of Belaws, a one-stop platform for legal and corporate matters, facilitating access to trusted legal and business professionals who deliver compliant, practical solutions aligned with local laws and on-the-ground realities. He has advised foreign investors for over 10 years on corporate structuring, BOI promotion, cross-border tax, and regulatory compliance in Thailand. He previously served as Vice President of the Franco-Thai Chamber of Commerce and is a founding member of French Tech Bangkok.