Thailand Law Library

by Thailand Lawyer

Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed

1. 10 percent of the gross amount of the dividends if the beneficial owner is a company which controls at least 10 percent of the voting power of the company paying the dividends; or
2. 15 percent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

Subparagraph (b) of paragraph 2 and not subparagraph (a) shall apply in the case of dividends paid by a person which is a resident of the United States and which is a Regulated Investment Company. Subparagraph (a) of paragraph 2 shall not apply to dividends paid by a person which is a resident of the United States and which is a Real Estate Investment Trust, and subparagraph (b) shall apply only if the dividend is beneficially owned by an individual holding less than a 25 percent interest in the Real Estate Investment Trust; otherwise the rate of tax applicable under U.S. domestic law shall apply.

The rules of this paragraph shall apply to dividends paid by companies resident in Thailand that are similar to the United States companies referred to in this paragraph. Whether Thai companies are similar to the United States companies referred to in this paragraph will be determined by mutual agreement of the competent authorities.

The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident. The term "dividends" also includes income from other arrangements, including debt obligations, carrying the right to participate in profits, to the extent so characterized under the law of the Contracting State in which the income arises.

The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State, of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply.