Land Office Fees Going Up March 26 (correction)

[george]

Floods of transaction expected

BANGKOK: -- The Lands Department is prepared to deal with a flood of property transactions ahead of the end of property tax incentives next month.

The last transaction date to be eligible for the incentives is March 26.

Director-general Anuwat Meteewiboonwut said the department was prepared for huge activities, particularly in the final two weeks.

Because of lower taxes in the past two years, the department's revenue dropped 40 per cent to Bt30 billion annually.

Anuwat expects revenue to increase by Bt10 billion this fiscal year ending September 30.

-- The Nation 2010-02-25

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[george]

It's conflicting dates regarding this tax hike. The Nation (article above) says it's March 26, while Pattaya Times says last day for low tax is February 26.

We expect a clarification from Pattaya Times if their claim of February 26 may be a local Pattaya date set or not. I have emailed them for a clarification.

/Admin

[ding]

The date in the original article from the Pattaya Times is incorrect. The expiration date of the temporarily reduced real estate taxes is 28th of March, 2010.

The new law was properly approved and announced as anyone can see from any of these multiple references:

http://www.thailandlawonline.com/transfer_tax.html

http://bangkok.angloinfo.com/countries/thailand/intax.asp

http://ezinearticles.com/?Thailand-Real-Es...&id=2387266

http://phuket-post.com/article/thai-tax-ti...reak-ends-march

Also note that this has nothing to do with farrangs -- it affects ALL real estate transactions in Thailand, regardless of the buyer's nationality.

It is not a tax increase -- it is a return to the normal tax rate, which the Thai government was smart enough to reduce to near zero for the last 2 years in order to boost the economy.

The notion that if there was no change in the average number of real transactions (where did the Pattaya Times get this info anyway?), that it means the tax reduction should not be extended is ludicrous on its face. Demand for real estate slowed when the economic crises first hit. In order to increase demand for real estate back up to 'normal' levels, the Thai government lowered the associated taxes. It is a fundamental principle of economics that lower costs (including taxes) for a particular product increases demand. So if the quantity and amounts of the real estate transactions in Thailand over the last 2 years have remained relatively stable, it is BECAUSE OF THIS TAX REDUCTION -- if the taxes were still in place, basic eco-101 teaches that the quantity and amounts of the real estate transactions over the last 2 years would have gone down.

The worldwide and Asean economies are now starting to recover -- if the Thai government is wise, they will extend the deadline for one additional year. Let's please refrain from all the cynical comments -- and remember that they were wise enough to at least reduce it in the first place.

Very useful post, thanks.

My wife and I are scouting a move to Thailand. I keep seeing Cambodia as an option for many reasons. This has caused us to look at it again, tho I don't really want to take my Thai wife to Cambodia. The fee reduction program was a success if the market didn't crash like it has in much of the word. We are on the edge in our decision, and this may be a tipping point.

25,000B to 162,500B is a 137,500B increase. Not a deal-breaker, though, and especially if the fee is split 50/50 with the seller.

And there's this; "Property transfered between individuals will be charged three percent fees if owned for more than two years by the current owner." This is now on my list of questions.

Edited February 25, 2010 by ding

[LivinLOS]

It has NOTHING to do with companies. When title to land is sold or transferred taxes and fees must be paid.

The rate at which they are paid however was TEMPORALLY reduced in a promotion which ends March 28th this year, at which points rates go back to their NORMAL levels.

It has NOTHING to do with your nationality it applies to ALL transactions.

Erm can you read ??

The fees for purchases and sales involving a Thai company limited which most foreigners use to buy land will go up from one percent to six and a half percent of appraised or contract value, whichever is higher.

Now Thais, on the whole, dont need to use companies simply to hold private land.. So its a farang tax, pure and simple, 6.5% of the assessed land value.. Thats Thais wont be paying !!

[LivinLOS]

Don't you just love these increases whenever farang are concerned?

Not 10% or even a hefty 50% as might be expected, maybe?

But 650%.....!!!!!

(yes, yes, it's "because it was lowered 2 years ago")

where did you do your math... mine works out to about 7.9 %

From 1% to 6.5%.. Is drum roll please.. A 650% increase..

Where did you do your math ??

[quiksilva]

It has NOTHING to do with companies. When title to land is sold or transferred taxes and fees must be paid.

The rate at which they are paid however was TEMPORALLY reduced in a promotion which ends March 28th this year, at which points rates go back to their NORMAL levels.

It has NOTHING to do with your nationality it applies to ALL transactions.

Erm can you read ??

The fees for purchases and sales involving a Thai company limited which most foreigners use to buy land will go up from one percent to six and a half percent of appraised or contract value, whichever is higher.

Now Thais, on the whole, dont need to use companies simply to hold private land.. So its a farang tax, pure and simple, 6.5% of the assessed land value.. Thats Thais wont be paying !!

I can read just fine thanks, but if I believed everything I read in newspapers I'd also believe that Elvis lived on a double decker bus on the dark side of the moon.

Just in case you are wondering I don't believe that to be true either.. the only difference is that I have been to the land department.

Ps plenty of Thai companies own land

Edited February 26, 2010 by quiksilva

[ChiangMaiFun]

It has NOTHING to do with companies. When title to land is sold or transferred taxes and fees must be paid.

The rate at which they are paid however was TEMPORALLY reduced in a promotion which ends March 28th this year, at which points rates go back to their NORMAL levels.

It has NOTHING to do with your nationality it applies to ALL transactions.

Erm can you read ??

The fees for purchases and sales involving a Thai company limited which most foreigners use to buy land will go up from one percent to six and a half percent of appraised or contract value, whichever is higher.

Now Thais, on the whole, dont need to use companies simply to hold private land.. So its a farang tax, pure and simple, 6.5% of the assessed land value.. Thats Thais wont be paying !!

I can read just fine thanks, but if I believed everything I read in newspapers I'd also believe that Elvis lived on a double decker bus on the dark side of the moon.

Just in case you are wondering I don't believe that to be true either.. the only difference is that I have been to the land department.

Ps plenty of Thai companies own land

Don't bring Elvis into it... anyway he's selling hotdogs in Florida

[Rainmon]

Nothing was said about condos here only Thai company name land transfers, so is there a plan to raise the transfer tax on condos next?

But it is still a good deal compared to USA, I paid a property tax EVERY YEAR of close to 3% not just a one time transfer fee.

[ChiangMaiFun]

Nothing was said about condos here only Thai company name land transfers, so is there a plan to raise the transfer tax on condos next?

But it is still a good deal compared to USA, I paid a property tax EVERY YEAR of close to 3% not just a one time transfer fee.

please read the header AGAIN condos are mentioned in the article quoted - taxes are going up on 28th

[Rainmon]

Nothing was said about condos here only Thai company name land transfers, so is there a plan to raise the transfer tax on condos next?

But it is still a good deal compared to USA, I paid a property tax EVERY YEAR of close to 3% not just a one time transfer fee.

please read the header AGAIN condos are mentioned in the article quoted - taxes are going up on 28th

I see that now, so, all I can wonder is if it will affect only foreign name condos or all condos...

[robinhill]

I commented above on the calculation of the Withholding Tax - the info in my comment above is the case where the seller is an individual, and I omitted to include the case where the seller is a company, the current Withholding Tax being just 1%, which is typically less than that where the seller is an individual.

If the Withholding Tax for Company land /house sales is increasing from 1% to 6.5% then this is indeed a large hike to be paid. But consider the fact that this only applies if the seller of the land is a company as opposed to an individual, and so...

- those who use Thai Companies to purchase land from individuals will not have to pay this increase if the purchase is from an individual

- those who transfer the company, rather than selling the land, do not have to pay this increase either, since they merely change Directors and control of the company owning the land, which does not involve any transfer of ownership at the land office

I'm looking for any evidence of this 1% to 6.5% increase on the Department of Lands website, but most of the up to date info is in Thai, so bear with me while I search. If I find any news I'll post it here.

[george]

CORRECTION:

Land Office Fees Going Up March 26 or thereafter

"Foreigners are urged to take this opportunity to unwind Thai companies owning property."

There is a correction on the Land Office transfer fees increase date of property, however this is good news for foreigners who own property, especially in company limited names. The date transaction fees go up is March 26. In most cities the district office of the Land Department- where transactions like ownership, lease agreements and mortgage loan agreements on official titled deeds are recorded - will no longer be subsidized by the government after March 26 causing fees to increase back to the rates in place for may year prior to the April, 2008 reduction.

A misunderstanding on verb tense in a translation caused several Thai to English translators working for major media to confuse a recent statement made by a spokeswoman for the Land Department in the Ministry of the Interior and a report on Channel 3 TV.

Whereas the fact is the land office fees will go up after Friday next month on the 26th, translations to English were made stating that the fees would go up after the 26th of this month which is also a Friday which meant the fees would go up March 2 because February 27 and 28 are a weekend and Monday, March 1 is a holiday. So Friday the 26th of February was incorrectly reported to be the last day to transact property at the lower rates, according to translations of the spokeswoman’s statement and a channel 3 report.

However, the Land Department spokes women yesterday did say that in March, especially from Monday, March 8 to Friday March 26, there is expected to be a dramatic increase of transactions at land offices nationwide to avoid much higher fees.

Now that the land transfer fees are only about one and a half percent until March 26 it’s a good time to reevaluate property ownership alternatives. After March 26, the Land Office fees to sell the property held in a company name will be six and a half percent.

Anyone ready to complete a condo or land transaction should do so as early as possible, especially if held in a Thai company limited.

"Foreigners are urged to take this opportunity to unwind inactive Thai companies owning property while transfer fees are at a much lower rate than they will be," said one Land Office official.

T.I.T. (This is Thailand) so no one can guarantee what will happen and when and sometimes translations really get hard to understand, but it is certain land office fees are going up quite soon in Thailand and March 26 is set as a target date for raising the fees.

The link below was published on January 7 in the hard copy of the Pattaya Times newspaper following an interview with the Head of Chonburi Land Office. At that time, officials had the feeling the increase would be implemented on a timetable at the discretion of the district land offices in each province and a follow-up interview this morning confirms this is still the feeling so the date of March 26 may be the earliest date and some land offices may delay implementation, authorities said.

http://pattaya-times.com/a4730-land-office...se-next-quarter

With the new restrictions on foreign-managed or owned Thai companies, the risk of Thai nominee shareholders and the yearly, ongoing fees for closing balance sheets on Thai companies, many foreigners may want to consider transferring their property out of the company limited and into the name of a Thai.

The Land Department no longer allows Thai companies with a foreigner as the Managing Director or as a shareholder to buy property, record a mortgage loan agreement or leases over three years. However, these companies can still SELL property with a foreign Managing Director or shareholder.

This was previously reported in the Pattaya Times newspaper and posted on the website at http://pattaya-times.com/a5001-land-office...aging-directors

“This is to encourage foreigners to transfer properties out of Thai companies set up only to own property and do not conduct any business,” said one prominent Thai lawyer.

Another reason to take advantage of the low transfer fees and move property from Thai companies not conducting business is the risk to Thai nominee shareholders. These people are listed on official company limited registrations, but have nothing to do with the company.

They are on the shareholder lists of Thai companies where the foreigner bought the property held by the company and no Thai made any investment and there is no business being transacted by the Thai company. These Thais first came under scrutiny in October, 2006 following the military coup taking over the national government.

Under the military government, the databases for the District Land Offices under the Land Department and the Department of Business Development under the Department of Commercial Registration were merged for cross-referencing to indentify Managing Directors or shareholders with non-Thai surnames in Thai companies which also owns property.

Thais who have their names as shareholders or Managing Directors of companies used by foreigners only for the purpose to buy property would be designated as “Thai nominees” and are subject to prosecution for false statements since they really do not do any business sin the company, never attend company meetings required by law and did not invest any money into the company which bought property.

Nothing much has happened to use the information the cross referencing of companies with land office records in the database yet, but if the government has it, they may use it to force the closing of Thai companies not operating any business and make the companies sell properties held as assets.

If this happens, it is much better to sell the property now while the Land Office fee for a 10 million baht house is about 150,000 baht whereas after March 26 the land office fee will be about 650,000 baht.

Another reason to sell properties held in Thai company names and put them in a secured way into the name of a Thai person is the yearly, ongoing fees for closing balance sheets on Thai companies which averages 18,000 baht per year. Also, there is a problem with Thai companies that do not conduct any business yet file a false tax return as advised by an accountant showing a profit for the company to avoid closure of the Thai company for inactivity.

Property in a Thai company can be sold to a Thai person and a loan agreement can be recorded at the Land Office against the title deed and a mortgage can be placed on the property to prohibit the sale of the property until the loan is paid. Additionally a lease agreement between the Thai and the foreigner can be signed.

Property transferred between individuals will be charged three percent fees if owned for more than two years by the current owner. If owned less than two years the fee is higher, between five and six and a half percent.

See also

http://pattaya-times.com/a3177-thailand-la...-deal-goes-down

-- Pattaya Times 2010-02-26

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[robinhill]

As mentioned above : Providing that a company is set up for each plot of land, then you don't have to sell the land, just sell the company.... which involves no transfer of ownership fees at the land office

[craigt3365]

Not to be a nidge, but Drew makes money getting people to transfer land from their company to some other form of ownership. I know he is a stand up guy, but isn't it true that if Thailand really cracked down on these nominee companies more than just us homeowners would be affected? We are just small peanuts compared to foreign companies and the land/businesses they own....I think the economic effect to Thailand would be huge?

[LivinLOS]

Ps plenty of Thai companies own land

Sure they do, in the course of their business..

But very few Thais use this method to privately own the land thier home is on do they ??

Its a farang tax.. But we have long known that using a company was dodgy and I have posted for years that it wouldnt surprise me if they just used ways of taxing it to increase the costs to farangs..

[LivinLOS]

As mentioned above : Providing that a company is set up for each plot of land, then you don't have to sell the land, just sell the company.... which involves no transfer of ownership fees at the land office

And if the buyer doesnt want it in a company with all those maintenance costs..

Seems to me very clear.. They dont like the company loophole, they have gradually increased the problems to using this loophole, and for the slow learners out there they will now start to increase the hassles and fees associated with playing this loophole.

Thailand loves the grey areas, it gives them revenue streams off book.. But in fairness they often do send out signals and telegraph the ways they dont want you to play. I tend to attempt to read between the lines and not swim upstream, on this and any issue like this.

[LivinLOS]

Not to be a nidge, but Drew makes money getting people to transfer land from their company to some other form of ownership. I know he is a stand up guy, but isn't it true that if Thailand really cracked down on these nominee companies more than just us homeowners would be affected? We are just small peanuts compared to foreign companies and the land/businesses they own....I think the economic effect to Thailand would be huge?

But its relatively easy to determine if the company performs real economic activity..

Simple things like the company must (or rather will be taxed) on a min turnover a year, or demand a min taxation amount at a level they decide. Real company's have no problem, farangs with dormant shell companies holding land start getting another bill annually.

[craigt3365]

Well put posts, LivinLOS. It will be interesting to see how this plays out....but sure does look like they are targeting us directly...

[quiksilva]

Ps plenty of Thai companies own land

Sure they do, in the course of their business..

But very few Thais use this method to privately own the land thier home is on do they ??

Its a farang tax.. But we have long known that using a company was dodgy and I have posted for years that it wouldnt surprise me if they just used ways of taxing it to increase the costs to farangs..

Nonsense, of course its not.

Much more land is held by legitimate Thai companies than companies established by foreigners for residential use, and as others have said transfer of shares of a company does not equate to transfer of title and thus those taxes need never be paid.

The purpose of rescinding SBT and transfer fees is that, in the government's view the property sector does not require the support that it once did. They are specifically targeting developers here who are, by far and away, the largest contributors of this tax pool.

[oracle]

Ignore these articles, it’s rubbish. The national tax rate reduction and getting back to normal fees has nothing to do with foreigners or foreigners owning properties through companies. It is known for a year that is will go back to normal rates as it was a temporary rate reduction and a national tax policy.

The suggestion that foreigners are urged to take this opportunity to unwind Thai companies owning property is total crap by an opportunistic local lawyer looking for business and does not refer in any way to a change in policy by the government towards foreigners and companies owning property.

If you listen to this crap and follow up on it you will be screwed twice.

[quiksilva]

Exactly.

[Marvo]

Ignore these articles, it's rubbish. The national tax rate reduction and getting back to normal fees has nothing to do with foreigners or foreigners owning properties through companies. It is known for a year that is will go back to normal rates as it was a temporary rate reduction and a national tax policy.

The suggestion that foreigners are urged to take this opportunity to unwind Thai companies owning property is total crap by an opportunistic local lawyer looking for business and does not refer in any way to a change in policy by the government towards foreigners and companies owning property.

If you listen to this crap and follow up on it you will be screwed twice.

This thread is about as confused and as ill reported as they get on TV!!!!

Simple Fact: On 29th March 2010, the taxes and land office fees are returning to their previous levels of 2008.

Question: From 29th March onwards, is there a new additional 6.5% "fee" that will be charged to companies that buy land???

If not, then this whole thread is a reporting mess and a complete waste of time missleading scores of people.

Please someone - the definitive answer to.... is there an additional 6.5% "fee" that will be charged to companies that buy land - or not?

[LivinLOS]

To me it reads the cost is to a company selling land, the sales tax (supposed to be) the sellers problem.

And I dont think the rate was 6.5% back pre 08, hence it is not 'only reverting to where it was' its an increase.

[oracle]

Ignore these articles, it's rubbish. The national tax rate reduction and getting back to normal fees has nothing to do with foreigners or foreigners owning properties through companies. It is known for a year that is will go back to normal rates as it was a temporary rate reduction and a national tax policy.

The suggestion that foreigners are urged to take this opportunity to unwind Thai companies owning property is total crap by an opportunistic local lawyer looking for business and does not refer in any way to a change in policy by the government towards foreigners and companies owning property.

If you listen to this crap and follow up on it you will be screwed twice.

This thread is about as confused and as ill reported as they get on TV!!!!

Simple Fact: On 29th March 2010, the taxes and land office fees are returning to their previous levels of 2008.

Question: From 29th March onwards, is there a new additional 6.5% "fee" that will be charged to companies that buy land???

If not, then this whole thread is a reporting mess and a complete waste of time missleading scores of people.

Please someone - the definitive answer to.... is there an additional 6.5% "fee" that will be charged to companies that buy land - or not?

That is crap, it just goes back for companies from roughly 1%+0.01%+0,11% (current rate reduction) to 1%+2%+3.3% which is again the normal and previous rate. No new tax!

[robinhill]

As I stated above : the Withholding tax for company land sales is 1%.

I know nothing of an increase of this fee to 6.5% as referred to, but am investigating.

Myself and my Thai wife have yet to find any reference to such increase on the Dept of Lands website...

http://www.dol.go.th/

...although most of the info is in Thai which is making the search slower than if it were all also available in english.

My wife has phoned the land office who say that fees return to normal on the 28th March.

Regrettably she failed to get an answer to the question of whether or not the Withholding Tax fee for company sales is increasing from 1% - 6.5%

[robinhill]

One other point I think I omitted to clarify :

Withholding Tax on the sale of land held by a person is calculated on the Assessed Value at the Land Office.

Withholding Tax on the sale of land held by a company is calculated on the Assessed or registered Sale Price, whichever is the greater.

[robinhill]

The fees after March 26th 2010 :

- Transfer Fee = 2%

- Stamp Duty = 2%

- Special Business Tax (SBT) = 3.3%

- Withholding Tax = same as before*

Oops! Sorry about that, it was getting late when I typed the above. I meant to type Stamp Duty 0.5% NOT 2%, this was simply a typo.

So, the only things affected are the Transfer fee from 0.01% to 2% and the Special Business Tax (if applicable) from 0.11% to 3.3%

Our land office confirmed today that they know of no increase in the Withholding Tax for the sale of company held land, so the current rate of 1% remains the same and does not increase to 6.5%, according to them , and I tend to agree having found no mention of such increase on the Dept of Lands website either, or anywhere else apart from the allegedly erroneous comment which generated this discussion.

Those buying land / house should ensure that they know how the land office fees are calculated, and which figure is used in the calculation of the fee (Assessed Value or Sale Price) because there can be a BIG difference between the Assessed Price and the Sale Price, and you could easily be duped into paying higher fees than you should if your agent misleads you in this respect in order to pocket the difference.

One last point : one of the comments above suggested that the fee for the registration of a loan / mortgage had also been reduced to 0.11% - I hadn't heard of this, and according to our local land office this comment was erroneous too.

Therefore, there is no change in the cost for the registration of loan / mortgage, lease, usufruct or superficies agreements - the fee for such remains as before (which I understand is 1% of the value of such).

[ChiangMaiFun]

Nothing was said about condos here only Thai company name land transfers, so is there a plan to raise the transfer tax on condos next?

But it is still a good deal compared to USA, I paid a property tax EVERY YEAR of close to 3% not just a one time transfer fee.

please read the header AGAIN condos are mentioned in the article quoted - taxes are going up on 28th

I see that now, so, all I can wonder is if it will affect only foreign name condos or all condos...

all condos - this is not a farang tax nor a new tax - it was simply suspended and they want to re-introduce it - not nice but there it is

[Marvo]

The fees after March 26th 2010 :

- Transfer Fee = 2%

- Stamp Duty = 2%

- Special Business Tax (SBT) = 3.3%

- Withholding Tax = same as before*

Oops! Sorry about that, it was getting late when I typed the above. I meant to type Stamp Duty 0.5% NOT 2%, this was simply a typo.

So, the only things affected are the Transfer fee from 0.01% to 2% and the Special Business Tax (if applicable) from 0.11% to 3.3%

Our land office confirmed today that they know of no increase in the Withholding Tax for the sale of company held land, so the current rate of 1% remains the same and does not increase to 6.5%, according to them , and I tend to agree having found no mention of such increase on the Dept of Lands website either, or anywhere else apart from the allegedly erroneous comment which generated this discussion.

Those buying land / house should ensure that they know how the land office fees are calculated, and which figure is used in the calculation of the fee (Assessed Value or Sale Price) because there can be a BIG difference between the Assessed Price and the Sale Price, and you could easily be duped into paying higher fees than you should if your agent misleads you in this respect in order to pocket the difference.

One last point : one of the comments above suggested that the fee for the registration of a loan / mortgage had also been reduced to 0.11% - I hadn't heard of this, and according to our local land office this comment was erroneous too.

Therefore, there is no change in the cost for the registration of loan / mortgage, lease, usufruct or superficies agreements - the fee for such remains as before (which I understand is 1% of the value of such).

Thanks for that Robinhill, the thread is straight at last!

Anybody else lurking who want to moan about being a persecuted farang?

[craigt3365]

The fees after March 26th 2010 :

- Transfer Fee = 2%

- Stamp Duty = 2%

- Special Business Tax (SBT) = 3.3%

- Withholding Tax = same as before*

Oops! Sorry about that, it was getting late when I typed the above. I meant to type Stamp Duty 0.5% NOT 2%, this was simply a typo.

So, the only things affected are the Transfer fee from 0.01% to 2% and the Special Business Tax (if applicable) from 0.11% to 3.3%

Our land office confirmed today that they know of no increase in the Withholding Tax for the sale of company held land, so the current rate of 1% remains the same and does not increase to 6.5%, according to them , and I tend to agree having found no mention of such increase on the Dept of Lands website either, or anywhere else apart from the allegedly erroneous comment which generated this discussion.

Those buying land / house should ensure that they know how the land office fees are calculated, and which figure is used in the calculation of the fee (Assessed Value or Sale Price) because there can be a BIG difference between the Assessed Price and the Sale Price, and you could easily be duped into paying higher fees than you should if your agent misleads you in this respect in order to pocket the difference.

One last point : one of the comments above suggested that the fee for the registration of a loan / mortgage had also been reduced to 0.11% - I hadn't heard of this, and according to our local land office this comment was erroneous too.

Therefore, there is no change in the cost for the registration of loan / mortgage, lease, usufruct or superficies agreements - the fee for such remains as before (which I understand is 1% of the value of such).

Ok, so let's try an example. A farang owns land/property in a Thai nominee company. Value is, say, 5M Baht. He has read this thread and is now nervous. Wants to transfer that land to his wife and close the company down. What is the current fee and would would the new fee be starting in April????? It would be really interesting to hear what you think for this example....