New definition of term “leasing” not subject to withholding tax

(21/2009)

According to paragraphs 2 and 3 of Clause 6 of the Departmental Regulation No. Taw Paw 4/2528, payment of rent under a leasing agreement would not be subject to withholding tax under the following conditions:            

(1) The lessor is a juristic company or partnership whose registered and paid-up capital amounts to Baht 60 million or more and is a registrant for the purpose of value added tax paying tax under Section 82/3 of the Revenue Code;

(2) The lessee is a juristic person;

(3) The lease period is three years or longer, except where the leased property is one that has been repossessed from another lessee, in which case the lease period may be shorter than three years.

In order to clarify the term “leasing” in this regard, Departmental Regulation No. Taw Paw 176/2552 has been issued to add the following definition of “leasing” to the above conditions:   

The term "leasing" means an agreement to lease property whereby the lessor is the owner of the property and let it out on hire with the option that, at the end of the lease contract, the lessee can buy such property or otherwise return it to the lessor.

This new Departmental Regulation will be effective for the payment of assessable income from 6 October 2009 onwards.