Key takeaways
Commission tax depends on the recipient's status, not on the name of the item. For Thai juristic persons, withhold 3%. For individuals, confirm the withholding method under Section 50(1). For foreign juristic persons, check both PND 54 and PP 36. For employees, the payment is always Section 40(1) income. VAT relating to the sale of condominium units cannot be credited and is a cost.
Comparing the 4 cases
| Issue | 1 Thai juristic person | 2 Thai individual | 3 Overseas agency | 4 Employee |
|---|---|---|---|---|
| Type of income | Commission or service fee | Section 40(2) | Service fee from overseas | Section 40(1) |
| WHT | 3% | Confirm under Section 50(1) | 15% or the treaty rate | Progressive rates |
| Type | PND 53 | Confirm the form with the accounting firm | PND 54 | PND 1 |
| VAT | 7% if VAT-registered; not creditable for unit sales | None, unless VAT-registered | PP 36 at 7%; not creditable for unit sales | None |
| Social security | None | None | None | Yes |
| TFRS 15 | Capitalize | Capitalize | Capitalize | Capitalise only commission tied to sales |
| Risk | Low | Medium | Very high | Medium |
PND forms and PP 36 are filed by the 7th of the following month, or by the extended date under the latest e-Filing announcement, and a withholding tax certificate is issued to every payee
Case 1: Thai juristic person agent
This is the lowest-risk channel when the documents are complete and it can be proved that the work was actually done. Check the objects in the company certificate and the actual VAT status.
Example: commission of THB 300,000
| Item | VAT-registered | Not VAT-registered |
|---|---|---|
| Service fee | 300,000 | 300,000 |
| VAT 7% | 21,000 | - |
| Tax invoice or invoice amount | 321,000 | 300,000 |
| WHT withheld at 3% (base 300,000) | (9,000) | (9,000) |
| Amount actually paid | 312,000 | 291,000 |
| Cost of obtaining the contract | 321,000 | 300,000 |
Dr Cost of obtaining the contract 321,000 / Cr Withholding tax payable 9,000 / Cr Bank 312,000. On transfer day it is transferred to expense.
- Agent agreement stating the rate, payment terms and scope of work
- Tax invoice or invoice stating the unit number and customer name
- Withholding tax certificate
- Evidence of work, such as a booking form signed by the agent and a viewing record
- The agency's company certificate
Case 2: individual agent
Commission is Section 40(2) income under Section 50(1). The payer must withhold using the progressive-rate calculation method. Withholding at a flat rate such as 3% is the practice of some companies, but if the amount withheld is lower than the calculated amount, the payer is jointly liable under Section 54. Have the accounting firm confirm the withholding method and the form to be filed before using it, especially for large payees.
Example: commission of THB 300,000, with a company policy of withholding 3%
WHT of THB 9,000, net payment of THB 291,000, and a cost of obtaining the contract of THB 300,000 recorded. No VAT, unless the agent has income above THB 1.8 million a year and is VAT-registered.
No cash payments. Transfer to an account in the agent's name, with a signed receipt and a copy of the ID card.
| Signs of employment | Safeguards |
|---|---|
| Works for one company only | The agreement states that the agent may take work from others |
| Has a desk, business cards and a company e-mail | Does not use company resources |
| Has working hours and a supervisor | No working hours or supervision |
| Receives regular remuneration | No regular salary |
| No unit-level evidence of work | Evidence of work tied to unit number and customer name |
If the agent is treated as an employee, tax must be withheld at progressive rates and the payments brought retrospectively into the social security base, together with surcharges.
Case 3: overseas agency
| Tax | Rate | Law | Does the treaty help? |
|---|---|---|---|
| PND 54 | 15% | Section 70 | Can be reduced if the conditions are met, e.g. no PE and a COR for the year of payment |
| PP 36 | 7% | Section 83/6 | No, because treaties cover income tax |
The conservative position is to withhold 15% first and let the recipient claim credit in its own country. For high-value cases, seek a written ruling. Commission rates above the benchmark and agencies in the same group are points that attract close scrutiny.
Example: USD 10,000 at THB 35
| Item (THB) | Gross | Net (Gross-up ÷ 0.85) |
|---|---|---|
| Income before tax | 350,000 | 411,765 |
| PND 54 at 15% | (52,500) | (61,765) |
| Transfer to the agency | 297,500 | 350,000 |
| PP 36 at 7% | 24,500 | 28,824 |
| Company's total cost | 374,500 | 440,588 |
A net contract makes the real cost 25.9% higher than the face value of the contract. This must be built into the margin from the pricing stage.
The gross-up is deductible as an expense for CIT when the contract clearly states that the payer bears the tax. See the dedicated article for details on payments abroad.
Case 4: in-house sales staff
Commission paid to an employee is always Section 40(1) income, withheld under Section 50(1) and filed on PND 1. Withholding WHT at a flat rate and filing another form because the payment is called commission is a common error. The result is under-withheld tax, possibly incorrect contributions, incomplete Section 50 bis certificates, and expenses that attract suspicion. Payments to directors or shareholders who do not actually do any selling risk being treated as disguised dividends.
Example: salary of THB 50,000, commission this month of THB 80,000
| Full-year estimate | No commission | With commission |
|---|---|---|
| Income | 600,000 | 680,000 |
| Less expenses | (100,000) | (100,000) |
| Less personal allowance | (60,000) | (60,000) |
| Less social security contributions | (10,500) | (10,500) |
| Net income | 429,500 | 509,500 |
| Annual tax | 20,450 | 28,925 |
Additional tax from the commission: THB 8,475. Dr Cost of obtaining the contract 80,000 / Cr Withholding tax 8,475 / Cr Bank 71,525. The example uses the social security wage ceiling of THB 17,500 a month, a contribution of THB 875 (effective 1 Jan 2026), and no other allowances.
Recalculate every month in which there is a large commission; do not use the previous withholding amount. Otherwise additional tax must be withheld at year-end and the employee receives an unusually small final payment. Commission does not increase contributions once wages have reached the ceiling. If paid regularly, it may count as wages in the base for severance pay under the Labour Protection Act 1998, which affects the TAS 19 estimate. Consult a labour law adviser.
Split case: one commission pool, 5 ways
Example: unit of THB 10,000,000, pool of 5% = THB 500,000
| Recipient | Proportion | Commission | WHT | VAT or PP 36 | Net payment | Type |
|---|---|---|---|---|---|---|
| Overseas agency (gross, no COR) | 60% | 300,000 | 45,000 | 21,000 | 255,000 | PND 54, PP 36 |
| Thai agency (VAT-registered) | 20% | 100,000 | 3,000 | 7,000 | 104,000 | PND 53 |
| Sales employee | 15% | 75,000 | 7,725 | - | 67,275 | PND 1 |
| Thai individual agent (3% policy) | 5% | 25,000 | 750 | - | 24,250 | PND 3 (confirm) |
| Total | 100% | 500,000 | 56,475 | 28,000 | 450,525 | 5 cases |
Total cost of obtaining the contract THB 528,000 = net payment 450,525 + WHT 56,475 + PP 36 of 21,000 (the Thai agency's VAT of 7,000 is already included in the amount paid). The employee case uses the same salary assumptions as the previous example.
5-step review approach
- Extract line-by-line entries from the GL, linked to unit number, recipient, rate and document number
- Group by tax status and flag payees that cannot be identified
- Reconcile the tax base to the forms actually filed each month
- Test for rates that deviate from policy, duplicate items and multiple recipients on a single unit
- Estimate the risk and rank by value and urgency
Risk estimate = unfiled base × tax rate + penalty + surcharge of 1.5% per month + CIT at 20% of expenses that may be added back
Warning signs to check every time
- The recipient's name has no juristic-person suffix, or is inconsistent with a brokerage business
- A high amount with no matching invoice
- An overseas recipient but no matching WHT or PP 36
- Rates that differ widely with no policy to explain them, or are above market with no benchmark
- A single recipient accounting for more than a quarter of total payments
- Several recipients drawing the full rate on a single unit, so that the total exceeds the pool
- Invoice numbers that do not match the system, the same amount and unit repeated, or non-sequential document numbers
- Names spelt inconsistently between periods
- Other items mixed into the commission account, such as bank fees
Monthly control points
- The commission-splitting policy states the proportions for referral, co-agent and closing
- A commission allocation sheet per unit, signed off for approval
- Check that the total does not exceed the pool
- A monthly filing checklist, with a second reviewer
The review should produce three outputs: a line-by-line register, a summary of issues and risks in monetary terms, and a record of data sources and methods so that others can repeat the work.