Land Holding Companys Are Illegal

[solo siam]

I get the same fees as Thais whenever I show my Work Permit actually.

Course you do mate course you do. The fact that the legislation for the parks says 'Thai nationals' pay this price all others pay the higher price doesn't apply to you cause you got a work permit.

JohnnyK I do not dispute what you say but my understanding is Thai Rak Thai (ไทยรักไทย) means literally Thais love Thais and I have never heard any Thai describe the party as anything but this.

Maybe you just don't get the normal price because you have a bad attitude, I went to the zoo last week, they wanted 500 baht till I showed my work permit and then it was 50 baht or something daft like that. Its a bit bizzare that you think I would lie about something like that for some inane reason, I can't say if it happens everywhere but the 5 or 6 different places I have been to have all given me the lower rate when they see the work permit, I've a feeling the same goes for a hai driving license.

[Tarqin]

My last word on you as I do want to derail this subject.

I get the same fees as Thais WHENEVER

was your first post, on your second post its

I can't say if it happens everywhere

hoist with your own petards.

[andyadam]

Can the last one out switch the lights off!!!!!!!!!!!!!!!

[johnnyk]

Tarqin,

Yes the slogan has a double meaning. I think that's the point of it.

On double pricing for national parks, museums etc I don't have a pompem because citizens also pay via their taxes.

Not to mention the guy at the gate can skim off a bit from the falang admission fee.

[solo siam]

Tarqin,

Obviously I can't state that this happens EVERYWHERE since I have yet to go EVERYWHERE, which is why I stated that the 5 or 6 times I have been to national parks, zoos, museums etc... that I have been charged the normal rate. I can't comment on places I have not been obviously, sounds like you are clutching at straws, desperately looking for any reason to prove me wrong. Can you give me examples personally of when you have had to pay the bloated holidaymaker charge when showing your work permit?

To keep it on topic, I don't understand your Original comment, the guy said that he recommended people to restructure, wow - that's gonna cost what, nearly 20,000-30,000 baht to do. Its hardly a big deal and certainly not worth an "I told you so", property prices here in Phuket are still higher now than 12 months ago and places are still selling.

[Dupont]

All Thais are racist to the extent that they believe they are far superior to non-Thais. Thaksin called his (massively popular) party Thais love Thais. This is how you get elected in Thailand. Do you not know this after 15 years?

The word Thai also means free or freedom. Thailand is "free land" meaning never conquered.

Thai Rak Thai name equally means Thais love freedom

Hard to conquer wasn't it.

As far as my limited history remembers it, most of the protagonists from most of the confilcts in the area, basically just came in and did what they wanted down the past few centuries. Burmese got a few kickings but thats about all.

The Japs in particualar killed and enslaved thousands of Thias during the last set to. Letting people in and letting them do what they want looks like capitualation, which is not the same as being free as far as I can see.

This, however, should put Thailand on a similar footing as Switzerland at the end of WW2. So what went wrong?

OT, My only regret was that someone in an earlier thread thought I may be an Estate Agent. Many of my previous post are totally against this species. I perhaps responded rashly to an "I told you so" idiot post.

It is a precarious situation, but if you genuinly love the place and live here, its worth the risk over and above having to live anywhere else in the world. I do post regularaly on the positeve threads about Thailand as well.

I'll get a Chang detector on my computer that prevents me posting on here when drunk in the future.

Edited January 30, 2007 by Dupont

[Geppis72]

Response from legal expert to my question asking if is the right time

to switch from freehold to leasehold :

" The company owns only one plot of land-and has never been engaged

in development activities- it is under list 3 of FBA and not the prohibited

and restricted items -1 & 2 lists. "

My understanding about company in List 3 is that you just need to restructure

and declare it.

Rumours also said List 3 could be open up totally.

[pumpuiman]

A loophole is an action which violates the spirit of the law while complying with the letter of the law. A perfect example of this is the 30 day border runners who stayed in Thailand indefinately this way. It was never the intent(spirit) of the law to allow this but since it was not expressly forbidden it was not illegal. This is a loophole.

On the other hand, when a foriegn national bribes 4-7 Thai citizens to act as ghost(nominee) shareholders in order to form a fraudulent Thai majority company for the sole purpose of owning land this action violates both the spirit and the letter of the law as the use of nominee shareholders is expressly forbidden. This action is not a loophole, it is simply committing a crime.

P

Well written....I agree.

[Arkady]

Response from legal expert to my question asking if is the right time

to switch from freehold to leasehold :

" The company owns only one plot of land-and has never been engaged

in development activities- it is under list 3 of FBA and not the prohibited

and restricted items -1 & 2 lists. "

My understanding about company in List 3 is that you just need to restructure

and declare it.

Rumours also said List 3 could be open up totally.

Hopefully the advice will work out. It may depend on much scrutiny the company is subject to, whether it looks like a real business, whether the deal looks like a real investment for the Thai shareholders, whether they could afford their shares without your help and finally how bloody minded the authorities decide to get. The last point is hard to answer at this point because we are in uncharted waters. In the past, they left well alone unless some one threw it their face e.g. there is a legal dispute about the land or the company (yes farangs have done this and effectively shopped themselves). To go this route it is very important that you have great confidence in your shareholders to stick up for and lie convincingly to the authorities, if necessary. BTW how objective is your lawyer? Was he involved in setting up the company in the first place.

[Arkady]

Response

My understanding about company in List 3 is that you just need to restructure

and declare it.

Meant to say that delaring it would be no good, if the company owns land. You could be grandfathered into the FBA but into the Land Code. What they also don't say that is declaring it might mean applying for an alien business licence which involves detailed scrutiny of your business plan and projections etc. An alien company also needs a minimum of B3m paid up capital.

[Geppis72]

Hopefully the advice will work out. It may depend on much scrutiny the company is subject to, whether it looks like a real business, whether the deal looks like a real investment for the Thai shareholders, whether they could afford their shares without your help and finally how bloody minded the authorities decide to get. The last point is hard to answer at this point because we are in uncharted waters. In the past, they left well alone unless some one threw it their face e.g. there is a legal dispute about the land or the company (yes farangs have done this and effectively shopped themselves). To go this route it is very important that you have great confidence in your shareholders to stick up for and lie convincingly to the authorities, if necessary. BTW how objective is your lawyer? Was he involved in setting up the company in the first place.

Tks Arkady, appreciate your comments. (even from the other treat)

Yes the Lawyer was involved since the beg. and he is in BKK.

What get me upset is always the same story running all over the world :

Govt. rather then go for the real criminals (Multinationals,Telecons etc etc)

which make the big caos and mess on all levels, from pollution to

poverty...

they go after small people who own a Bar, Restaurant or a stupid small piece of land !

Hallo... nobody there ??

WE CAN NOT TAKE IT AWAY, IT WILL REMAIN HERE !!

Edited January 30, 2007 by Geppis72

[Dupont]

Response from legal expert to my question asking if is the right time

to switch from freehold to leasehold :

" The company owns only one plot of land-and has never been engaged

in development activities- it is under list 3 of FBA and not the prohibited

and restricted items -1 & 2 lists. "

My understanding about company in List 3 is that you just need to restructure

and declare it.

Rumours also said List 3 could be open up totally.

Thats how my Laywer interpreted it as well. Owning the house isn't the business of the company, its part of the 3 million baht required, and usually (sometimes tenuously) part of the business set up. The company renting the land to you, however, makes it a property company I am told.

For my part, I think they are right to go for the foreign property developers as this is a blatant disregard of the law, certainly more so than marrying, having a business and buying a small plot to live on.

They should massively tax anybody selling a house within a 5 year period to discourage speculation. They have a tax now, but if they increased it to 50% for any company with foreigners on the board, it would clear itself up. ie, you want house? Make sure its where you want to live for a long time, live in it and stay in it.

What some of the told you so posters miss, is that most of their companies are illegal as they don't have this 3 million baht. Companies found short of this 3 million get serious grief and when they are audited, the missing money is taxed as an interest free loan to the director... and thats the best case scenario.

The Thais have benefited massively from us however in terms of money and technology. To destroy their foreign customer base wil have very long term effects on any Thai not rich enought to ride out 10 years of confidence re-building. I'll not bore you with it on this thread though.

[pgrin]

It is my understanding that the entire purpose of using Thai shareholders, real or nominee, is to be treated as a Thai national company and not as a foriegn business. If you are a Thai national company you are not subject to the FBA and can own land. If you are subject to the FBA you are a foriegn entity and can not own land. If this is not correct can someone educate me?

P

[quiksilva]

BTW how objective is your lawyer? Was he involved in setting up the company in the first place.

Yes the Lawyer was involved since the beg. and he is in BKK.

To play it safe you may want to consider seeking a second opinion from a lawyer who was not involved from the outset, their opinion could well be biased.

Pgrin, correct but the definition of what is foreign will change under the Foreign Business Act and alot of companies that were set up as Thai firms but with foreign directors will be reclassified as foreign under the proposed changes to the FBA. (depending on shareholding % and crucially voting rights)

Edited January 31, 2007 by quiksilva

[pgrin]

Here is where I get off the track. If a foriegn national has set up a Thai registered company using nominee shareholders in order to own land this is a crime punishable by fines and jail time. The recommendations for these people is to simply restructure to comply with the law. To my way of thinking this would be the real estate equivilent of money laundering. If your original action was illegal you can not undo it by another action. If that were the case if I robbed a bank and got caught, all I would have to do would be to return the money and everything would be OK, no crime here. Also, if you do not legally own land in the first place, how can you transfer title to something you do not own to a new legal entity? Finally in order to restructure the foreign national has to find at least 4 Thai citizens who have sufficient funds to invest in a company with the purpose to own land for the sole benefit of a foriegn national. How can that work?

P

[Heng]

Surely those who might be affected have been planning ahead. I wouldn't worry too much about them. Who would be silly enough to wait until the laws are actually enforced when they knew what they were doing was illegal from the get go?

[oracle]

Nice opinion I found on the samuiforsale website

Foreigners Warned on Land. Bangkokpost January 29 2007 : Foreign investors holding property through shell companies using Thai nominees have been warned to restructure their holdings or face prosecution. The Commerce Minister Krirk-krai Jirapaet told foreign journalists at a dinner talk on Friday: 'Foreigners using shell companies to buy housing across the country are violating two laws. One, the Land Act that forbids foreigners from holding land and two, the Foreign Business Act by using nominee structures. I recommend that they restructure'.

Q - Can you explain what the Minister means with restructure and what actually changed that foreigners now need to restructure?

A – The main change under the amended FBA will be that companies controlled by foreigners would be classified as foreign, even if their direct shareholdings are in a minority. The minister could mean that foreigners operating certain businesses and/ or holding land must comply with the new foreigner definition when this becomes law and give majority voting rights and control to the Thai shareholders within a certain period of time. It is uncertain if this will include requirements to have a specific number of Thai or resident directors in the company (there are currently no general restrictions on the nationality of directors of a Thai limited company). The final version of the amended FBA is still under consideration.

It is not clear if the minister means that shell companies holding land must comply with the new foreigner definition irrespective their business objectives. It is also not clear what the government will do with the illegal nominee shareholding structures or shell companies in general. If the government would investigate these companies and Thai nominee shareholders irrespective voting rights in these companies, foreigners could be ordered the termination of the illegal nominee shareholdings or face procecution and companies may be closed down and removed from the register for companies. Both under the FBA and the Land Code there are serious penalties for the foreigner who uses nominees and shell companies to circumvent the FBA or the Land Code.

The problem with holding land through shell companies is that even if you would restructure the share structure or change your business objectives to comply with the FBA, the Land Code has its own rules prohibiting the use of shell companies for land purchase. Even if a shell company complies with the restrictions under the FBA, still the Land Department could deem the company foreign or prohibit the use of nominees or deem the company as the owner in place of the foreigner or the legal set up an attempt to circumvent the laws against foreign land ownership and therefore illegal. Under a strict interpretation and implementation of the law foreigners could be forced to dispose of the land within a certain time frame or the title deed could be corrected.

Q - In the same article the minister is quoted, 'if the investors cannot observe one or two laws that are similar to those in other civilised countries, then we should not care about them' and ‘look around you, all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. They cannot take the land away but there's a sense of nationalism and therefore they should restructure'.

Would this not be extremely unfair for the thousands of foreigner, who often in good faith bought villas as second or retirement homes in Thailand, to ask them to restructure when this is practically impossible?

A – Firstly, it is foreign land ownership we are talking about and this is prohibited under Thai law, as is the use of Thai nationals as nominees or shell companies to circumvent the law. This is not new. Together with the 'sense of nationalism' the minister refers to, foreigners owning properties through shell companies should be worried at the moment. Restructuring to comply with the law may be practically impossible under the announced enforcement of the expanded definition of nominees and foreign. Some foreigners now want to sell their freehold ownership, however, prices are based on foreign investments and there are simply no foreign buyers at the moment and Thais are not paying the current prices.

An example how Thai businessmen exploit the current fear among foreign property owners is the private VIP scheme, or the Thai property Long-stay program or Samui Vacation Investment Program. They advertise with slogans like ‘breaking news, your property is at risk', meaning, give us your property for free and we give you for a rip-off fee a 30-year lease in return. I would advice foreigners owning properties not to panic and the best advice would be to wait and see, certainly not to get involved with these kinds of schemes, as this is not approved by the government and is illegal. Wait and see is the best advice. It would be a big scandal for the Thai government if foreigners who bought property in good faith would be denied rights to the land or would be forced to dispose of the land. There are too many legal and political complications and this problem is simply too difficult for this temporally military government to solve. The current situation is in the first place created and allowed by the previous government(s) and its local officials and other powerful Thais.

It is clear that the government wants to clear up the nominee problem. Recent attempts by the previous government, Land Office guidelines and business registration rules, to tackle the nominee problem have shown how difficult it is. Lawyers found ways to cheat these rules and powerful people (including Thai politicians) have manipulated the application of the rules at the local level for their own benefit. Local officials have even explained to foreigners how to circumvent the rules.

Q - Why would 'powerful people' manipulate the rules at the local level for their own benefit?

A - In Thailand powerful people can manipulate the law or enforcement of the law for their self-interest. They have huge interests in land and property development in tourist areas like Phuket and Samui where based on foreign investment land and property prices skyrocketed the recent years. Prices in areas like Samui and Phuket are based on foreign investment and they are simply trying to protect their investments.

There is an additional risk, as it has become common practice for these people to invest in title-lese land. Influential Thais know how to cheat the rules and have the connections to get such land upgraded. If needed documents are created or adjusted. The administration of land is a mess, the documentation is confusing and the scale of corruption and financial interest is huge. Converting land from title-less to properly-titled is one of the easiest ways to make a lot of money fast. Powerful Thais get the cooperation of the local officials by one means or another. As a result large areas have been illegally upgraded or encroached on reserved forest land. The Samui Land Department is blamed for ignoring land encroachments. In Samui thousands of rai has been illegally issued title deeds. Worthless land, often mountain land, became worth millions and is sold to foreign investors who now may face legal problems for a- illegal possession or b- unlawful foreign ownership. Just take as an example the recent land scandal around the Peak project. It is corruption and self-enrichment of powerful Thais, including leading members of the Thai Rak Thai party and local politicians and officials that is to blame for the current problems.

Company ownership is not illegal per se and the local officials could argue that they did nothing illegal when they registered land into a partly foreign owned company. The foreigner broke the law, they followed the official process. However, section 74 of the Land Code states '.... If there is reason to believe the recording of such rights and legal acts is an evasion of the law or there is reason to believe the purchaser is purchasing on behalf of an alien, instructions shall be asked of the Minister whose word shall be final'. The use of shell companies for land purchase is an evasion of the law and the company is purchasing on behalf of the foreigner. It is clearly illegal, however, no minister yet had the guts to issue instructions how to deal with this problem.

Q - Do you expect this military government to tackle foreign land ownership?

It is anybody's guess what the government will do. Based on the Commerce minister's comments the situation is very uncertain and anti foreign. The question is also what the Land Department will do. Certain is that the amendments in the FBA will directly affect companies operating (or having objectives to operate) businesses on List 1 and 2 of the FBA. Shareholding structures in these businesses will face close scrutiny by the government and will have to restructure their indirect foreign ownership or will face legal problems. This includes partly foreign owned companies developing and selling land and villas to foreign buyers.

I expect for the short term that there will remain some form of status quo when it concerns foreign land ownership through shell companies. These companies must comply with the new foreign definition under the FBA and the situation will be ignored again. In the longer term, maybe the next elected government will have to change the law and allow foreigners to own land (unlikely) or find a reasonable solution for the current problem or continue to ignore the problem until they worked out what to do with this problem. One solution could be that there will be some kind of amnesty for foreigners who bought property through shell companies, where the land will be owned by say the Treasury Department and the foreigners in return will receive a 30-year lease.

Q - If these shell companies have always been illegal, why has this become such a common practice?

A - If a lie is told often and long enough and the law not enforced it becomes the truth. The same with land holding companies. Foreign purchasers believed these companies were a recognized and legally sound method for foreigners to 'own' land. In fact it has always been illegal and based on a non-enforcement of the law.

The current announced shift in law enforcement is not an unforeseen development for legal specialists as the laws prohibiting the use of nominees and shell companies have always been there. The law was not enforced by the previous government, though the risk of future law enforcement was always there.

Q - How about the lawyers who adviced these structures?

A - As the minister said, foreigner holding property through shell companies using Thai nominees are violating two laws. As it has always been illegal the property lawyers provided advice and substantial assistance to the foreign client's breach of the law and supplied the means to do so, while the client often in good faith thought he was entering into a legally sound, accepted and recognized method for land purchase.

I believe statistics showed there were about 1200 new companies registered in 2005 in Samui alone and there are huge profits to make as long as these property law firms play the game with the real estate agents and local government. I guess if foreigners were properly adviced about the illegal aspects and risks and concerns involved in company ownership 80% would have pulled out of the deal. How many 'law firms' are there currently on a small island as Samui? Thirty? Forty? There is a fierce competition for the legal work and they obviously do not explain the legal risks and concerns to foreign purchasers, because then they would be out of work in no time. All these firms use illegal nominees structures and holding vehicles to set up dodgy companies for land purchase and assist foreigners in violating the law for their self-interest. This company ownership structure is not something they would sell to their friends and family or they would use themselves. The property firms knowingly misled and ill-advised foreigners for their self-interest and they could be held accountable for their negligence and sometimes even criminal acts. They are liable for their professional conduct that is impermissible and, if found guilty, for committing an offence aiding and abetting the commission of an offence under the Land Code and the FBA.

There are several groups to blame for the fact that all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. Lawyers, Thai government, politicians, local officials, powerful Thais, however, not foreigners who in good faith bought villas as second or retirement homes in Thailand.

[quiksilva]

I agree with what he's said, and hope that the government do go easy on these purchasers, the majority of which have brought in good faith but ignorance of the law is no defence, as many Brits in Spain have just found out...

http://news.bbc.co.uk/1/hi/programmes/real_story/6298865.stm

[Phil Conners]

Nice opinion I found on the samuiforsale website

Foreigners Warned on Land. Bangkokpost January 29 2007 : Foreign investors holding property through shell companies using Thai nominees have been warned to restructure their holdings or face prosecution. The Commerce Minister Krirk-krai Jirapaet told foreign journalists at a dinner talk on Friday: 'Foreigners using shell companies to buy housing across the country are violating two laws. One, the Land Act that forbids foreigners from holding land and two, the Foreign Business Act by using nominee structures. I recommend that they restructure'.

Q - Can you explain what the Minister means with restructure and what actually changed that foreigners now need to restructure?

A – The main change under the amended FBA will be that companies controlled by foreigners would be classified as foreign, even if their direct shareholdings are in a minority. The minister could mean that foreigners operating certain businesses and/ or holding land must comply with the new foreigner definition when this becomes law and give majority voting rights and control to the Thai shareholders within a certain period of time. It is uncertain if this will include requirements to have a specific number of Thai or resident directors in the company (there are currently no general restrictions on the nationality of directors of a Thai limited company). The final version of the amended FBA is still under consideration.

It is not clear if the minister means that shell companies holding land must comply with the new foreigner definition irrespective their business objectives. It is also not clear what the government will do with the illegal nominee shareholding structures or shell companies in general. If the government would investigate these companies and Thai nominee shareholders irrespective voting rights in these companies, foreigners could be ordered the termination of the illegal nominee shareholdings or face procecution and companies may be closed down and removed from the register for companies. Both under the FBA and the Land Code there are serious penalties for the foreigner who uses nominees and shell companies to circumvent the FBA or the Land Code.

The problem with holding land through shell companies is that even if you would restructure the share structure or change your business objectives to comply with the FBA, the Land Code has its own rules prohibiting the use of shell companies for land purchase. Even if a shell company complies with the restrictions under the FBA, still the Land Department could deem the company foreign or prohibit the use of nominees or deem the company as the owner in place of the foreigner or the legal set up an attempt to circumvent the laws against foreign land ownership and therefore illegal. Under a strict interpretation and implementation of the law foreigners could be forced to dispose of the land within a certain time frame or the title deed could be corrected.

Q - In the same article the minister is quoted, 'if the investors cannot observe one or two laws that are similar to those in other civilised countries, then we should not care about them' and ‘look around you, all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. They cannot take the land away but there's a sense of nationalism and therefore they should restructure'.

Would this not be extremely unfair for the thousands of foreigner, who often in good faith bought villas as second or retirement homes in Thailand, to ask them to restructure when this is practically impossible?

A – Firstly, it is foreign land ownership we are talking about and this is prohibited under Thai law, as is the use of Thai nationals as nominees or shell companies to circumvent the law. This is not new. Together with the 'sense of nationalism' the minister refers to, foreigners owning properties through shell companies should be worried at the moment. Restructuring to comply with the law may be practically impossible under the announced enforcement of the expanded definition of nominees and foreign. Some foreigners now want to sell their freehold ownership, however, prices are based on foreign investments and there are simply no foreign buyers at the moment and Thais are not paying the current prices.

An example how Thai businessmen exploit the current fear among foreign property owners is the private VIP scheme, or the Thai property Long-stay program or Samui Vacation Investment Program. They advertise with slogans like ‘breaking news, your property is at risk', meaning, give us your property for free and we give you for a rip-off fee a 30-year lease in return. I would advice foreigners owning properties not to panic and the best advice would be to wait and see, certainly not to get involved with these kinds of schemes, as this is not approved by the government and is illegal. Wait and see is the best advice. It would be a big scandal for the Thai government if foreigners who bought property in good faith would be denied rights to the land or would be forced to dispose of the land. There are too many legal and political complications and this problem is simply too difficult for this temporally military government to solve. The current situation is in the first place created and allowed by the previous government(s) and its local officials and other powerful Thais.

It is clear that the government wants to clear up the nominee problem. Recent attempts by the previous government, Land Office guidelines and business registration rules, to tackle the nominee problem have shown how difficult it is. Lawyers found ways to cheat these rules and powerful people (including Thai politicians) have manipulated the application of the rules at the local level for their own benefit. Local officials have even explained to foreigners how to circumvent the rules.

Q - Why would 'powerful people' manipulate the rules at the local level for their own benefit?

A - In Thailand powerful people can manipulate the law or enforcement of the law for their self-interest. They have huge interests in land and property development in tourist areas like Phuket and Samui where based on foreign investment land and property prices skyrocketed the recent years. Prices in areas like Samui and Phuket are based on foreign investment and they are simply trying to protect their investments.

There is an additional risk, as it has become common practice for these people to invest in title-lese land. Influential Thais know how to cheat the rules and have the connections to get such land upgraded. If needed documents are created or adjusted. The administration of land is a mess, the documentation is confusing and the scale of corruption and financial interest is huge. Converting land from title-less to properly-titled is one of the easiest ways to make a lot of money fast. Powerful Thais get the cooperation of the local officials by one means or another. As a result large areas have been illegally upgraded or encroached on reserved forest land. The Samui Land Department is blamed for ignoring land encroachments. In Samui thousands of rai has been illegally issued title deeds. Worthless land, often mountain land, became worth millions and is sold to foreign investors who now may face legal problems for a- illegal possession or b- unlawful foreign ownership. Just take as an example the recent land scandal around the Peak project. It is corruption and self-enrichment of powerful Thais, including leading members of the Thai Rak Thai party and local politicians and officials that is to blame for the current problems.

Company ownership is not illegal per se and the local officials could argue that they did nothing illegal when they registered land into a partly foreign owned company. The foreigner broke the law, they followed the official process. However, section 74 of the Land Code states '.... If there is reason to believe the recording of such rights and legal acts is an evasion of the law or there is reason to believe the purchaser is purchasing on behalf of an alien, instructions shall be asked of the Minister whose word shall be final'. The use of shell companies for land purchase is an evasion of the law and the company is purchasing on behalf of the foreigner. It is clearly illegal, however, no minister yet had the guts to issue instructions how to deal with this problem.

Q - Do you expect this military government to tackle foreign land ownership?

It is anybody's guess what the government will do. Based on the Commerce minister's comments the situation is very uncertain and anti foreign. The question is also what the Land Department will do. Certain is that the amendments in the FBA will directly affect companies operating (or having objectives to operate) businesses on List 1 and 2 of the FBA. Shareholding structures in these businesses will face close scrutiny by the government and will have to restructure their indirect foreign ownership or will face legal problems. This includes partly foreign owned companies developing and selling land and villas to foreign buyers.

I expect for the short term that there will remain some form of status quo when it concerns foreign land ownership through shell companies. These companies must comply with the new foreign definition under the FBA and the situation will be ignored again. In the longer term, maybe the next elected government will have to change the law and allow foreigners to own land (unlikely) or find a reasonable solution for the current problem or continue to ignore the problem until they worked out what to do with this problem. One solution could be that there will be some kind of amnesty for foreigners who bought property through shell companies, where the land will be owned by say the Treasury Department and the foreigners in return will receive a 30-year lease.

Q - If these shell companies have always been illegal, why has this become such a common practice?

A - If a lie is told often and long enough and the law not enforced it becomes the truth. The same with land holding companies. Foreign purchasers believed these companies were a recognized and legally sound method for foreigners to 'own' land. In fact it has always been illegal and based on a non-enforcement of the law.

The current announced shift in law enforcement is not an unforeseen development for legal specialists as the laws prohibiting the use of nominees and shell companies have always been there. The law was not enforced by the previous government, though the risk of future law enforcement was always there.

Q - How about the lawyers who adviced these structures?

A - As the minister said, foreigner holding property through shell companies using Thai nominees are violating two laws. As it has always been illegal the property lawyers provided advice and substantial assistance to the foreign client's breach of the law and supplied the means to do so, while the client often in good faith thought he was entering into a legally sound, accepted and recognized method for land purchase.

I believe statistics showed there were about 1200 new companies registered in 2005 in Samui alone and there are huge profits to make as long as these property law firms play the game with the real estate agents and local government. I guess if foreigners were properly adviced about the illegal aspects and risks and concerns involved in company ownership 80% would have pulled out of the deal. How many 'law firms' are there currently on a small island as Samui? Thirty? Forty? There is a fierce competition for the legal work and they obviously do not explain the legal risks and concerns to foreign purchasers, because then they would be out of work in no time. All these firms use illegal nominees structures and holding vehicles to set up dodgy companies for land purchase and assist foreigners in violating the law for their self-interest. This company ownership structure is not something they would sell to their friends and family or they would use themselves. The property firms knowingly misled and ill-advised foreigners for their self-interest and they could be held accountable for their negligence and sometimes even criminal acts. They are liable for their professional conduct that is impermissible and, if found guilty, for committing an offence aiding and abetting the commission of an offence under the Land Code and the FBA.

There are several groups to blame for the fact that all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. Lawyers, Thai government, politicians, local officials, powerful Thais, however, not foreigners who in good faith bought villas as second or retirement homes in Thailand.

Who was providing those "answers" above?

It seems to be that it is written in a way to suggest this is the opinion of the minister whereas I think in reality it is just another spin cycle from the local real estate agents. Someone correct me if I'm wrong ...

[taxexile]

the minister is quoted, 'if the investors cannot observe one or two laws that are similar to those in other civilised countries, then we should not care about them' and ‘look around you, all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. They cannot take the land away but there's a sense of nationalism and therefore they should restructure'.

i think that this is the most relevant sentence , and gives an insight into what is actually driving this legislative "reform"

[wolfmanjack]

I get the same fees as Thais whenever I show my Work Permit actually.

I get the same rate at some places by showing my thai drivers license. One place I went to wanted my work permit and passport.

[wolfmanjack]

On double pricing for national parks, museums etc I don't have a pompem because citizens also pay via their taxes.

What is the percentage of thais that pay taxes? That could be the theory they are using when they give the same price to those showing work permits though.

[Arkady]

the minister is quoted, 'if the investors cannot observe one or two laws that are similar to those in other civilised countries, then we should not care about them' and ‘look around you, all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. They cannot take the land away but there's a sense of nationalism and therefore they should restructure'.

i think that this is the most relevant sentence , and gives an insight into what is actually driving this legislative "reform"

What is driving it is the Shin Corp deal and the desire of this lame duck government to "achieve" something. The majority of voters no doubt just want Thaksin back. So pushing the nationalist button is something that might get a bit of popular support and foreigners are a soft target. The crackdown on land ownership was started under Thaksin. I would imagine the Samui Q & A article is right in suggesting that 80% of foreigner land owners in resort areas did in fact believe that it was legal. But the Thais will not care about that. Negligence of the law is no excuse in most countries. However, what is ignored by the minister is that lawyers recommending illegal structures in most civilized countries would be struck off. The article doesn't really come to any conclusions. It just says the problem is beyond the scope of the current government and it is quite unclear how future governments will deal with it i.e. anything could happen. This is probably true.

The crack down on land ownership got started under Thaksin and that has made it difficult for registration of new shell companies. I would expect the situation to remain that way until the new FBA comes out. Then there may be more impetus to check up on companies with foreign shareholders and start trying to catch existing ones with nominees, regardless of whether they own land or not. Since there are a lot of companies with foreign shareholders and it is hard to prove that nominees are just that, some new guidelines might come out for Commerce Ministry officials to screen existing companies e.g. foreigners holding more that 40%, a foreign authorized director, Thais in a minority on the board, income under B1.8m a year (the minimum VAT threshhold) for two years, accounts qualified by the auditor. I am not saying they will crack down on existing companies but, if they do, it is more likely after the new FBA has clarified the definition of an alien company. They may even wait until any grace periods under the new law have expired. However, the grace period for Thai nominees to declare themselves amnesty will only be 90 days. It seems likely that a lot of nominees, who are not close friends of the foreigners, will indeed declare themselves, as they have nothing to lose and might benefit from their share in forced sales of property.

[mbkudu]

I get the same fees as Thais whenever I show my Work Permit actually.

Course you do mate course you do. The fact that the legislation for the parks says 'Thai nationals' pay this price all others pay the higher price doesn't apply to you cause you got a work permit.

JohnnyK I do not dispute what you say but my understanding is Thai Rak Thai (ไทยรักไทย) means literally Thais love Thais and I have never heard any Thai describe the party as anything but this.

Maybe you just don't get the normal price because you have a bad attitude, I went to the zoo last week, they wanted 500 baht till I showed my work permit and then it was 50 baht or something daft like that. Its a bit bizzare that you think I would lie about something like that for some inane reason, I can't say if it happens everywhere but the 5 or 6 different places I have been to have all given me the lower rate when they see the work permit, I've a feeling the same goes for a hai driving license.

Regardless of you having a work permit or not; it's still an unfair system. Do Thais get charged extra at Disneyworld in Florida, or do they get in the same price as you if they show a green card? Open your eyes.

Edited February 6, 2007 by mbkudu

[solo siam]

I get the same fees as Thais whenever I show my Work Permit actually.

Course you do mate course you do. The fact that the legislation for the parks says 'Thai nationals' pay this price all others pay the higher price doesn't apply to you cause you got a work permit.

JohnnyK I do not dispute what you say but my understanding is Thai Rak Thai (ไทยรักไทย) means literally Thais love Thais and I have never heard any Thai describe the party as anything but this.

Maybe you just don't get the normal price because you have a bad attitude, I went to the zoo last week, they wanted 500 baht till I showed my work permit and then it was 50 baht or something daft like that. Its a bit bizzare that you think I would lie about something like that for some inane reason, I can't say if it happens everywhere but the 5 or 6 different places I have been to have all given me the lower rate when they see the work permit, I've a feeling the same goes for a hai driving license.

Regardless of you having a work permit or not; it's still an unfair system. Do Thais get charged extra at Disneyworld in Florida, or do they get in the same price as you if they show a green card? Open your eyes.

Thats beside the point, which is that Somchai from Issan isn't gong to be able to afford to go to Disneyland, the whole idea is that why should a Thai who earns $100 a month pay the same as a tourist who earns $2000 a month and can afford to visit other countries. Put it this way, if they charged everyone the same fee it would probably have to at least triple prices to earn the upkeep of the museum/park etc... How can they justify entry into a national park costing two days of minimum wage.

[Phil Conners]

I get the same fees as Thais whenever I show my Work Permit actually.

Course you do mate course you do. The fact that the legislation for the parks says 'Thai nationals' pay this price all others pay the higher price doesn't apply to you cause you got a work permit.

JohnnyK I do not dispute what you say but my understanding is Thai Rak Thai (ไทยรักไทย) means literally Thais love Thais and I have never heard any Thai describe the party as anything but this.

Maybe you just don't get the normal price because you have a bad attitude, I went to the zoo last week, they wanted 500 baht till I showed my work permit and then it was 50 baht or something daft like that. Its a bit bizzare that you think I would lie about something like that for some inane reason, I can't say if it happens everywhere but the 5 or 6 different places I have been to have all given me the lower rate when they see the work permit, I've a feeling the same goes for a hai driving license.

Regardless of you having a work permit or not; it's still an unfair system. Do Thais get charged extra at Disneyworld in Florida, or do they get in the same price as you if they show a green card? Open your eyes.

Thats beside the point, which is that Somchai from Issan isn't gong to be able to afford to go to Disneyland, the whole idea is that why should a Thai who earns $100 a month pay the same as a tourist who earns $2000 a month and can afford to visit other countries. Put it this way, if they charged everyone the same fee it would probably have to at least triple prices to earn the upkeep of the museum/park etc... How can they justify entry into a national park costing two days of minimum wage.

Why should how much you earn have anything to do with how much you pay for something? That's either communism or absurd.

PS. I think local residents around the Disney resorts have a special low-price access rate to Disney, but that's another issue.

[solo siam]

I get the same fees as Thais whenever I show my Work Permit actually.

Course you do mate course you do. The fact that the legislation for the parks says 'Thai nationals' pay this price all others pay the higher price doesn't apply to you cause you got a work permit.

JohnnyK I do not dispute what you say but my understanding is Thai Rak Thai (ไทยรักไทย) means literally Thais love Thais and I have never heard any Thai describe the party as anything but this.

Maybe you just don't get the normal price because you have a bad attitude, I went to the zoo last week, they wanted 500 baht till I showed my work permit and then it was 50 baht or something daft like that. Its a bit bizzare that you think I would lie about something like that for some inane reason, I can't say if it happens everywhere but the 5 or 6 different places I have been to have all given me the lower rate when they see the work permit, I've a feeling the same goes for a hai driving license.

Regardless of you having a work permit or not; it's still an unfair system. Do Thais get charged extra at Disneyworld in Florida, or do they get in the same price as you if they show a green card? Open your eyes.

Thats beside the point, which is that Somchai from Issan isn't gong to be able to afford to go to Disneyland, the whole idea is that why should a Thai who earns $100 a month pay the same as a tourist who earns $2000 a month and can afford to visit other countries. Put it this way, if they charged everyone the same fee it would probably have to at least triple prices to earn the upkeep of the museum/park etc... How can they justify entry into a national park costing two days of minimum wage.

Why should how much you earn have anything to do with how much you pay for something? That's either communism or absurd.

PS. I think local residents around the Disney resorts have a special low-price access rate to Disney, but that's another issue.

"Why should how much you earn have anything to do with how much you pay for something? "

What, like Income Tax for example?

Its simply a way of keeping the places open to the poorly paid public, I certainly wouldn't want a farmer who earns 100 baht a day to have to subsidise my visit to a museum/national park in his country - You aren't talking about a discrepance in salary, but the fact that its quite common that the foreigner standing next to the Thai could easily be earning as much as 1,000 times the Thai guys salary.

[mbkudu]

I get the same fees as Thais whenever I show my Work Permit actually.

Course you do mate course you do. The fact that the legislation for the parks says 'Thai nationals' pay this price all others pay the higher price doesn't apply to you cause you got a work permit.

JohnnyK I do not dispute what you say but my understanding is Thai Rak Thai (ไทยรักไทย) means literally Thais love Thais and I have never heard any Thai describe the party as anything but this.

Maybe you just don't get the normal price because you have a bad attitude, I went to the zoo last week, they wanted 500 baht till I showed my work permit and then it was 50 baht or something daft like that. Its a bit bizzare that you think I would lie about something like that for some inane reason, I can't say if it happens everywhere but the 5 or 6 different places I have been to have all given me the lower rate when they see the work permit, I've a feeling the same goes for a hai driving license.

Regardless of you having a work permit or not; it's still an unfair system. Do Thais get charged extra at Disneyworld in Florida, or do they get in the same price as you if they show a green card? Open your eyes.

Thats beside the point, which is that Somchai from Issan isn't gong to be able to afford to go to Disneyland, the whole idea is that why should a Thai who earns $100 a month pay the same as a tourist who earns $2000 a month and can afford to visit other countries. Put it this way, if they charged everyone the same fee it would probably have to at least triple prices to earn the upkeep of the museum/park etc... How can they justify entry into a national park costing two days of minimum wage.

Yes, I forgot all Americans are rich and can afford to go to Disneyworld.

[chuchok]

Surely those who might be affected have been planning ahead. I wouldn't worry too much about them. Who would be silly enough to wait until the laws are actually enforced when they knew what they were doing was illegal from the get go?

Sound advice.

[solo siam]

"Yes, I forgot all Americans are rich and can afford to go to Disneyworld."

I don't really see the similarity between someone who is "poor" in the USA and poor here in Thailand, its very different. I'd love to see the two trade places for a month or so.