The Fba And Farang Ownership Of Houses

[stevieff]

"I am sorry for these criminals they shall be in the monkey house for breaking the law. The houses will be selling at 40 per cent of todays prices if they are lucky to get any money as it may go to pay the fine.

I have never meet a smart Frang in Thailand. "

*****

a comment from an obvious "have-not" who envies those who "have".

... and vice versa :shrug:

You always have the good answers, Phil.

[Arkady]

"I am sorry for these criminals they shall be in the monkey house for breaking the law. The houses will be selling at 40 per cent of todays prices if they are lucky to get any money as it may go to pay the fine.

Yes, this is the worst case scenario, if they decided to get really nasty. Looking at another TV thread about huge fines for people trying to smuggle cigarettes through Suwarnabhumi, we can see that Thai authorities don't always take the approach of being lenient on foreigners to avoid rocking the boat. This admittedly a completely different situation and affects foreign investment as well as tourism. However, in the case of the cigarette smugglers, who were tourists acting stupidly rather than hardened criminals, it is odd that they choose to impose the maximum fines allowed by law straight off, rather than saving that for repeat offenders as most other countries would (in the case of receipted fines that is). Just the Baht 5 million fine for breach of the new FBA would wipe out most farangs' investments without any fines imposed by the Land Code. Bear in mind you are only entitled to 49% or less of the proceeds plus your debt repayment to yourself, if you have any. There are no signs of anything like this yet and it doesn't look like any one has made a decision on what to do anyway. So it may be left to the next government and there is also the difficulty of proving the existence of nominees in all but the most obvious cases. Ultimately though I guess there will be cases prosecuted, unless the next government does a U turn. Cases like the 400 companies in Koh Samui cited last year as not having filed accounts or tax returns for three years, of which quite a few must be shell companies owned by farangs assured by the developer that he was handling it, spring to mind as obvious targets.

[Geppis72]

'Arkady' date='2007-02-15 09:55:45' post='1141727'

Cases like the 400 companies in Koh Samui cited last year as not having filed accounts or tax returns for three years, of which quite a few must be shell companies owned by farangs assured by the developer that he was handling it, spring to mind as obvious targets.

Implementation of FBA, persecution, fines, etc. etc. if any, will include all those Co. into the country

not only Samui, I see huge problems for the Govt., some of us will loose "only" money but they

will loose much more if they go for it, That's sure 100%.

[Arkady]

'Arkady' date='2007-02-15 09:55:45' post='1141727'

Cases like the 400 companies in Koh Samui cited last year as not having filed accounts or tax returns for three years, of which quite a few must be shell companies owned by farangs assured by the developer that he was handling it, spring to mind as obvious targets.

Implementation of FBA, persecution, fines, etc. etc. if any, will include all those Co. into the country

not only Samui, I see huge problems for the Govt., some of us will loose "only" money but they

will loose much more if they go for it, That's sure 100%.

Maybe this is a stupid idea in a country where foreigners can probably be accused of forcing their innocent Thai wives to be nominees but I would be interested if anyone has a meaningful comment. For those with Thai girlfriends but not yet married and free to do so, or recently married. Since the bride price (sinsot) is accepted as a tax free gift in Thailand and can be your wife's legitimate property, could you restructure a land holding company by giving your wife a sinsot to buy her shares in the company? If the value of the property is much more that B2 million, perhaps it would make sense to increase capital in the same way, or replace foreign debt with debt from her. I am assuming that the company has some business, as all shell companies without operating income are very risky. Perhaps this would not work for a new company because last year's directive asked the DBD offices to check salary history and savings accounts. From a legal point of view it is hard to fault that she bought the shares with her own money which was given to her as a dowry but then this Thailand and fairness and logic don't uually enter into it. Clearly a poor Thai man marrying a wealthy foreign woman would have no problem with this structure. The reason I say sinsot from a recent marriage is the case against Thaksin's brother-in-law who is accused of tax evasion by way of accepting a huge wedding gift two years after his wedding which was deemed too late to be constured as a tax free wedding gift. On the other hand, sinsot is also given for unregistered marriages in Thai culture. So, you may also be able to argure with somewhat less conviction that sinsot given in respect of a marriage done under local custom was also her tax free property - perhaps an option for people who are not free to legally marry or don't wish to.

[Arkady]

'Arkady' date='2007-02-15 09:55:45' post='1141727'

Cases like the 400 companies in Koh Samui cited last year as not having filed accounts or tax returns for three years, of which quite a few must be shell companies owned by farangs assured by the developer that he was handling it, spring to mind as obvious targets.

Implementation of FBA, persecution, fines, etc. etc. if any, will include all those Co. into the country

not only Samui, I see huge problems for the Govt., some of us will loose "only" money but they

will loose much more if they go for it, That's sure 100%.

Hard to see a way out for these people because they can't even sell the property as they will not be able to get updated company docs from the DBD due to being in default of filing requirements. They need to rehabilitate the companies by making the past filings, if they can find auditors willing to sign the overdue accounts, pay the fines and make them operational. Otherwise they would be best advised to abandoned their property and stay away from Thailand. In several years time the government will seize the properties to pay off fines and past tax that the Revenue Dept will assess by itself since no tax returns were ever filed.

[oracle]

Re today's Bkk Post article above. Can anyone help explain what this piece of typically Thai officialese double talk means? It was no doubt taken out of context, then misquoted, mistranslated and finally mashed about by the subeditor. But the Lands Dept seems to lamenting the fact that the Business Development Department is not automatically hunting down nominees and reporting them to the Lands Dept and the BDD is saying that they need a specific request from the Lands Dept. The BDD forwards cases to the police, not the Lands Dept directly. On the other hand athe Lands Dept has the authority to investigate and prosecute by itself but perhaps finds this difficult without cooperation from the BDD. Perhaps this was in response to a question as to why no one has so far been pro prosecuted. The Lands Dept then throws in a strange comment that the crackdown will somehow not affect the property market but will help stop asset laundering (presumably this is only done in Thailand by evil foreign criminals not by corrupt government officials and other Thais).

The BDD may be waiting for the new FBA to gear itself up, so that it doesn't have a problem with prosecuting a lot of foreign businesses that it may have to drop, if the government flip flops again and loosens up on the FBA under pressure from foreign governments. If this actually happened (although I am not too hopeful), and for example Annex 3 were significantly loosened up or dropped completely, then the onus would be on the Lands Dept to track down nominees of formerly Annex 3 companies.

The bottom line is, however, that, if they get their acts together, things could become very nasty. Even though there may be some hope that there might be some concessions on the FBA from this or a future government, it is unlikely that land ownership willl be freed up within a generation. The best might be some sort of amnesty, suggested somewhere in TV, whereby land could be put into a governemnt entity and leased back for 30 years (for a fat fee).

Came across this opinion

Q - In the latest article in the Bangkok Post (February 15) - ' More documents sought in nominee hunt', the sub Lt Khantachai Vichakkhana, the deputy director-general of the Lands Department, said it was the responsibility of the Commerce Ministry unit to determine the nationality of companies and whether illegal shareholding structures were used. In the same article Mr. Kanissorn Navanugraha, the director-general of the Business Development Department, said the Lands Department was empowered to investigate on its own whether a foreign entity used nominees.

What is the situation? Is it the responsibility of the Commerce Ministry to determine the nationality of companies and whether illegal shareholding structures are used or the Land Department's?

A - Both the Land Department and the Commerce Ministry have their own responsibilities preventing the illegal use of nominees and have the power to investigate whether nominees are used. The previous lack of a legal definition of nominee in both departments and poor and selective law enforcement by the previous government(s) is the root of the current nominee mess. Foreigners were able to engage in restricted businesses and/ or get full property rights by using nominees, even though Thai law restricts foreign ownership and prohibits the use of nominees.

In the article the deputy director-general of the Lands Department probably refers to the expanded definition of nominee following the investigations into Temasek shareholding structure and its use of nominee vehicles and the new foreigner definition under the approved amendment of the FBA. Under the FBA it is the responsibility of the Commerce Ministry to determine the nationality of companies and whether illegal shareholding structures were used.

Q - The Lands Department directed its provincial Land Offices last June to submit information on partly foreign owned/ controlled companies that had purchased land or properties in their jurisdiction to the Commerce Ministry for verification of their status.

Is this currently happening?

A - It is also said in the article that greater co-operation between the departments is needed to improve enforcement of the law. Currently the Provincial Land Department works together with the Provincial Business Development Office in a way that the provincial Land Office sends the name list of the juristic person who acquired land for checking of the percentage of shares held by a foreigner. They only cross check the number of shares held by the foreigner and if the majority of the shareholders are Thai. If a company were to increase a foreigner shareholding by more than 49% the Land Office would be informed. They do not check if the shareholders are nominees and no formal report of an illegal nominee structure has been made to the Lands Department.

The Land Department itself only investigate the Thai shareholders occupation, monthly salary and source of investment funds (May 25 2006 regulations) before transferring land to a partly foreign owned company. If it appears that a Thai is holding shares as a representative of a foreigner then the Land Office must send a report to the Bangkok Land Department and await the order of the Minister. In practice, due to the absence of a clear definition of nominee, the regulations were easy to cheat. If you changed the company structure or could show the documents as stipulated in the guidelines the officials transferred the land, even if it was an obvious breach or evasion of the law. Local officials did nothing wrong as they followed the official rules. But that is hardly the point.

Q - Kanissorn Navanugraha, the director-general of the Business Development Department said the department only forwarded information on various juristic entities to the Lands Department on request, but did not have the right to stipulate whether a nominee structure existed or not. 'If a company is suspected of using an illegal nominee structure, we are obligated to report the case to the police and await a formal court ruling'. He said the Lands Department was empowered to investigate on its own whether a foreign entity used nominees.

Is this correct?

A - Kanissorn said that the Business Development Department did not have the right to stipulate whether a nominee structure existed or not. However, they must and this is their resposibilty investigate if a foreign entity used nominees to get round the FBA. The Commerce Ministry must if found that a company violated the FBA by using nominees forward the case to the police for legal action and await a formal court ruling.

The deputy director-general of the Lands Department is actually saying that any company or partnership considered foreign under the FBA is likewise considered foreign under the Land Code, but he says they must be informed by the Business Development Department. When the provincial Land Offices receive information from Commerce Ministry of the status of companies that had purchased land - meaning if companies are in fact foreign or used nominees - the provincial governors have the right to direct the companies to sell off the land within the time limit prescribed by the Director-General which shall not be less than one hundred eighty days nor more than one year.

Q - Do you expect this to happen?

A - Again, it is anybody's guess. Gen Sonthi Boonyaratkalin one of the coup leaders recently said 'for soldiers, we will not tolerate a loss of territory, not even a square inch. It is the same with natural resources'. This was said in reference to recapture national assets sold to Singapore following Temasek's takeover of telecom giant Shin Corp, but it could just as well apply to foreigners unlawfully owning land in Thailand.

I expect for the short term authorities to focus on foreigners developing land as a business and new business registrations and on making sure the law is followed in new cases. General retroactive enforcement of the expanded nominee and foreigner definition will have mass consequences (if they have the means or manpower to do that) . If there is the political will, yes it is under present law possible to clamp down on existing illegal foreign ownership structures, however the decision to prosecute will need a political decision (which must include previous government(s)' policies) and must be based on correct principles of law enforcement.

Q - In the article Sub Lt Khantachai said Foreign Business Act also says reforms and tighter enforcement of existing land laws were unlikely to result in a slowdown in the property market. What do you expect?

A - Since the May 25 regulations the property market on Samui got a serious blow, the price of land has drastically dropped, real estate speculation has gone. But he is right that reforms and tighter law enforcement of existing laws were unlikely to result in a slowdown in the national property market, as foreigners buying through shell companies are only a very small percentage of the total property market. And foreigners can still legally lease land for 30 years and own condominiums.

source