Company For Land Ownership

[johnnyk]

I'm aware of the legal restrictions on falangs owning land in Thailand.

Its been suggested that a company be set up in order to hold land for building a house and structured with a maximum of 39% falang ownership.

My questions:

In effect it seems this is a dormant company that actually carries on no business.

Is one at risk from authorities checking this out with resulting problems?

The company must file financial statements/documents each year, so what happens when the company shows no revenue, no profit, no loss?

What's the likelihood of Mr. T waking up one morning and slamming shut what seems to be a large loophole?

Any help and/or informed opinion would be most welcome. Thanks.

[Monkeypants]

What's the likelihood of Mr. T waking up one morning and slamming shut what seems to be a large loophole?

Any help and/or informed opinion would be most welcome. Thanks.

<{POST_SNAPBACK}>

I reckon that there is a strong possibility of this, and I for one would not feel comfortable sinking money in this way. IMO it is dangerous to circumvent the law, in this way. There are other options which you will be probably aware of .

[Digger]

If you follow the law, I do not think there is much too worry about. Key here is following the law as it applies to companies in Thailand. There is no such thing as a dormant company, anyone that tells you that has lost the plot, or at least will likely lose their house if they have acquired one in such a way. Basically, the company of which you should be a shareholder and director, is obligated to file returns every year which follow the Thai accounting laws. Its nothing too onerous and not an expensive undertaking. Typically, the company needs to generate an income and have expenses. An example of these could be, that you rent the property as an individual from the company and your paying rent. From that the company then needs to pay a proportion of that revenue in rental taxes. You can depreciatte the cost of building the house but not the land. Other typical expenses would be a UBC bill - it will be in the name of the company that owns the property and is a legitimate expense.

So basically as in any P&L, you stack up the income on one side and then the expenses on the other. From that you produce a balance sheet, have it audited by a registered auditor and pay whatever taxes are due.

If you follow this approach and safeguard yourself as to who your other 6 shareholders are, then you will be unlikely to have any problems. The key though is following the law, not ignoring it. The government has I believe the ability to wind up a company if they have not filed returns for the last 3 years and can sieze assets - thats when the problems occur.

[johnnyk]

Digger, thanks.

No one told me it was a dormant company I just assumed that's what it would be as it did no trade.

I didn't realize the company could rent the house to me and I could have expenses like UBC etc.

So I guess the bottom line is the company is actually doing some biz.

I know the annual costs of maintaning the company are peanuts so that's not a worry.

Thanks again.

[expatinasia]

Your company generally has 3 years to show a profit, and a good lawyer can show you how to do it. After 3 years without a profit, the authorities can shut it down. I formed a company to own land and, as another poster offered, if done properly it's safe and not expensive.