Buying Or Opening A Business In Phuket

[KarenBravo]

Americans cannot own land here. What they are in theory able to do is open a 100% American owned company using the Amity treaty between Thailand and the USA.

So, are you saying that an American owned company can own 100% land here? If so, could a farang lease their land directly off the American company?

Yes, a US owned company registered in Thailand can buy land. As that company can be 100% Owned by US shareholders, then it could be assumed the land is 100% owned. I see no reason why that company cannot lease land to a third party, although all the usual annual company and property taxes would need to be paid.At least that's what I think, best have a company expert check it out.

Incorrect. The Amity treaty does not allow land ownership.

See this link. http://www.siam-legal.com/Business-in-Thailand/US-Thai%20Amity.php

[GiantFan]

KB, you are correct. No land. Oh if it were so!

[steelepulse]

I had a friend from the US that played the shell game with his 100% owned Amity company. His company was the main shareholder in a Thai company that bought and sold land as he explained to me. He bought and sold quite a few properties and never had any issues, but then again many foreigners are buying and selling land with just their Thai companies.

[petercallen]

I had a friend from the US that played the shell game with his 100% owned Amity company. His company was the main shareholder in a Thai company that bought and sold land as he explained to me. He bought and sold quite a few properties and never had any issues, but then again many foreigners are buying and selling land withst their Thai companies.

To right mate, they also want to be paid in cash or have the money paid into a overseas bank account

[simon43]

Simon43 advice was good but instead of leasing the land only in my name my wife would buy the land in her name and i would lease it from her

Which is good advice if you/your wife has the money and feels that it's a good investment.

In my case, I neither have the funds to purchase the land, nor do I want to purchase the land. A solid 30 year lease that's registered at the government office is fine and eases my cash flow, since no lump sum is payable upfront. I know my monthly rent amount for the complete lease term.

What happens when the lease expires? In 30 years I probably won't need to worry about that! But for my type of business, (small, single-storey hotel/guesthouses), I either renew the lease on fair terms or I demolish all the buildings (as allowed by my lease contract), and take my business elsewhere in the locality.

This principle has generally worked fine for me since 2005, (deranged ex-wives excluded..).

Now my real concern is what is happening to Phuket and the future of tourism there. Since 2005, I have seen my average room rate fall, due to new and competing guest-houses owned by local Thais. The type of tourist has definitely changed from 'westerners' to Asians (Chinese, Korean).

Although my businesses are still OK, the fact that I relocated to live and work in Myanmar 9 months ago might give you a strong clue as to where I'll put my money next!

Simon

[NamKangMan]

Have you considered declaring yourself a "non-resident" of Australia for taxation purposes and paying a flat 10% tax on everything?

From the current financial year the new tax rate in Australia, for non residents, is 32.5 % for every dollar earned from 0 to $80,000.

Under tax legislation you are automatically considered to be a non-resident after two years out of the country and must pay this rate even if you are a citizen.

You are correct, it has gone up this financial year.

http://atotaxrates.i...-tax-rates-2013

I'm not so sure about the 2 year rule. I think it's a little more complicated than that, otherwise, most Australian expats would fly back to Australia after 1 year 11 months and 29 days.

Instead of a "visa run" they could call it a "tax run."

Edited December 16, 2012 by NamKangMan

[petercallen]

Simon43 advice was good but instead of leasing the land only in my name my wife would buy the land in her name and i would lease it from her

Which is good advice if you/your wife has the money and feels that it's a good investment.

In my case, I neither have the funds to purchase the land, nor do I want to purchase the land. A solid 30 year lease that's registered at the government office is fine and eases my cash flow, since no lump sum is payable upfront. I know my monthly rent amount for the complete lease term.

What happens when the lease expires? In 30 years I probably won't need to worry about that! But for my type of business, (small, single-storey hotel/guesthouses), I either renew the lease on fair terms or I demolish all the buildings (as allowed by my lease contract), and take my business elsewhere in the locality.

This principle has generally worked fine for me since 2005, (deranged ex-wives excluded..).

Now my real concern is what is happening to Phuket and the future of tourism there. Since 2005, I have seen my average room rate fall, due to new and competing guest-houses owned by local Thais. The type of tourist has definitely changed from 'westerners' to Asians (Chinese, Korean).

Although my businesses are still OK, the fact that I relocated to live and work in Myanmar 9 months ago might give you a strong clue as to where I'll put my money next

Simon

From what i have seen a 30 year lease is almost as expense as buying the land freehold

Its obvious to me why you are in Burma and a good idea if you are happy to live there

[NamKangMan]

Simon43 advice was good but instead of leasing the land only in my name my wife would buy the land in her name and i would lease it from her

Which is good advice if you/your wife has the money and feels that it's a good investment.

In my case, I neither have the funds to purchase the land, nor do I want to purchase the land. A solid 30 year lease that's registered at the government office is fine and eases my cash flow, since no lump sum is payable upfront. I know my monthly rent amount for the complete lease term.

What happens when the lease expires? In 30 years I probably won't need to worry about that! But for my type of business, (small, single-storey hotel/guesthouses), I either renew the lease on fair terms or I demolish all the buildings (as allowed by my lease contract), and take my business elsewhere in the locality.

This principle has generally worked fine for me since 2005, (deranged ex-wives excluded..).

Now my real concern is what is happening to Phuket and the future of tourism there. Since 2005, I have seen my average room rate fall, due to new and competing guest-houses owned by local Thais. The type of tourist has definitely changed from 'westerners' to Asians (Chinese, Korean).

Although my businesses are still OK, the fact that I relocated to live and work in Myanmar 9 months ago might give you a strong clue as to where I'll put my money next!

Simon

Burma is definately a place to keep an eye on. I also believe Burma are/will be offering 50 year leases instead of 30 years like in Thailand.

The demographis of tourists has definately changed here. Most tourist to Phuket now are from the emerging ecomonies of Russia, China and india. Whilst Russians like a drink, the other two nationalities do not have a drinking culture. Also, the Russians travel with a spouse or family, which doesn't allow them to party so much.

It will get harder to turn a baht in the hospitality industry here in the future.

Interesting you say your average room rate is falling. Why can't you compete with a Thai run guest house? Is it due to a disparity in rent and/or wages because you are a farang?

[Old Croc]

Have you considered declaring yourself a "non-resident" of Australia for taxation purposes and paying a flat 10% tax on everything?

From the current financial year the new tax rate in Australia, for non residents, is 32.5 % for every dollar earned from 0 to $80,000.

Under tax legislation you are automatically considered to be a non-resident after two years out of the country and must pay this rate even if you are a citizen.

You are correct, it has gone up this financial year.

http://atotaxrates.i...-tax-rates-2013

I'm not so sure about the 2 year rule. I think it's a little more complicated than that, otherwise, most Australian expats would fly back to Australia after 1 year 11 months and 29 days.

Instead of a "visa run" they could call it a "tax run."

You're right. They have a 183 day rule. Effectively you have to reside in Oz for half the financial year.

[simon43]

30 year lease is almost as expense as buying the land freehold

Peter, you're correct, but leasing and paying monthly over 30 years really helps with cash-flow.

Why can't you compete with a Thai run guest house? Is it due to a disparity in rent and/or wages because you are a farang?

I can compete. The gradual lowering of room rates really is more to do with tourist's perception of how much of a 'quality place' Phuket is. 6 years ago, it was The Pearl of the Andaman. Now it seems to be the sh*thole of the Andaman. Whilst the 5-star tourists are happy to pay high rates for 5-star hotels, in the 2 and 3-star league it's more cut-throat. Thai guesthouses will drop their room rates to a few hundred baht just to fill a room - and tourists pass on this info on web forums etc so that future tourists demand similar rates.

I am sure my little hotels will always be profitable, due to their location by the airport, but I can't say it's 'fun' anymore. I'd rather establish a new hotel(s) in an emerging tourist location ==> Myanmar.

BTW, the Myanmar government and tourist authority is currently doing their master plan to look after foreign tourists. One suggestion is that any crime against a foreign tourist will automatically result in double the normal penalty for the accused if convicted.

Now imagine if Thailand had such a law

Simon

Note to mods - I mention my businesses purely in the scope of this specific discussion and not as any intention to drum up business.

[SeaVisionBurma]

I am sure my little hotels will always be profitable, due to their location by the airport, but I can't say it's 'fun' anymore. I'd rather establish a new hotel(s) in an emerging tourist location ==> Myanmar.

BTW, the Myanmar government and tourist authority is currently doing their master plan to look after foreign tourists. One suggestion is that any crime against a foreign tourist will automatically result in double the normal penalty for the accused if convicted.

Now imagine if Thailand had such a law

Simon

Note to mods - I mention my businesses purely in the scope of this specific discussion and not as any intention to drum up business.

Hi Simon,

Apologies, I'm going a bit off topic here but your post about Myanmar was interesting.

I think you're right about Myanmar - accommodation shortages are the biggest immediate problem for foreigners going there at the moment. Not just tourists - but business people as well. My trips there now are often at short notice, and I'm playing musical chairs trying to get a room.

I have heard various things recently from a Myanmar friend who is involved in the tourism industry, and he has also mentioned the draft plans being discussed at the moment to manage the industry properly. It sounds as if they are thinking along the right lines.

There's a large tourism conference taking place in February (?) - would be very interesting to attend - but I don't think I can afford the $1500 fee.

[noob7]

Have you considered declaring yourself a "non-resident" of Australia for taxation purposes and paying a flat 10% tax on everything?

From the current financial year the new tax rate in Australia, for non residents, is 32.5 % for every dollar earned from 0 to $80,000.

Under tax legislation you are automatically considered to be a non-resident after two years out of the country and must pay this rate even if you are a citizen.

You are correct, it has gone up this financial year.

http://atotaxrates.i...-tax-rates-2013

I'm not so sure about the 2 year rule. I think it's a little more complicated than that, otherwise, most Australian expats would fly back to Australia after 1 year 11 months and 29 days.

Instead of a "visa run" they could call it a "tax run."

You're right. They have a 183 day rule. Effectively you have to reside in Oz for half the financial year.

Like it is in most other countries too. Even in Monaco, less than 180 days: taxes are waiting for you!

Edited December 16, 2012 by noob7

[NamKangMan]

30 year lease is almost as expense as buying the land freehold

Peter, you're correct, but leasing and paying monthly over 30 years really helps with cash-flow.

Why can't you compete with a Thai run guest house? Is it due to a disparity in rent and/or wages because you are a farang?

I can compete. The gradual lowering of room rates really is more to do with tourist's perception of how much of a 'quality place' Phuket is. 6 years ago, it was The Pearl of the Andaman. Now it seems to be the sh*thole of the Andaman. Whilst the 5-star tourists are happy to pay high rates for 5-star hotels, in the 2 and 3-star league it's more cut-throat. Thai guesthouses will drop their room rates to a few hundred baht just to fill a room - and tourists pass on this info on web forums etc so that future tourists demand similar rates.

I am sure my little hotels will always be profitable, due to their location by the airport, but I can't say it's 'fun' anymore. I'd rather establish a new hotel(s) in an emerging tourist location ==> Myanmar.

BTW, the Myanmar government and tourist authority is currently doing their master plan to look after foreign tourists. One suggestion is that any crime against a foreign tourist will automatically result in double the normal penalty for the accused if convicted.

Now imagine if Thailand had such a law

Simon

Note to mods - I mention my businesses purely in the scope of this specific discussion and not as any intention to drum up business.

Vietnam has a similar law. Crimes committed against fa oreigner result in double the fine/sentence. Here, you are just an easy target.

Given what you have stated, it's hard to believe they are still building more and more hotels, guest houses and bars.

In my opinion, Phuket really is going down the same path as Pattaya. It will be an island city, built out.

Edited December 16, 2012 by NamKangMan

[IrishIvan]

Simon43 advice was good but instead of leasing the land only in my name my wife would buy the land in her name and i would lease it from her

Currently undeveloped land is way over priced here except for a few select areas

Maybe things will change but i wont hold my breath waiting for it to happen

It seems only people from USA can own land if investing in business here

As far as I know a US citizen can 100% own a Thai company and that company can buy land in the company name. Not exactly the case that US citizens can own land directly in their own name.

And Uncle Sam can chase them to the ends of the earth. The USA is one of the only countries in the world which taxes your earnings overseas! Do you want the IRS on your arse while you are sitting on the beach sipping cocktails?

[Shot]

And Uncle Sam can chase them to the ends of the earth. The USA is one of the only countries in the world which taxes your earnings overseas! Do you want the IRS on your arse while you are sitting on the beach sipping cocktails?

Uncle Sam won't bother, if you follow the rules http://www.irs.gov/I...---Requirements

[phuketrichard]

as this topic is about buying or owning a business i would state this;

Don't do it unless you have 6 months income AFTER all ur set up expenses and assume u will not make 1 baht in that 6 months,

Than u stand a chance