Various taxes and fees accompany any deal regarding property or land. Without proper counseling and timely payments, the costs may pile up and grow to a significant amount of money. Knowledge is power and knowing all possible taxes will help you avoid additional expenses and prepare for any business activities related to land or property.
There are 4 key types of taxes that must be considered when purchasing any real estate property or land in the Thai Kingdom. The exact nature of a transaction, who sells, and ownership duration all affect the amount of money that should be paid. There is a particular price list that is used to calculate most fees. This list is filled with “tax assessment values” and showcases prices that are lower than the median in the open market.
|
Tax/Fee |
Land & Property Sale/Freehold |
Land Transfer of Leasehold |
Building Sale |
Who Pays |
|
Transferring Fee |
2% |
None |
2% |
Both parties |
|
Lease Registration Fee |
None |
1% |
None |
Both parties |
|
Business Tax |
3.3% or None |
None |
3.3% or None |
Only Seller |
|
Stamp |
0.5% or None |
0.1% |
0.5% or None |
Only Seller |
|
Withholding Tax |
1% or 5 – 37% |
None |
1% or 5 – 37% |
Only Seller |
Transferring Fee
To calculate this fee, you should use the estimated price of the property. This fee is divided between participants of the deal if both parties agree to such division.
Lease Registration Fee
The total sum that will be paid over the course of the lease will be used to calculate the size of the fee. Both the lessor and lessee should agree to divide the cost.
Specific Business Tax
The SBT or business tax is paid by owners of property with the ownership term less than five years. The official assessed price or on the rate defined by the contract can be chosen as the baseline for the calculation. The higher amount will be used.
If the property in question is your primary residence and you have been an owner of the household for at least 12 months, you will be able to avoid this payment.
Stamp Duty
In cases when an SBT cannot be used, the government collects the stamp duty. The size of the task depends on either the contract price or the estimated value. The higher amount is chosen by default.
Withholding Tax
Also called WHT. The highest price (between the estimated and contracted) is chosen. Companies pay only 1% while individuals will have to pay anywhere from 5% to 37% depending on the overall tax rate. Note that the sum depends on the length of ownership and several other factors including the total tax size.
Property Taxes
Owning any real estate property will result in paying taxes, no exceptions. Two types of charges can be applied to an owner.
Land Tax
Just like in any other country, all landowners have to pay taxes for owning land. The payment is annual. You will have to pay a small amount of Baht for each RAI you own (1 rai is roughly 0.4 acres). This is for properties that are considered private residences. If you own a patch of land through an LLC, the tax will be less forgiving.
Actual laws dictate that an LLC or any other separate juridical entity must pay to the Thesaban office each year. The current legal field is quite slow. Bills are not sent, and the government rarely enforces you to pay them. Nonetheless, you will have to pay in case you want to sell the land or constructions on it. A property loaded with unpaid taxes cannot be transferred.
Note that a new taxation structure is being developed. The government plans to implement a new type of taxes that will generalize the property. Owners will have to pay for the land and permanent structures. There will be separate taxes for all business properties, privately owned residences, and all types of areas used for agricultural purposes. Developers will also pay this new tax.
Buildings Usage Tax
You will have to pay this fee only when dealing with commercial properties and leasing. The current rate is 12.5%. As the baseline for the calculations, you should use the total rental value. Usually, the estimated cost is also lower than the market median.
Additional Information
Some foreign investors want to purchase property through an LLC. While this is a legitimate way to own wealth in this country, the taxing for the corporation is considerably higher than any tax applied to an individual. When planning a purchase through a company, think of all pros and cons and account for fees that you will have to pay.
The Foreign Transaction Form is required to conduct any form of activity using foreign currency. If you want to purchase the land in Baht, make sure to move your funds to the country. Exchange the money in a Thai bank and receive the FETF. There are other forms of taxes and penalties that can be applied to your business activities if you do not have a FETF that confirms the initial transaction.
The FETF is also used as evidence when repatriating your investments. It is also quite useful when taking a loan from a foreign source. You will need to provide some proof. Both the FETF and the loan contract can be used. The very remittance of money can be considered an income meaning that it is liable for additional taxing if you cannot provide any of the documents mentioned above.
