Commercial Contract Drafting and Review with the Tax Angle: Common Questions

Anything delivered in stages, anything touching intellectual property, anything requiring disclosure of customer data, and anything between parties in different countries. These four are where disputes tend to erupt after part of the money has already moved and nobody can prove how wide the agreed scope was.

Generally yes, once the essentials are there: the parties, the scope, the price and the timing. The real issue is not whether a contract exists but what the quotation left out — revisions, liability, termination — because general law then fills those gaps instead of either party's intention.

For a continuing relationship, a master agreement with work orders is easier and keeps terms from contradicting each other: the order states only scope, price and delivery, while liability, confidentiality and governing law live once in the master. It also makes later review far quicker.

Most templates are translated from another legal system, so they carry clauses that are unenforceable here and say nothing about withholding tax or stamp duty. When a dispute arrives, the clause a party believed protected them turns out inert, and the tax lands on whoever did not budget for it.

A sweeping line like that usually leaves the payee carrying both VAT and withholding without intending to. The clearer form states the price exclusive of VAT, adds VAT on top, and obliges the payer to deduct withholding at the rate the law sets and to issue the deduction certificate.

They do, and the label used in the contract is not what decides it — the Revenue Department looks at the substance of the work performed. Writing the scope clearly as manufacture to specification, advisory work, or hire of property therefore drives the applicable rate and removes argument during a later review.

For services the liability generally arises on receipt of payment; for goods, on delivery. A contract whose payment milestones do not line up with delivery milestones is the easiest way to issue a tax invoice in the wrong month. The fix is to align the two schedules and state the invoicing date in the contract itself.

Instruments listed in the stamp duty schedule — leases, contracts for work, loans and powers of attorney among them — must be stamped at the prescribed amount. Leave it unpaid or short and the document simply cannot be put before a civil judge until the shortfall, plus its surcharge, has been settled, which is why many claims stall at the document stage.

State a numeric annual rate, the date it starts running, and the base it is calculated on, plus a line that it does not affect other damages. An excessive rate may be reduced by the court as a penalty, so a defensible number works better than a high one written to intimidate.

A fair limit is workable — for example capping at the fee received for that stage, or excluding indirect loss. Excluding liability for deliberate acts or gross negligence is generally treated as ineffective, and consumer contracts are scrutinised far more closely than business-to-business ones.

Match the period to the life of the information: three to five years suits ordinary commercial data, with a separate line for trade secrets that stay protected for as long as they remain secret. Declaring the whole obligation perpetual can lead a court to read it down when a dispute arrives.

Court suits fit clear-cut money claims because the cost is predictable. Arbitration fits technically complex contracts or foreign counterparties who want neutrality and cross-border enforcement. The caution is that arbitration costs far more than it is worth on low-value disputes.

Certain payments abroad require withholding and filing on the prescribed form, and the rate may drop where a double tax agreement applies and the recipient holds a tax residency certificate. Put an obligation in the contract to supply that certificate before the first payment date, or the burden lands on the payer.

A Thai recipient using a foreign supplier's service inside Thailand must remit VAT on a dedicated return and may then claim it as input tax in the following month, subject to conditions. Software subscriptions and online advertising are the two items most often forgotten.

Commercial parties generally may, but think about enforcement: if all of the counterparty's assets sit in Thailand, a foreign judgment may not be directly enforceable and a fresh action could be needed. Choosing Thai law against a counterparty whose assets are here usually produces a better practical result.

Always say so explicitly. If a dispute is likely to be heard in a Thai court, letting the Thai version prevail reduces translation risk, since the court will work from Thai anyway. The English version is still needed for foreign management and auditors, so keep both but rank them clearly.

An ordinary service or supply agreement usually takes two to three working days from receiving the file and the basic deal facts. Joint-venture documents or anything with technical annexes take longer. We confirm the timeframe together with the scope assessment at the first round.

The contract in an editable format, which side you are on, the value and payment stages, the delivery dates, and your three biggest worries. Attach any earlier agreement with the same counterparty too — conflicting terms between an old and a new document are a frequent problem.

A tracked-changes file, a memo listing the issues in order of risk, alternative wording for the clauses you will have to negotiate, and tax notes flagging which clauses affect withholding, VAT or stamp duty — so the accounts team can configure the system the day it is signed.

Accounting, tax and document review stay with this team. Advocacy and court work move across to our affiliated litigation lawyers, who receive an already-reconciled document bundle so nobody starts collecting evidence from zero.