L-t Land Lease With Thai Girlfriend (owner)

[bustersizemore]

Does anyone reading this have a long-term land lease with their girlfriend, who happens to own the property?

Many (possibly a majority) of the land leases in Phuket under this type of arrangement have been drafted in a manner which has exposed your girlfriend to significant tax liabilities. The tax liability arises from tax assessed on the stated prepaid rent for the entire lease term plus penalties.

Unless your girlfriend filed a "Phor Ngaw Dor 93" to the Revenue Dept within filing due dates, she could be liable for tax assessed on the entire lease rent calculated in the year that the lease was executed. The "Phor Ngaw Dor 93", as I understand it, allows for a landlord to elect the tax to be calculated based on annual rent payments, as opposed to calculating the tax in one year as a lease might stipulat. This treatment of lease income, in many cases, eliminates any tax laibility that may have existed if the rent had been calculated in the initial year based on the entire rental payments.

Thailand utilizes a highly progressive tax structure. Tax calculated on all rent in one year(as opposed to spread out throughout the lease term) creates a significant tax liability for many landlords.

The Land Department and Revenue Department have processed a number of cases of this type. It remains a significant potential problem for many landowners in Phuket.

If you have a lease of this type and did not file a "Phor Ngaw Dor 93 " in a timely manner, I suggest that you contact your accountant and/or tax attorney.

There are many legal advisors in Phuket who have been drafting these lease for years and did not warn their clients of the potential problems and/or the necessity of filing appropriate tax returns.

Edited November 6, 2009 by bustersizemore