Our tenant wants to register her company for VAT. Revenue dept visited them.

[advancebooking]

5 yrs ago we bought a small building in a prime location. Our tenants run a very popular restaurant. Its on a main road and I drive past most nights on my way to do exercise and see its packed most nights. 

 

They formed a company structure a few yrs ago. Recently they had the local revenue dept visit them who also commented on how they have seen it so popular. 

They said to her that they estimate she has earnt more than 1.8mill and should have registered for VAT. They will have to pay a fine. 

 

Now the mad rush is on for her to get all docs. She contacted us saying she needs a copy of the chanote, copy of wifes id card and tabian bahn for her. I was wondering why my wife should supply this? Is this correct. If you have recently registered for VAT can you give an opinion? Or is there a website outlining the requirements?

thanks

[Woof999]

I need a copy of chanote, housebook and ID for my visa renewal anyway. I can't see any reason to be obstructive about it. Pretty much any time I need to do anything I'm asked for copies of someone else's ID. Seems perfectly reasonable that a VAT registration would require docs from the premises owner, to me at least.

[blackcab]

4 hours ago, advancebooking said:

I was wondering why my wife should supply this? Is this correct. If you have recently registered for VAT can you give an opinion? Or is there a website outlining the requirements?

 

What the Revenue Department (RD) are asking for is very normal. Technically your wife does not have to supply any of this, however as a good landlord she really should, because if she doesn't she could cause the restaurant to go out of business and then she would lose what is probably a good long-term tenant.

 

The RD want copies of your wife's documents as presumably she is listed as the owner on the title deed. Consider that the RD can get this information themselves extremely easily themselves if they have to. The land plot is viewable online using Land Department software, which gives the plot number. One email/phone call from the RD to the Land Department gives the RD the owner's name and ID number. One further email/call to the Department of Provincial Administration gives the RD your wife's house book details.

 

The RD don't want to do any of this though. They want the business owner to bring all of the information to them so they have to do the least work possible.

[scorecard]

14 hours ago, Woof999 said:

I need a copy of chanote, housebook and ID for my visa renewal anyway. I can't see any reason to be obstructive about it. Pretty much any time I need to do anything I'm asked for copies of someone else's ID. Seems perfectly reasonable that a VAT registration would require docs from the premises owner, to me at least.

Note, and I believe good news, they didn't ask for bank account numbers or statements.

[Eaglekott]

On 12/19/2023 at 10:20 PM, advancebooking said:

They said to her that they estimate she has earnt more than 1.8mill and should have registered for VAT.

Next thing that might happen is your wife might have to pay WHT for the tenant unless you do that already, or convince the tenant to pay it them self. The correct way is that Land Lord should pay the WHT.

[Everyman]

1 hour ago, Eaglekott said:

Next thing that might happen is your wife might have to pay WHT for the tenant unless you do that already, or convince the tenant to pay it them self. The correct way is that Land Lord should pay the WHT.

 

What is WHT?

[digbeth]

On 12/21/2023 at 12:30 PM, Everyman said:

 

What is WHT?

withholding tax, 5% for rent, the tenant, once they register as a company will have to file a tax withholding for the rent, they can take it out of the amount already agreed or add it on top, depending on how you negotiate

[advancebooking]

On 12/21/2023 at 11:05 AM, Eaglekott said:

Next thing that might happen is your wife might have to pay WHT for the tenant unless you do that already, or convince the tenant to pay it them self. The correct way is that Land Lord should pay the WHT.

I dont understand your comment actually. 

 

If my wife and I dont run our business via a company but through her personal name, then presumably we would not pay any WHT either way. 

 

What they did do was put the stamps on the contract issued by the revenue dept. Then they put stamps on the back of our contract as well. 

[Eaglekott]

On 12/30/2023 at 1:34 PM, advancebooking said:

If my wife and I dont run our business via a company but through her personal name, then presumably we would not pay any WHT either way

That is the thing, your tenant that is VAT registered should pay the WHT. Not you. So either your Tenant should pay the WHT to the revenue department or you must do. The rental contract you have settled with the tenant should state who is responsible to pay the taxes. I had an issue with this in my first few months, because the Thai version of my contract stated that I as a tenant had to pay all extra taxes, and in the english translation is stated I should not. So we had to sort that out.

 

In the normal case, the Tenant pay you the rent -5% that they pay to Revenue department, then if you also are registered for VAT you can then claim that 5% back from Revenue department. If you are not registred for VAT the revenue department keeps the 5%. In my case I pay the WHT by my self on top of the rent to the Revenue department for my Landlord so my rent went up with a few thousand.

 

Maybe your tenant is already paying the 5% on top the rent to the Revenue department and if so all is OK. If not you probably will get another visit from them when they are asking there their WHT is. You should verify it with the tenant so there is no unpleasant surprises in the future.

Edited January 4 by Eaglekott

[advancebooking]

21 minutes ago, Eaglekott said:

That is the thing, your tenant that is VAT registered should pay the WHT. Not you. So either your Tenant should pay the WHT to the revenue department or you must do. The rental contract you have settled with the tenant should state who is responsible to pay the taxes. I had an issue with this in my first few months, because the Thai version of my contract stated that I as a tenant had to pay all extra taxes, and in the english translation is stated I should not. So we had to sort that out.

 

In the normal case, the Tenant pay you the rent -5% that they pay to Revenue department, then if you also are registered for VAT you can then claim that 5% back from Revenue department. If you are not registred for VAT the revenue department keeps the 5%. In my case I pay the WHT by my self on top of the rent to the Revenue department for my Landlord so my rent went up with a few thousand.

 

Maybe your tenant is already paying the 5% on top the rent to the Revenue department and if so all is OK. If not you probably will get another visit from them when they are asking there their WHT is. You should verify it with the tenant so there is no unpleasant surprises in the future.

Thanks for the info. I wish I had read this 1 week ago. 

 

Actually would you believe they came to see my wife when I was away a few days. They collected the docs described above and then they presented a short lease contract to my wife for signature. They said it was for them to give to the revenue dept and that they will put the stamps on the back of the contract from the rev dept. My wife was so busy with customers and didnt really read or understand what she was signing. And I dont think the tenant read it properly either as their accountant, who prepared the doc, wrote  xxxx rent per year instead of per month. I got back from being away and my wife told me about it. Asked them to send a copy in line and I was really angry. I felt they shafted my wife to be honest and it was ridiculously low rent bc of the typo error. 

 

There was only 1 copy and they delivered it to us with the stamps on the back of it. I showed our accountant who said we should do a proper contract and nullify this dodgy one. I told the tenants this and said we will only give them 1 yr not 3. I wanted to penalise them for this stupid act. Just before new yr they came and it was all a bit uncomfortable. They said that they didnt try to trick my wife. Now the stamps are on the back of our new contract and they said they visited the rev dept to put new stamps on their copy. Unsure if they did or not. But seems logical they woiuld do it bc we will be paying taxes on the higher rent level reported. If they pay taxes on the lower amount then they are commiting fraud. Do you agree. They will have to comply and put stamps on the new contract with higher rent to correspond with our contract. 

 

thanks

[SAFETY FIRST]

On 12/19/2023 at 10:20 PM, advancebooking said:

copy of wifes id card and tabian bahn

They need to submit a TM30 for sure. 😂

Edited January 4 by SAFETY FIRST

[Eaglekott]

56 minutes ago, advancebooking said:

If they pay taxes on the lower amount then they are commiting fraud. Do you agree.

Yes, I would say that is correct

[advancebooking]

On 1/4/2024 at 11:32 AM, Eaglekott said:

That is the thing, your tenant that is VAT registered should pay the WHT. Not you. So either your Tenant should pay the WHT to the revenue department or you must do.

I have since investigated this issue more and found out that

1. If the tenant has the restaurant registered as personal name then they dont have to pay Withholding tax. 

2. If its registered under Juristic person then the 5% has to be paid. 

 

They run a limited company and are vat registered so I dont know how it all works as such. 

 

But our accountant agrees with them. They dont have to pay WHT and nor do we as the landlord

[n00dle]

On 12/19/2023 at 10:20 PM, advancebooking said:

She contacted us saying she needs a copy of the chanote, copy of wifes id card and tabian bahn for her. I was wondering why my wife should supply this? Is this correct. If you have recently registered for VAT can you give an opinion? Or is there a website outlining the requirements?

 

What you should be more concerned about is them coming after your wife for undeclasred revenue on the rental.

[advancebooking]

15 minutes ago, n00dle said:

 

What you should be more concerned about is them coming after your wife for undeclasred revenue on the rental.

We operate our business via my wifes personal name and not a company. She pays taxes 6 monthly. 

 

Also, the revenue stamps have been added to our contract now. We will be paying taxes on the monthly rent reported in the contract. The tenants have showed their contract to the vat dept/ rev dept. 

 

So its not undeclared actually. 

[ChaiyaTH]

Yes is normal to happen if the business would also be registered there. It is also needed when a Thai wants to change their location for for example the 30 baht health scheme etc. I had multiple landlords provide us with similar documents for various cases.

[ChaiyaTH]

36 minutes ago, advancebooking said:

I have since investigated this issue more and found out that

1. If the tenant has the restaurant registered as personal name then they dont have to pay Withholding tax. 

2. If its registered under Juristic person then the 5% has to be paid. 

 

They run a limited company and are vat registered so I dont know how it all works as such. 

 

But our accountant agrees with them. They dont have to pay WHT and nor do we as the landlord

Yes of course, if the tenant runs it from a personal name, it would simply be income taxed, there would never be any VAT. However when you are a company, you will always need to apply and start charging VAT, when revenue is 1.8M baht per year or more.

[Liverpool Lou]

33 minutes ago, n00dle said:

 

What you should be more concerned about is them coming after your wife for undeclasred revenue on the rental.

Typical Asean Now poster's comment that assumes that no landlords ever declare their rental income.   

[advancebooking]

1 hour ago, ChaiyaTH said:

Yes of course, if the tenant runs it from a personal name, it would simply be income taxed, there would never be any VAT. However when you are a company, you will always need to apply and start charging VAT, when revenue is 1.8M baht per year or more.

Thats what I am confused about. What actually happened was that they were randomly visited by the revenue dept bc their restaurant is extremely popular and full everynight. They were basically forced to register the business for VAT and had to pay a penalty.   But when I asked them about the WHT they said that the business is registered in personal name and not a juristic person?