Thailand moves on double tax treaty with Cambodia

Thailand is moving forward to strike a double tax treaty with Cambodia, to cope with increasing cross-border trade.

Sathit Rungkasiri, director general of the Revenue Department, said it is a priority to expand the double tax treaty with all countries in Asean to prepare for the Asean Economic Community.

“The double tax treaties with 8 countries in Asean have come into force. Now, the Revenue Department is rushing to discuss this issue with Cambodia. Afterwards, we will focus on extending the coverage to non-AEC countries," he said.

After parliamentary approval for double tax treaties with nine additional countries in March, the number of countries with such treaties has risen to 64. Thailand first concluded the double tax agreement with Sweden in 1963.

The treaties cover individual and juristic persons and apply to only income taxes, namely personal income tax, corporate income tax and petroleum income tax. Other indirect taxes such as value added tax and specific business tax are not covered.

The resident country retains the right to tax the income, which has already been taxed in the source country. It calculates its tax on the basis of the taxpayer’s total income including income from the other country, which according to the DTA, is taxed in that other country. However, it allows a deduction from its own tax for the tax paid in the other country. To Sathit, such treaties promise cooperation to tame tax evasion.