New Government Decree On Aliens Trying To Buy Land

[Arkady]

I found this in the Government Gazette from January 2009 and I haven't seen any other translations of it, so I have posted here for reference. I believe it is the most recent piece of legislation against aliens buying land. I don't know if any of this is really new, as there have been a host of ministerial regulations on this topic since the famous one in 2006, but it seems to signify there will be no easing of the purge against the use of company structures to buy land under this government. As yet it still seems to apply only to new applications to transfer land but who can say what the future holds, since so much energy is seemingly being devoted to this area? The detail in this seems to make it extremely difficult to buy land through a company, even if it is a legitmate business with real Thai shareholders. They are also asking officials to be very suspicious of companies owned by other companies (Section 6), even if they don't have any aliens connected with them, which may be in other ministerial regulations but I hadn't noticed it before. I have also not seen before the provisions to check up on foreign companies entering into long term leases on land in case aliens are using a leasing structure to engage in prohibited occupations involving land development (Section 9). As usual the decree points out several different laws that violators could be in breach of, providing courts the opportunity to hand out several penalties for the same offence, as is their wont. Please forgive any glitches in my translation.

Re: Evidence that aliens are requesting permission to acquire land. Government Gazette 22 January 2009

1-3. Preamble.

4. In the case that a limited company, limited partnership or unlimited registered partnership requests permission to register land with the intention of carrying on a property business, such as trading in real property, renting out property, operating hotel businesses, or building resort homes, if an alien holds shares or is a director, the official is required to investigate the source of funds used by the Thai shareholders to buy shares in the business, such as personal savings, proceeds from sale of land, an inheritance, loan which should be evidenced by a loan agreement. The Thai shareholders must also show their bank statements or pass books as evidence that they received such loans or inheritances.

5. In the case that a limited company, limited partnership or unlimited registered partnership requests permission to register land with the intention of carrying on a property business and there is reason to believe that a Thai shareholder is acting as a nominee for an alien, e.g. an alien is an authorized signatory, the entity was founded by an alien, alien shareholders hold preferred shares giving them greater voting rights than Thai shareholders, the Thai major shareholders have occupations that are inconsistent with investment in business, e.g. lawyer or broker, the official is required to investigate the source of funds used by the Thai shareholders to buy shares in the business.

6. In the case that a shareholder is a juristic person of Thai nationality, even though that juristic person has no alien shareholders or directors, the official shall investigate the sources of funds used by that entity to buy shares in the entity requesting permission to acquire land. The representative of the parent entity must present evidence of the source of funds used to buy shares in the affiliated entity, such as financial statements, and, in the case it that debt was used to buy the shares, evidence of a loan agreement and minutes of company meetings relating to the aforesaid.

7. In the case that a juristic person buys land for a higher value than its registered capital, e.g. it has registered capital of 500,000 baht and buys land for 10,000,000 baht that is not provided through a mortgage, the official shall investigate the source of funds used to buy the land and shall ask for evidence. If a loan is used, minutes of company meetings confirming this must be presented with copies of loan agreements and all related documents.

7.1 In the case of a loan from an alien natural person or an alien juristic person, evidence is required such as evidence of the transfer of funds from overseas or evidence of the withdrawal of funds from the alien’s bank account together with minutes of the company meeting relating to the loan.

7.2 In the case of a loan from a Thai natural person or a Thai juristic person (even if that company has no alien shareholders or directors), evidence is required such as financial statements, evidence of withdrawal from a bank account together with minutes of the company relating to the loan.

8. Relates to public limited companies and alien companies that have permission to buy land and don’t need to be investigated.

.

9. In the case that an alien juristic person rents land or holds other rights over land on a long term basis, the official is required to investigate whether the intention is to hold the land on behalf of an alien natural person or to violate the Occupation of Aliens Act of 1999.

10. Officials are required to publicize the fact that anyone who holds land on behalf of an alien is violation of Section 113 of the Land Code. Through providing false statements to a government official and causing a government official to enter false information on an official document they are also in violation of Sections 137 and 267 of the Penal Code. Alien natural and juristic persons are in violation of Sections 111 and 112 of the Land Code and must sell the illegally acquired land in the time limit specified in each case by the director general of the Land Department which shall be not less than 180 days and not more than one year. If the land is not sold within the specified period the director general shall use his authority to sell the land.

11. In cases where applications to register land have been investigated and there is reason to believe the application is in violation of the law or that the intention is to purchase of land for the use of aliens according to Section 74, clause 2 of the Land Code the official shall pass the case to the director general for his instructions.

Edited March 18, 2009 by Arkady

[InterestedObserver]

Noted without comment. Outstanding work Arkady.

[quiksilva]

A lot of this seems to be reinforcing the earlier memos that were passed from the Interior Ministry on to the DoL, which called for greater questioning of source of funding where DoL officers suspected that foreigners were trying to purchase land through the infamous and illegal 'company route'.

I also don't recall any previous questions over the legitimacy of foreigners holding leasehold and other interests in land as described in Point 9. I will certainly look into this further.

Thank you Arkady,

Edited March 18, 2009 by quiksilva

[retiredusn]

We come here for varies reasons, our own country is giving our land away ect. ect ect My personal opinion is I Think it is great that the Thai's do not want other's to own theirland. Have a great day............

[johnnyk]

It certainly gives them the power to get nasty if they want. I tend to believe/hope they won't (because I own through a company) but one never knows.

I also think that they do like to keep falangs off-balance and never let them get too comfortable.

[Naam]

it seems to signify there will be no easing of the purge against the use of company structures to buy land under this government

what purge?

[Arkady]

The decree was issued right at the beginning of the government's tenure. So the Democrats probably have had anything to do with formulating it but they equally didn't hold it back for review and anyway the Interior Ministry is under Bhumijai Thai. The Democrats' outlook towards foreigners is more liberal than most other parties but they are weak, may not last long in government and the signs are they are avoiding making waves and any major non-essential legislation. In opposition the only claim they made re foreign investment was that they will not proceed with the reform of the Foreign Business Act, planned by the Sarayudh government that was viewed as damaging by most foreign investors but got defeated by the Sarayudh government's own legislature (for not being tough enough against foreigners). On the other hand the Business Development Dept (formerly Commercial Registrations Dept) at the Commerce Ministry, which is not under the Democrats, seems to have been told to reduce the list of businesses in Annex 3 of the FBA, including sectors like brokerage, land transportation and consulting which will please a lot of foreign investors, if there are not a lot strings attached. This part of the FBA is subject to "ministerial regulations that are drawn up from time to time" and therefore it can be changed without an act of parliament that would give the opposition an opportunity to target the government for giving the country away to foreigners. This seems a sensible way for the government to score points with foreigners without exposing itself to domestic attack.

Going back to the land issue I see nothing in this government for foreigners to be optimistic about. Under the Chuan government the Democrats did try to reform the Land Code substantially in favour of foreigners. They tried to insert a clause allowing foreigners married to Thais to buy one rai of residential land in their own names but it was widely attacked by the opposition and from within the party itself and never saw the light of day. All that was left of the proposed 1999 Land Code amendment was Section 96 bis that allows foreign investors, at the discretion of the Minister, to buy one rai of residential land, if they invest 40 million baht in approved investments in addition to the price of the land and house. The ministry took two years to issue the ministerial regulations for this and I have never heard of any one doing it. Since it requires the Minister's approval and there may be secret internal guidelines (e.g. perhaps the investment really has to be 100 million baht), it may take years to get the approval even for a highly qualified applicant. So it is probably to all intents and purposes redundant. Abhisit will remember well the flack received for this failed attempt to ease land owning restrictions on foreigners and will certainly have no desire to involve himself in this issue. My guess is that under this government the bureaucracy will be given a fairly free hand to continue with the work they have been doing since 2006 of closing down all loopholes that could possibly be used for foreigners to acquire land. So far there has been no move to check up on past purchases of land by companies. The Sarayudh government certainly threatened to do this but didn't stay in power long enough. The crack down on land ownership by foreigners was actually started under the Thaksin government, so there is no reason to suppose that a Pheua Thai government would be more foreigner friendly on the issue. I don't think there is much room for complacency that a crack down will never occur or that, if it did, there would be some sort of amnesty. Thai Ministries are famous for not cooperating with each but it is not at all difficult to envisage how a crack down could be organized with some cooperation between the Interior and Commerce Ministries. I will refrain from making any suggestions here.

Over the last 20 years or so, nothing much has become easier for foreigners here, although there have been some positive steps. The concession in 1999 to allow Thai women married to foreigners to buy land was introduced only grudgingly because the prohibition was clearly in breach of the 1997 constitution and was not even supported by an act of parliament. The Land Code has no clause prohibiting land acquistion by Thais married to foreigners and the discrimination against Thai women had been introduced through Interior Ministry regulations that were easy to amend and actually made the work of Land Department officials much easier through the introduction of a standard declaration form. Visas have been generally been made more difficult, although the one stop BOI service made things easier for those working for large companies. The 1999 FBA eased a few things but introduced prison sentences for being or using nominees for the first time. The 2008 Occupation of Aliens Act increased the prison sentences substantially for foreigners working illegally but dropped the prison sentence of employers, who are mainly Thai, completely. The process for applying for permanent residence has been made significantly more complex and has been strung out from what was a maximum of 12 months to an indefinite period which can stretch for over two years. Meanwhile, apart from a lucky spurt of economic growth in the 90s, Thailand seems to make very little progress in terms of economic, political or social development.

Edited March 19, 2009 by Arkady

[Arkady]

it seems to signify there will be no easing of the purge against the use of company structures to buy land under this government

what purge?

Call it what you will but prior to 2006 the ministerial regulations required Land Office officials to pass the case to the Director General, only if a foreigner owned more than 40% of the shares of the company applying to buy land. That was a minimal restriction compared to the list above.

[think_too_mut]

Arkady, great work and very informative.

Many thanks.

[patklang]

Wish this happened in the UK,which could have stopped all this immigration saturation

[eddiemonster]

Thanks very much for the posts Arkady. Much appreciated.

[ScienceGuy]

Sounds like a land-grab and disenfranchisement from foreigners. When owning land is illegal, only outlaws will own land...

[BigSnake]

No new here, we all know they farangs land of much of anything else in the land of smiles, just come, enjoy go HOME. The Thais want to keep a on the land. Any questions?

[FlorC]

Ok I'm a newbie on this , but what is the smallest company in capital that a farang can make?

So if I want to buy a piece of land about 400.000 B, 51% Thai and at least 7 Thais, each has

to proove they have around 30.000 B for the shares in my company? So asking the

cleaning lady is out.

And the company has to be a legit business, I could lease the land from my own company

or sell fruits from my garden, and I'm in the clear?

Like Arkady said farang owned , less than 40 %, no problem about Thai prooving their money for the shares and ok being just a company to own land?

Sorry if I get it wrong, but the 30 year lease is not good for me , and no Thai wife who owns

the land under my house , thank you!

[johnnyk]

1 million baht copany is ok as long as the land is not valued at more (obvious reason).

These days you need only 3 shareholders not 7, though you can have 7 if you want.

Up to you as long as the majority are Thai. The company should be registered to engage in businesses that falangs are allowed to be in, there are Thai-only businesses so avoid them. Ask Sunbelt or your accountant/lawyer.

They are now looking more closely at the shareholders and if they have the actual means to buy shares in the company. This means the noodle lady has a more difficult road to the top of the corporate heap as a company director.

Shareholders may have to produce bank books showing they had the capital required.

The company should have turnover, sleping companies attract attention so make sure the company files tax returns and pays some tax if need be (think of it as a cost of doing business).

[FlorC]

1 million baht copany is ok as long as the land is not valued at more (obvious reason).

These days you need only 3 shareholders not 7, though you can have 7 if you want.

Up to you as long as the majority are Thai. The company should be registered to engage in businesses that falangs are allowed to be in, there are Thai-only businesses so avoid them. Ask Sunbelt or your accountant/lawyer.

They are now looking more closely at the shareholders and if they have the actual means to buy shares in the company. This means the noodle lady has a more difficult road to the top of the corporate heap as a company director.

Shareholders may have to produce bank books showing they had the capital required.

The company should have turnover, sleping companies attract attention so make sure the company files tax returns and pays some tax if need be (think of it as a cost of doing business).

Thanks , I ask it here to people who have done it like this.

So 1mlj is the minimum? Land outsite of cities and tourist area's is cheap.

I didn't know about the only 3 Thais.

I hate lawyers, making a company, quotes are from 6000 to 60.000 B. And then they want 10.000 to 20.000 a year

to do the books and so that I can pay some taxes!

People work here 26 days a month for 5000B, and those f.. lawyers get 20.000 for an hours

work!

Yes I know it is a bit out of topic, but if it wasn't for that stupid law for owning land....

[samgrowth]

1 million baht copany is ok as long as the land is not valued at more (obvious reason).

These days you need only 3 shareholders not 7, though you can have 7 if you want.

Up to you as long as the majority are Thai. The company should be registered to engage in businesses that falangs are allowed to be in, there are Thai-only businesses so avoid them. Ask Sunbelt or your accountant/lawyer.

They are now looking more closely at the shareholders and if they have the actual means to buy shares in the company. This means the noodle lady has a more difficult road to the top of the corporate heap as a company director.

Shareholders may have to produce bank books showing they had the capital required.

The company should have turnover, sleping companies attract attention so make sure the company files tax returns and pays some tax if need be (think of it as a cost of doing business).

Thanks , I ask it here to people who have done it like this.

So 1mlj is the minimum? Land outsite of cities and tourist area's is cheap.

I didn't know about the only 3 Thais.

I hate lawyers, making a company, quotes are from 6000 to 60.000 B. And then they want 10.000 to 20.000 a year

to do the books and so that I can pay some taxes!

People work here 26 days a month for 5000B, and those f.. lawyers get 20.000 for an hours

work!

Yes I know it is a bit out of topic, but if it wasn't for that stupid law for owning land....

How much does a lawer cost in your country?

[johnnyk]

A simple 1 mllion baht company costs 35-40K to set up. After that about 10-12K a year for accounting.

Becoz its a 1 million baht company doesn't mean you have to put 1 million in the bank, ts just the valation of the shares.

[FlorC]

How much does a lawer cost in your country?

Point taken , but this is Thailand !

In my country I don't need a lawyer to buy land.

And that is just what this is about, setting up a stupid company to buy land, and the Thai

shareholders are investigated.

[FlorC]

A simple 1 mllion baht company costs 35-40K to set up. After that about 10-12K a year for accounting.

Becoz its a 1 million baht company doesn't mean you have to put 1 million in the bank, ts just the valation of the shares.

OK, but can it be a 500K or less too?

Not all Thais companies are that big, and I don't see them pay 35-40 K.

Making a company is a formality, a bit more paperwork for the shareholders.

A bankclerk gets about 10-12K a month, accounting takes a lot less time.

I just think the numbers are out of proportion, just to kinda own a piece of land, valued 400K.

[johnnyk]

A simple 1 mllion baht company costs 35-40K to set up. After that about 10-12K a year for accounting.

Becoz its a 1 million baht company doesn't mean you have to put 1 million in the bank, ts just the valation of the shares.

OK, but can it be a 500K or less too?

Not all Thais companies are that big, and I don't see them pay 35-40 K.

Making a company is a formality, a bit more paperwork for the shareholders.

A bankclerk gets about 10-12K a month, accounting takes a lot less time.

I just think the numbers are out of proportion, just to kinda own a piece of land, valued 400K.

Doesn't matter what something costs back home.

Doesn't matter how big Thais companies are or what they pay.

Doesn't matter that making a company is a formality.

Doesn't matter what a Thai bank clerk earns per month.

Doesn't matter what you think about the numbers.

You are in Thailand.

Sorry if that is a bit blunt.

[FlorC]

Sorry if that is a bit blunt.

Don't worry, I can take blunt.

But it doesn't help with my original question: what is the smallest company in capital that a farang can make?

It is in line with OP statement about how much shareholders have to show under the new "law". So it does matter how big.

I know I'm in Thailand , I wasn't comparing costs with home.

[TPI]

Sorry if that is a bit blunt.

Don't worry, I can take blunt.

But it doesn't help with my original question: what is the smallest company in capital that a farang can make?

It is in line with OP statement about how much shareholders have to show under the new "law". So it does matter how big.

I know I'm in Thailand , I wasn't comparing costs with home.

You only have to put up, from all sources, 25% of the registered capital...in your case THB250,000, not a big ask...if you're serious? Remember that includes your Thai directors as well.

[wolfmanjack]

Sorry if that is a bit blunt.

Don't worry, I can take blunt.

But it doesn't help with my original question: what is the smallest company in capital that a farang can make?

It is in line with OP statement about how much shareholders have to show under the new "law". So it does matter how big.

I know I'm in Thailand , I wasn't comparing costs with home.

You only have to put up, from all sources, 25% of the registered capital...in your case THB250,000, not a big ask...if you're serious? Remember that includes your Thai directors as well.

The 400,000 for the purchase of the land will cover the minimum investment but he will need to show that his thai investors put up at least 60% of that or does he just have to show that they were capable of putting up that amount ?

Also i am curious how these companies set up for the sole purpose to own land get the documents signed without needing a work permit? I was told I needed a work permit to sign company documents.

Edited April 16, 2009 by wolfmanjack

[wolfmanjack]

Sorry if that is a bit blunt.

Don't worry, I can take blunt.

But it doesn't help with my original question: what is the smallest company in capital that a farang can make?

It is in line with OP statement about how much shareholders have to show under the new "law". So it does matter how big.

I know I'm in Thailand , I wasn't comparing costs with home.

I found out a long time ago that what some things cost have nothing to do with what they should cost. Especially when it comes to dealing with the government. How do you think people with less than 20,000 baht per month salaries drive a benz?

[johnnyk]

Sorry if that is a bit blunt.

Don't worry, I can take blunt.

But it doesn't help with my original question: what is the smallest company in capital that a farang can make?

It is in line with OP statement about how much shareholders have to show under the new "law". So it does matter how big.

I know I'm in Thailand , I wasn't comparing costs with home.

You only have to put up, from all sources, 25% of the registered capital...in your case THB250,000, not a big ask...if you're serious? Remember that includes your Thai directors as well.

The 400,000 for the purchase of the land will cover the minimum investment but he will need to show that his thai investors put up at least 60% of that or does he just have to show that they were capable of putting up that amount ?

Also i am curious how these companies set up for the sole purpose to own land get the documents signed without needing a work permit? I was told I needed a work permit to sign company documents.

I sign the papers in Canada where I don't need a work permit. I don't do any work in Thailand.