From a tax standpoint, the Thai branch of a foreign entity is the same juridical person as the head office. With that in mind, some readers might be curious how this concept would come into play in determining withholding tax liabilities in a cross-border financing transaction.
Let’s say you wish to undertake project financing to fund your new factory by borrowing money from a foreign bank with a branch in Thailand. When you pay interest to the head office of the bank abroad, should you withhold tax at a rate of 10% (reduced from 15% by virtue of a tax treaty)? Or do you need to withhold tax at all in light of the fact that the overseas bank has a branch office doing business in Thailand even if the branch does not participate in the loan?
The short answer is if it can be determined that interest received by the overseas head office is includable in the Thai tax base of the branch, no withholding tax on interest will be applicable.
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