Land Transfer - Specific Business Tax Sbt

[andaman28]

I refer to the following law:

3.SPECIFIC BUSINESS TAX (SBT)

SBT will only be imposed if you are selling your property, which you have own less than a period of five years. The tax rate is 3.3% of the selling or assessed price of an asset (whichever is higher).

My question:

Is our company, which holds 5.5 rai of land (chanote title) during a period of 12 years, required to pay this tax or not. We have information that only individuals holding land for a period of more than five years are exempt from this tax.

Would appreciate to get some correct advice...

[Ungabunga]

No, SBT is not payable in this instance because you have owned the land for more than 5 years.

Furthermore, if you are selling your land to another foreigner, the easiest way (cheapest) is to sell it with the company. So, your name will be removed from the company papers and the buyers name will take its place. The going rate is approx 10,000 THB. This way the land doesn't actually change title, therefore there is no transfer fee or tax payable at the land registration office.

If however you are selling the land and the buyer has no need for the company, then you'll need to transfer the title at the land office and you'll have to pay the transfer fee, which is dependant upon price & size also.

Here's an article taken (stolen) from Thailand Real Estate & Property Guide;

Whenever a property in Thailand is bought and sold, there are four taxes that need to be taken into account (many buyers, especially foreigners, fail to take these into account).

Unfortunately, in December 2003 the Cabinet issued a resolution relating to tax issues, and from 1 January 2004 onwards, specific business tax, which is imposed on the sale of immovable property, will return to the original 3.3 percent rate as a result of the recovery of the property sector. In 2001, the government reduced the property tax to 0.11 percent to stimulate the property sector. Similarly, the transfer fee will also return to the normal rate of 2 percent instead of the reduced rate of .01 percent

1. Land registration (transfer fee) of 2.0% of assessed value of the land.

2. Stamp Duty/Fee of 0.5% of the assessed value or the sale price - whichever is higher.

3. Specific Business Tax of 3.3% of the assessed value or the sale price - whichever is higher - this will be applied to all sales by companies and to any private sales that occur within 5 years of the date of purchase.

4. Income Tax - this is calculated on a very complex formula based on the assessed value of the property, the length of time owned and the applicable personal income tax rate. In practice, this will work out to under 2% of the price for low to medium value properties, and up to 3% for higher value properties.

Because of the local system of taxing property on an arbitrary assessed value as determined by the Land Department, rather than true market value, these taxes could amount to a considerable percentage of the purchase price.

Therefore, if you haven't determined during the negotiations that the seller will pay the taxes upon transfer, you could get a nasty shock when a tax bill arrives - often some two or three months after the sale is completed. As in all business transactions anywhere, caveat emptor (let the buyer beware) rules. There are no set rules on who pays for which taxes and it is just another part of the bargaining process - make sure you discuss it with the agent and your own lawyer.

[Irene]

I refer to the following law:

3.SPECIFIC BUSINESS TAX (SBT)

SBT will only be imposed if you are selling your property, which you have own less than a period of five years. The tax rate is 3.3% of the selling or assessed price of an asset (whichever is higher).

My question:

Is our company, which holds 5.5 rai of land (chanote title) during a period of 12 years, required to pay this tax or not. We have information that only individuals holding land for a period of more than five years are exempt from this tax.

Would appreciate to get some correct advice...

Your information is correct. The five-year rule is applicable to individuals not companies.