Utilization Of Tax Credit On Dividends

This article has been updated and adapted from an earlier version that was first published in the Bangkok Post in February 2006. The updated version is current as of August 2011.

One question that is frequently asked by individual shareholders concerns the utilization of tax credit on dividends granted under Section 47 bis of the Thai Revenue Code. This article will discuss the conditions for using tax credit and explain how the tax credit can benefit a shareholder.

The dividend paid by a Thai company to an individual shareholder is subject to 10% withholding tax. An individual shareholder who is domiciled or is a resident of Thailand may choose to (1) treat the 10% withholding tax as a final tax payment for such dividend, or (2) include the dividend with other income in the computation of individual income tax payable in the filing of an annual tax return. Under alternative (2), the individual will receive a tax credit equal to the amount of dividend multiplied by