Do We Still Need To Pay Withholding Tax....differing Suggestions

[Junglejumbo]

Does anyone know clearly about what if any withholding tax is due on a property sale?

I have looked at a number of web-sites and seen the formula for calculating it but then I read that this tax is now only applicable to companies and not individuals....The formula runs something like selling price minus buying price, divided by three (years) and then amount of one year charged at standard income tax rates with allowance of 150,000 baht.

Another site said that the business tax takes over the role of withholding tax is only relevant to individuals which is currently reduced to 0.1% from 3%...(there's also transfer tax now reduced to 0.1% from 2%).

Another site said individuals don't need to pay (since 2003) unless they take the money out of the country within one year, or don't buy another property within one year....

Other sites say with holding tax hasn't changed at all, and still applicable to all....

Withholding tax can be significant and we should know before putting a selling price on a property. Many people's property values were understated to reduce the transfer and business taxes in the past especially when paying for property by cash...However, when selling to a buyer who's paying with a loan the correct amount now needs to be stated...

Thanks in advance to any experts in the matter..

[samILO]

Disbursements for the registration of Lease and Building Ownership transfer

1. Land Lease Registration

Reg. fee 1.1% of rental

Misc. charges 1,000.-

None receipted disbursement 3,000.-

2. Building ownership transfer

2.1 The owner is juristic person.

Reg. fee 0.01% of estimate price (normal 2%)

Company Income tax 1% of selling price

Specific Business Tax 0.11% of selling price (normal 3.3%)

Misc charges 1,000.-

Non receipted disbursement 3,000. -

2.2 The owner is ordinary person

2.2.1 There have an owner’s name in this house registration more than 1 year

Reg. fee 0.01% of estimate price (normal 2% )

Personal Income tax to be advised by the Land Dept.

Duty stamps 0.5% of selling price

Misc charges 1,000.-

Non receipted disbursement 3,000. -

2.2.2 There’s nobody in this house registration and;

A. The owner has occupied this building for 5 years onwards.

Reg. fee 0.01% of estimate price (normal 2%)

Personal Income tax to be advised by the Land Dept.

Duty stamps 0.5% of selling price

Misc charges 1,000.-

Non receipted disbursement 3,000. -

B. The owner has occupied this building less than 5 years

Reg. fee 0.01% of estimate price (normal 2%)

Personal Income tax to be advised by the Land Dept.

Specific Business tax 0.11% of selling price

Misc charges 1,000.-

Non receipted disbursement 3,000. -

** Registration fee and Specific Business tax are subject to the change of Land Regulations issue.

Note : as per the Land Ministry information, this rate is valid up until March 2010.

The 1 % withholding tax for corporate taxes are not to be paid for individuals. Hope this helps

[1001monkeys]

Sam, thanks for the great information.

I am hoping you can also help with explaining the calculation of withholding tax.

Say the owner has owned and occupied the house for four years prior to selling. The government valuation is B3 million. Is the calculation as follows:

Govt valuation = 3,000,000

Deductable = 2,130,000 (71%)

Taxable total income = 870,000

Taxable annual income = 217,500 (ie 870,000 divided by 4)

Annual tax = 11,750 (approximately)

Total withholding tax = 47,000 (ie 4 x 11,750)

Transfer fee of 0.01% and stamp duty of 0.5% will also apply.

Many thanks

Edited August 19, 2009 by 1001monkeys