Tenant paying taxes?

[thaibutty]

I am currently looking for an office for my company. Used to work from home in a separate room but company has been growing and immigration also giving a hard time with the home office setup.

Anyways, have found a place, 2-storey townhouse in Chalong, at an acceptable price to rent as company office.Today we were going to sign the rental documents and upon checking them they clearly stated that we as the tenant would be required to pay all taxes on the property. 5% withholding tax to the owner to cover for the reduced rental fee and also the yearly land tax of the property.

 Obviously, we disagreed. I understood that a lot of places are asking for the withholding tax to be replaced by the tenant in case the tenant is a company.

 

But I never heard that the tenant should pay the land tax instead of the owner.

 

Is that common practice on the island?

 

I am not going to rent the place but just curious what your experiences are with this topic.

[LivinginKata]

Usually with a residential rental contract then the owner of the property pays all the taxes. We state that clearly in our rental contracts.  I have no experience with office rental contract but looks to me like the owners are trying to stiff you with extra 'expenses'  You made the correct decision by walking away.

[Shot]

Mrs. S rents a few commercial properties and the landlord pays all taxes. Good on you for walking away.

[Psimbo]

Good call- he probably would have screwed you over on a deposit as well. Now he will sit scratching his backside with an empty property- som nam na!

[LivinginKata]

I am confused by the term 'land tax' in your OP ...

 

My wife and our comapny own a number of properties. We do pay property tax on rental units.  Never paid land tax as far as I know. I've heard that some sort of annual land tax is in the works, but not yet implemented. 

[thaibutty]

 

1 hour ago, LivinginKata said:

I am confused by the term 'land tax' in your OP ...

 

My wife and our comapny own a number of properties. We do pay property tax on rental units.  Never paid land tax as far as I know. I've heard that some sort of annual land tax is in the works, but not yet implemented. 

 

I am not sure about it either. The contract was in Thai. I never heard that exact term before but my wife explained it as similar to "pasee tee din" ภาษีที่ดิน 
So it probably is something as a land tax.

 

My wife actually called the revenue department about it later this afternoon. They stated that if the landlord is renting out a place they are subject to pay a landtax of 12.5% of the yearly rental fee. However, the revenue department does not collect this tax by themselves. It is the owners responsibility to inform the local authorities. If they don`t the authorities don`t know and no tax is being collected...

 

Also, just found this piece:

https://www.samuiforsale.com/real-estate/property-law-building-and-land-tax.html

 

So, apparently this only affects individual property owners.

Edited August 10, 2016 by thaibutty

[Jimi007]

5 hours ago, LivinginKata said:

I am confused by the term 'land tax' in your OP ...

 

My wife and our comapny own a number of properties. We do pay property tax on rental units.  Never paid land tax as far as I know. I've heard that some sort of annual land tax is in the works, but not yet implemented. 

 

I am confused now too. My wife has 50 Rai in her name and has to pay tax on it every year. Her father also pay on his farm lands.

[SOTIRIOS]

....the idea is that you will be paying their retirement....

 

...after 100 years of foreigners coming here....still not a stitch of clear law or procedure on anything for us....

 

..so we are duped...then nabbed for breaking the laws that we were misinformed about....

 

...and it often costs us a fortune...if not everything....

 

...and our governments...and embassies....sit idly by....

 

 

[LivinginKata]

16 hours ago, thaibutty said:

 

 

I am not sure about it either. The contract was in Thai. I never heard that exact term before but my wife explained it as similar to "pasee tee din" ภาษีที่ดิน 
So it probably is something as a land tax.

 

My wife actually called the revenue department about it later this afternoon. They stated that if the landlord is renting out a place they are subject to pay a landtax of 12.5% of the yearly rental fee. However, the revenue department does not collect this tax by themselves. It is the owners responsibility to inform the local authorities. If they don`t the authorities don`t know and no tax is being collected...

 

Also, just found this piece:

https://www.samuiforsale.com/real-estate/property-law-building-and-land-tax.html

 

So, apparently this only affects individual property owners.

 

That the 12% property tax we pay based on rental income. It is collected by the local tesibaan office and not the revenue office.Looks like the owner wanted you to pay his local taxes.

Edited August 11, 2016 by LivinginKata

[DrDave]

I know that this isn't really relevant to Thailand, but the practice of tenants paying land/property taxes is very common in the US for commercial properties, but never for residential. Not standard practice in Thailand though, and you were smart to walk away from a contract like that.

 

The majority of retail/restaurant/etc commercial leases in the US are what's known as "triple net", or "+++". That is, the tenant pays the base rental rate, plus (1) common area services and maintenance, (2) annual property tax, and (3) a percentage of gross sales. In addition to these 3 extra charges, in some states, the rental rate is subject to ordinary sales tax (similar to VAT) at rates of 4-9%. Little wonder that small businesses can't make any money.