Thailand Dividend and Profit Remittance Tax: How Chinese Investors Repatriate Profit to China

1. How dividends are characterized under Thai tax law (Section 40(4)(ข))

The Thai Revenue Code lists the categories of assessable income in Section 40. Within it, Section 40(4)(ข) makes clear that dividends, shares of profit, or other benefits derived from a company, juristic partnership, or a financial institution established under a specific law of Thailand are assessable income. Accordingly, profit distributed by a Thai limited company to its shareholders (including Chinese shareholders) is taxable income in Thailand, not tax-exempt income.

• Dividends: profit that a company distributes to its shareholders falls under Section 40(4)(ข) (Section 40).
• Other distributions: Section 40(4) also covers shares of profit, shareholder bonuses, and the like (Section 40); the actual classification must be judged case by case according to the nature of the distribution.

2. Withholding tax on dividends paid to a foreign juristic person (Section 70)

Thailand applies withholding at source to assessable income paid to a recipient abroad: the payer must first withhold the tax at the time of payment and then remit it to the Revenue authorities. Where the recipient is a foreign juristic person not carrying on business in Thailand (such as a Chinese parent company) and receives assessable income (including dividends) paid from or within Thailand, Section 70 applies.

• Where a foreign company or juristic partnership not carrying on business in Thailand receives income under Section 40(2)(3)(4)(5)(6) (including dividends) paid from or within Thailand, the payer must withhold at the income tax rate applicable to companies and remit it within seven days from the last day of the month in which payment is made (Section 70).
• The specific withholding rate for dividends is set by royal decree and the applicable tax agreement; the section itself does not state a figure, and the actual rate is governed by royal decree and official regulations (our firm can help confirm it).

3. Routes for repatriating profit to China

Chinese investors typically use one of two structures to send profit earned in Thailand back to China: remitting it as a dividend from a Thai subsidiary, or remitting the profit of a Thai branch out of the country. The Thai tax treatment of the two differs.

4. Limits on the dividend tax credit for Chinese investors (Section 47 bis)

Section 47 bis gives a person who receives Section 40(4)(ข) dividends from a Thai company a dividend tax credit (imputation credit) that can be offset in the tax computation. However, the same section provides that the credit under its first and second paragraphs does not apply to a person who has no domicile in Thailand and is not a resident of Thailand. Consequently, Chinese non-resident shareholders generally cannot claim this dividend credit, and Thailand's withholding at source is generally final for them (Section 47 bis).

5. The China–Thailand tax agreement and cross-border planning

Beyond Thailand's domestic withholding, the tax agreement between China and Thailand may set a lower, preferential rate for dividend withholding and may affect the treatment of branch profit remittance. The conditions for applying the agreement and the specific rates are determined by the text of the agreement and official regulations, fall outside the sections cited in this article, and should be confirmed case by case. For dividend timing, holding structure, treaty benefit eligibility, and remittance arrangements, our firm can provide cross-border tax planning assistance.

FAQ

How does Thailand tax a dividend that a Chinese parent receives from its Thai subsidiary?

Dividends are assessable income in Thailand (Section 40(4)(ข)); when paid to a foreign company not carrying on business in Thailand, the payer must withhold tax and remit it within seven days from the last day of the month in which payment is made (Section 70). The actual withholding rate is set by royal decree and the China–Thailand tax agreement, and the exact figure is governed by official regulations.

Is a separate tax due when profit is remitted out of Thailand?

Where a foreign company operates through a Thai branch and remits profit abroad, Thai tax law provides separately; whether it is taxed, and the rate, tax base, and calculation, are governed by royal decree and official regulations and must be confirmed case by case (our firm can assist).

Can Chinese shareholders use Thailand's dividend tax credit?

The dividend tax credit under Section 47 bis does not apply to a person who has no domicile in Thailand and is not a resident of Thailand, so Chinese non-resident shareholders generally cannot claim it, and withholding at source is generally final for them.

Can the China–Thailand tax agreement reduce dividend withholding tax?

The agreement may set a lower, preferential rate for dividend withholding, but whether it applies and the specific rate depend on the text of the agreement and official regulations, and should be confirmed case by case (our firm can help verify this).