Chirayuthchai TraisaengsatheanStrategic Finance for Property Development

Real estate sales commission: 4 cases

Tax, accounting, documents and review of commission paid to Thai juristic persons, individuals, overseas agencies and employees

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

Issue1 Thai juristic person2 Thai individual3 Overseas agency4 Employee
Type of incomeCommission or service feeSection 40(2)Service fee from overseasSection 40(1)
WHT3%Confirm under Section 50(1)15% or the treaty rateProgressive rates
TypePND 53Confirm the form with the accounting firmPND 54PND 1
VAT7% if VAT-registered; not creditable for unit salesNone, unless VAT-registeredPP 36 at 7%; not creditable for unit salesNone
Social securityNoneNoneNoneYes
TFRS 15CapitalizeCapitalizeCapitalizeCapitalise only commission tied to sales
RiskLowMediumVery highMedium

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

ItemVAT-registeredNot VAT-registered
Service fee300,000300,000
VAT 7%21,000-
Tax invoice or invoice amount321,000300,000
WHT withheld at 3% (base 300,000)(9,000)(9,000)
Amount actually paid312,000291,000
Cost of obtaining the contract321,000300,000

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 employmentSafeguards
Works for one company onlyThe agreement states that the agent may take work from others
Has a desk, business cards and a company e-mailDoes not use company resources
Has working hours and a supervisorNo working hours or supervision
Receives regular remunerationNo regular salary
No unit-level evidence of workEvidence 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

TaxRateLawDoes the treaty help?
PND 5415%Section 70Can be reduced if the conditions are met, e.g. no PE and a COR for the year of payment
PP 367%Section 83/6No, 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)GrossNet (Gross-up ÷ 0.85)
Income before tax350,000411,765
PND 54 at 15%(52,500)(61,765)
Transfer to the agency297,500350,000
PP 36 at 7%24,50028,824
Company's total cost374,500440,588

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 estimateNo commissionWith commission
Income600,000680,000
Less expenses(100,000)(100,000)
Less personal allowance(60,000)(60,000)
Less social security contributions(10,500)(10,500)
Net income429,500509,500
Annual tax20,45028,925

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

RecipientProportionCommissionWHTVAT or PP 36Net paymentType
Overseas agency (gross, no COR)60%300,00045,00021,000255,000PND 54, PP 36
Thai agency (VAT-registered)20%100,0003,0007,000104,000PND 53
Sales employee15%75,0007,725-67,275PND 1
Thai individual agent (3% policy)5%25,000750-24,250PND 3 (confirm)
Total100%500,00056,47528,000450,5255 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

  1. Extract line-by-line entries from the GL, linked to unit number, recipient, rate and document number
  2. Group by tax status and flag payees that cannot be identified
  3. Reconcile the tax base to the forms actually filed each month
  4. Test for rates that deviate from policy, duplicate items and multiple recipients on a single unit
  5. 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.