LAWS GOVERNING THE ACQUISITION OF IMMOVABLE PROPERTY BY ALIENS IN THAILAND

Definition of "Aliens" and "Alien Juristic Persons"

Our apologies for the strange language syntax. This has been translated directly from Thai and left this way in an effort to preserve the spirit of the information

Definitions:

• "Aliens" According to the Nationality Act B.E. 2508 of 1965, the term, "Aliens" is defined as natural persons who have no Thai nationality or have lost or relinquished Thai nationality.
• "Alien Juristic Persons" According to Section 97 and 98 of the Land Code, the term, "Alien Juristic Persons" under Section 97 of the Land Code is defined as follows:
1. Limited companies with more than forty nine percent of their registered capital being held by aliens or with more than half of their shareholders being aliens and, in the case of bearer shares (shares whose name of holders are not specified and which can be transferable only by means of delivery of shares' certificates) issued by any limited company to bearers, such shares shall be deemed to be held by aliens.
2. Limited Partnerships or registered ordinary partnerships with capital contribution by aliens being valued at more than forty nice percent of their total capital or with more than half of their partners being aliens.
3. Associations, including cooperatives, in which more than half of the members are aliens or which operate especially or substantially in the interest of aliens;
4. Foundations whose objects are especially or substantially in the interest of aliens.

Section 98 of the Land Code also deals with alien juristic persons and provides as follows: In the case where a juristic person under Section 97 becomes the owner of the capital, a shareholder, or a partner, as the case may be, in another juristic person, this latter juristic person shall also be deemed an alien.

Forms of registered alien juristic persons

1. Juristic persons registered under Thai laws.
2. Juristic persons registered under foreign laws.
3. Juristic persons as defined by the National Executive Council Announcement No.281 (NEC 281) dated 24 November B.E. 2515 of 1972 including.
• Juristic persons without Thai nationality;
• Juristic persons with half or more than half of the capital belonging to aliens;
• Juristic persons with half or more than half of their shareholders, partners or members being aliens, regardless of the amount of the capital invested by aliens;
• Limited partnerships or registered ordinary partnerships, the managing partner or manager of which is an alien.

Laws governing the acquisition of immovable property By Aliens and Alien Juristic Persons

Aliens wishing to acquire immovable property in Thailand must comply with all laws applicable to transactions and types of property concerned. In general, laws governing the acquisition of immovable property by aliens as well as alien juristic persons can be divided into 5 categories as follows:

1. Acquisition of land by aliens;
2. Acquisition of land by alien juristic persons;
3. Acquisition of condominium unit ownership by aliens;
4. Acquisition of condominium unit ownership by alien juristic persons;
5. Lease of immovable property by aliens and alien juristic persons.

Acquisition of land by aliens

In the past, the ministry of interior had issued a Ministerial Regulation by virtue of the Land Code providing that aliens of the countries having treaties with Thailand could own land in Thailand. As the Ministerial Regulation was entirely repealed on 27 November 1971, neither aliens nor alien juristic persons had right to own land in Thailand since then.

Since 19 May 1999, however, the Amendment Land Code Act has come into force; its salient features are as follows:

Aliens wishing to acquire land in Thailand must bring foreign currency into Thailand for certain specified types of investments in an amount to be specified in ministerial regulations which shall in no event be less than 40 Million Baht and obtain permission from the Minister of Interior. Any aliens meeting such requirements may be granted a permission to own land in an area not exceeding 1 rai for residential purposes.

Certain specified types of investments and amounts of capital for investment mentioned above will be subsequently prescribed in ministerial regulations. Except for such residential purposes described above, there is no other change to the Land Act in respect of the acquisition of land by aliens for other purposes.

Acquisition of Land by Spouses of Aliens

According to the most urgent letter No.Mor.Thor. 0710/Vor.792 dated March 23, 1999, the procedures for the acquisition of land by Thais having spouses being aliens, either by lawful marriage (with proper registration of marriage) or unlawful marriage (without proper registration of marriage) and children of aliens, have been changed to be as follows:

Any Thai having an alien spouse may purchase or accept land as a gift with no consideration and register the ownership of such land during marriage under a condition that the spouse must jointly provide a written legal confirmation stating that the entire source of funds for such purchase or gift is solely from the "Personal Property" (as defined by Thai laws) of such Thai. Without written confirmation from an alien spouse, the request for such registration must be referred to the Land Department in order to obtain an approval from the Minister.

Acquisition of Land by Spouses of Aliens

Any Thai who has divorced or separated from an alien spouse may purchase or accept land as a gift with no consideration and register the ownership of such land if it does not appear after investigation that he/she has done so to avoid the law.

Acquisition of Land by Children of Aliens

Any alien's minor having Thai nationality may purchase or accept land as a gift with no consideration and register the ownership of such land if it does not appear after investigation that he/she has done so to avoid the law.

2: Acquisition of Land by Alien Juristic Persons

At present, no alien juristic persons may acquire land or land with buildings situated thereon in Thailand. This is as a result of the revocation of treaties between Thailand and other countries as mentioned earlier. However, certain exceptions are made available for the following alien juristic persons:

1. Alien juristic persons under the Investment Promotion Act:
2. Juristic persons without qualifications under Section 97 and 98 and the Land Code.

Alien Juristic Persons Under the Investment Promotion Act

The Investment Promotion Act provides in brief as follows:

Any juristic person in which more than forty percent of its shareholders are aliens and which is granted a promotion certificate from the Board of Investment (BOI) is permitted to own land if approved by the BOI without any further investigation by the Land Department (according to Section 27 of the Investment Promotion Act B.E. 2520 of 1977).

Juristic Persons Without Qualifications Prescribed by Section 97 and 98 of the Land Code.

Although as a matter of law a juristic person whose no more than half of shareholders is aliens or whose no more than forty nine percent of capital is owned by aliens is permitted to purchase land, in practice, the Land Department requires that any juristic person having its shareholders proportion or the capital contribution by aliens ranging from forty to forty nine percent must obtain an approval for the purchase of land on a case-by-case basis from:

1. - The Land Department, in the case of land located in Bangkok area;
2. - The Governor of the province, in the case of land located outside Bangkok area.

Prior to registration of land ownership's transfer to any juristic person, the Land Department will conduct an investigation as to whether the juristic person is an alien juristic person under Section 97 and 98 of the Land Code. If so, such alien juristic person will not be allowed to own land. The following are criteria for the investigation.

Criteria for Investigation and Approval of Land Acquisition by Alien juristic persons

Private Limited Company or Public Limited Company
    - Investigate evidence from a list of shareholders.

In the case of a private limited company having shareholders being other juristic persons and such juristic persons shareholders having shareholders being other juristic persons, the investigation will be to ascertain whether or not all such juristic person are alien juristic persons.

In the case of a public limited company, a letter from the Stock Exchange of Thailand certifying that it will monitor and control so that the alien shareholders proportion of the company will at any time not be greater than forty nine percent of the registered capital submitted.

Registered Ordinary Partnership or Limited Partnership
    - Investigate its registration certificate

Association or Cooperative
    - Investigate its membership register

Acquisition of Condominium Unit Ownership by Aliens

Reference to the Condominium Act B.E. 2522 of 1979, the Condominium Act (No. 2) B.E. 2534 of 1991 and the Condominium Act (No. 3) B.E. 2542 of 1999, issued date April 28, 1999.

In a condominium, total ownership of aliens or alien juristic persons may not exceed forty nine percent of the aggregate unit space as registered within such condominium.

Exceptions:

Within 5 years from 28 April 1999 to 27 April 2004, the law allows aliens or alien juristic persons to own up to 100% of the aggregate unit space as registered in a condominium. This case is subject to the conditions that:

• The condominium building must be situated in Bangkok, municipality or any other local government authority as prescribed by the Municipal Regulations.
• The land where the condominium and its common area is situated must not exceed 5 rais.

Aliens Permitted to Own Condominium Unit

• Aliens permitted to reside in Thailand under the immigration Law;
• Aliens permitted to enter Thailand under the Investment Promotion Law;
• Other aliens without qualifications under the immigration Law and the Investment Promotion Law;
• Spouses of aliens, and aliens' spouses with divorcement;
• Aliens' minors having Thai nationality.

Aliens Permitted to Reside in Thailand Under the Immigration Law

Pursuant to the Immigration Law, aliens permitted to acquire condominium unit ownership must hold residence permits and may use Thai Baht to purchase condominium units.

Criteria for Applying for a Residence Permit

1. Such persons must be resident in Thailand
2. Such persons must not posses any forbidden traits under the immigration Law such as not having been imprisoned except for petty offenses, not having been deported from Thailand, not having had a residence permit withdrawn, or not having behaved in a manner regarded as dangerous to society or threatening the public.
3. Approval must be sought from the Ministry of Interior
4. The yearly quota of aliens must not exceed one hundred persons per country and, additionally, for stateless aliens, fifty persons per year; however, the following are some exceptions for aliens to be permitted to reside in Thailand in larger numbers than those specified above.

Exceptions:

Ones must bring into Thailand foreign currency of not less than the amount equivalent to 10 Million Baht for investment. The portion of this extra quota must not be more than 5 percent of the yearly quota as mentioned above. Approval from the Director-General of the Police Department must be obtained.

However, no criterion for investment in Thailand as to the types of activity eligible for taking such exceptions has been precisely outlined yet while the BOI has set forth more explicit criteria for granting a permanent residence by virtue of the Investment Promotion Law. Any aliens wishing to acquire a residence permit, may select to follow the criteria of the BOI.

Types of Investment by Bringing into Thailand Foreign Currency to be Eligible for a Residence Permit Under the Criteria of BOI.

Direct Investment

Criteria

Foreign investors must bring in not less than 10 Million Baht to invest in a project which:

1. is new and eligible for investment promotion;
2. is eligible for approval by the Committee for Granting Residence Permits.

Criteria for Projects Eligible for Investment Promotion

1. Investors must bring in funds to invest in a new project that has not started operations.
2. For operating the proposed project, such investment must be in the form of a joint venture in a newly or already established company.
3. Associations, including cooperatives, in which more than half of the members are aliens or which operate especially or substantially in the interest of aliens;

Criteria for Considering Projects not Eligible for Investment Promotion but Eligible for Approval by the Committee for Granting a Residence Permit.

The proposed projects must benefit the economy of the country in the following ways:

• Produce for export
• Increase employment
• Utilize local raw materials
• Locate in regional area
• Encourage technology transfer to Thai nationals

The proposed projects must not be:

• Those restricted under the NEC. 281;
• Those competing in such a way as to harm existing domestic businesses;
• Those hindering the growth of existing domestic businesses, which have already been operated, or which have not been developed yet.

Funds remitted for investment must be invested in ordinary shares of private limited company set up to implement the proposed project with the proportion of its share holding of more than twenty five percent of the registered capital.

Exceptions:

For a project with investment capital exceeding 100 Million Baht (excluding the cost of land and working capital), the Committee for Granting Residence Permit may relax the above proportion of share holding requirement.

The investor must at all times comply with the criteria detailed in 1 and 2 above for at least three years from the date of granting a residence permit.

For direct investment type, the investor may apply for a residence permit not only for himself but also for his spouse, parents, and not more than three children who are unmarried and under 20 years old.

Investment in Securities

Criteria

1. Foreign investors must bring in funds to invest in state enterprise bonds guaranteed by the Minister of Finance and having a term of more than 5 years.
2. The bonds may not be transferred or pledged without the approval of BOI.
3. The required amounts of investment capital per person are:
• - Investor Not less than 8 Million Baht
• - Spouse Not less than 6 Million Baht

Unmarried child under the age of 20:

Not less than 2 Million Baht (Per child)

Investment in a Condominium

Criteria

1. Foreign investors must bring in funds to purchase condominiums that have been registered with BOI.
2. Those must not be mortgaged or disposed within five years.
3. The minimum value of investment is required as follows:
• - Investor Not less than 8 Million Baht
• - Spouse Not less than 6 Million Baht

Unmarried child under the age of 20:

1. - Not less than 2 Million Baht (Per child)

Once a residence permit has been granted, any subsequent purchase of condominium units may be made without using foreign currency.

Exceptions Under Conditions of BOI:

The following are certain groups of aliens eligible for residence permits and are not required to bring foreign currency into Thailand for investment in the above mentioned manner.

Requirements

1. They must possess know-how or expertise in the fields that they are in demand and will benefit the country. Educational and employment references certified by the Royal Thai Embassy or Consulate are also required to be submitted. In the country where there is neither the Royal Thai Embassy nor Consulate, such documents must be instead certified by the notary Public.
2. Documentation evidencing that they used to have an annual income of not less than US$10,000 must be submitted.
3. They must be over the age of 25. Furthermore, a residence permit will also be granted to their family members, i.e, spouses, parents, and unmarried children under the age of 20.

Thai Nationals who have Changed their Citizenship

Requirements

1. They must possess know-how or expertise in the fields that they are in demand and will benefit the country. Educational and employment references must be submitted.
2. They must be over the age of 20. Furthermore, a residence permit will be additionally granted to their family members, i.e., spouses, parents, and unmarried children under the age of 20.

Aliens Permitted to Enter Thailand Under the Investment Promotion Law

Reference to the Investment Promotion Act B.E. 2520

Criteria

Upon obtaining the permission of BOI, they may enter Thailand for the purpose of either studying investment opportunities or doing any other things to benefit investment. The purchase of a condominium unit may be made with Baht Currency.

(This type of alien is not required to have residence in Thailand or to hold a residence permit so as to have the right to acquire condominium unit ownership)

Exceptions:

• Certain groups of aliens, i.e:
• Skilled Workers
• Experts

Spouses and dependents of the skilled workers and experts.

These are not required to obtain promotion status if they are brought into Thailand by any promoted persons. In such cases, they may own condominium units as well.

Other Aliens Without Qualifications Under the Immigration Law and the Investment Promotion Law

Required Documents

1. Passport indicating the nationality of an alien
2. The documents showing the remittance of foreign currency into Thailand, Or the withdrawal of foreign or Baht currency, as the case may be, in either of the following form:
• Evidence of depositing into a foreign currency account with any commercial banks in Thailand (in form Thor. Tor. 3) together with its signature and seal;
• Foreign Currency declaration from the Customs Department;
• Evidence of receipt of purchasing foreign currency issued by authorized company or person attached with the evidence of its being authorized by the Bank of Thailand (currently, other than commercial banks in Thailand, there is no other authorized company or person designated by the Bank of Thailand to handle such transaction);
• Evidence of withdrawal of foreign currency from the account in Thailand;
• Evidence of withdrawal of Baht currency from the account either in or outside Thailand.

Spouses of Aliens and Spouses of Aliens with Divorcement

Case of Purchase or Accept Condominium Unit as a Gift by "Personal Property";

Required Documents

1. Written legal confirmation from alien spouse

Case of Purchase or Accept Condominium Unit as a Gift By: "Communal Marriage Property"

Required Documents

1. The documents showing the remittance of foreign currency into Thailand, or the withdrawal of foreign or Baht currency, similar to those prescribed under heading "3. OTHER ALIENS WITHOUT QUALIFICATIONS UNDER THE IMMIGRATION LAW AND THE INVESTMENT PROMOTION LAW"

Children of Aliens

Required Documents

1. Written legal confirmation from parents or guardian.

Acquisition of Condominium Unit Ownership by Alien Juristic Person

As mentioned in Section 4, total ownership of aliens or alien juristic persons may not exceed forty nine percent of the aggregate unit space as registered within such condominium (also see EXCEPTIONS under this clause)

Alien Juristic Persons Permitted to own Condominium Unit

The following alien juristic persons are permitted to own condominium unit:

1. Alien Juristic Persons under Section 97 and 98 of the Land Code B.E. 2497 and registered as juristic persons under Thai Law.
2. Alien Juristic persons under the Announcement of the National Executive Council No. 281 dated 24 November B.E. 2515 and having promotion privileges under the Investment Promotion Act B.E. 2520 Those permitted under (1) and (2) may purchase condominium units with Thai Baht.
3. Other alien juristic persons without qualifications specified in (1) and (2) above may acquire condominium unit ownership under the condition that they must bring foreign currency into Thailand to make payment for the purchase of condominium unit, or use foreign currency from their accounts in Thailand, or use Baht currency from their accounts either in or outside Thailand.

Procedures and Required Documents for Registration of Condominium Unit Transfer

Alien Juristic Persons under Sections 97 and 98 of the Land Code B.E. 2497 and Registered as Juristic Persons under Thai Law.

Required Documents

• Certificate of Incorporation ("Affidavit") issued no longer than one month.
• Memorandum of Association.
• List of Shareholders issued no longer than one month.
• Form Kor. (Specimen signature of directors duly authorized to sign on behalf of such juristic person)
• Set of specimen signatures of directors.
• Minutes of the meeting.
• Copies of Identification card and the register of household (director) or passport indicating the nationality (of such directors)
• Power of attorney

Restrictions: In this case, the registration of condominium unit transfer can be made only after the investigation and approval of:

• The Land Department, in the case of condominium unit situated in Bangkok area;
• The relevant Governor, in the case of condominium unit situated outside Bangkok area. Or otherwise the purchase must be made by way of bringing into Thailand Foreign Currency to make payment.

Note: Although as a matter of law a juristic person whose no more than half of shareholders is aliens or whose no more than forty nine percent of capital is owned by aliens is permitted to purchase condominium, in practice, the Land Department requires that any juristic person having its shareholders proportion or the capital contribution by aliens of over forty percent must obtain an approval for the purchase of condominium unit.

Alien Juristic Persons under the Announcement of the National Executive Council No. 281 Dated 24 November B.E. 2515 and having Promotion Privileges under the Investment Promotion Act B.E. 2520.

Required Documents

• Certificate of Incorporation ("Affidavit") issued no longer than one month
• Memorandum of Association
• List of shareholders issued no longer than one month
• Form Kor. (specimen signature of directors duly authorized to sign on behalf of such juristic person)
• Set of specimen signatures of directors
• Minutes o the meeting
• Copies of Identification Card and the register of household (director) or passport indicating the nationality (of such director)
• Investment promotion certificate pursuant to the Investment Promotion Law
• Certificate from BOI certifying that it is the promoted juristic person under the Investment Promotion Law
• Power of attorney

Alien Juristic Persons under Sections 97 and 98 of the Land Code and Registered as Juristic Persons under other Laws and other Alien Juristic Persons without Qualifications under the Announcement of the National Executive Council.

Required Documents

Similar to the case of alien natural persons, the documents showing the remittance of foreign currency into Thailand or the withdrawal of foreign or Baht currency are required.

• Evidence of depositing into a foreign currency account with any commercial banks in Thailand (in form Thor.Tor 3) together with its signature and seal
• Foreign currency declaration from the Customs Department
• Evidence of receipt of purchasing foreign currency issued by authorized company or person (none)
• Evidence of withdrawal of foreign currency from the account in Thailand
• Evidence of withdrawal of Baht currency from the account either in or outside Thailand
• Certificate of Incorporation ("Affidavit")
• Memorandum of Association
• List of Shareholders
• Set of specimen signatures of directors
• Minutes of the meeting of the board of directors
• Copy of passport indicating the nationality (of such directors)
• Power of attorney

Lease of Immovable Property by Aliens and Alien Juristic Persons

Pursuant to Section 538 of the Civil and Commercial Code and the Lease of Immovable Property for Commerce and Industry Act, B.E. 2542 (1999), effective as of 19 May 1999, aliens or alien juristic persons may enter into any contracts for leases of immovable property subject to requirements and criteria set out below.

Lease Term

1. The term of any lease contract may not exceed 30 years.
2. Any leases of immovable property for longer duration than 30 years may be made by renewal of the lease contract upon its expiration. Should it be uncertain whether the lessor will lease out such property after the lease contract has expired, an additional provision in respect of the lessor's promise of doing so must be included in the lease contract by simply stating that "at any time prior to the expiration of the lease, the lessee may renew the lease contract upon giving a written notice stating its intention to do so in advance to the lessor".
3. The duration of a lease of land on which building/s on it take many years to be constructed could be varied as follows;
4. The parties may agree that the lease term will commence only after a specified date which maybe estimated on the date immediately upon the completion of the construction;
5. The parties may specify in the contract that the lessee will construct building/s upon the lessor's land and will thereafter take on lease land including said building/s for a period of 30 Years as from the date of the completion of such construction.

Exceptions:

The lease term for the purpose of carrying on the business of commerce or industry may be extended to 50 years and can be renewed for another 50 years term.

Criteria for Executing Lease Contract

1. To be enforceable, a lease of immovable property for a term of less than 3 years must be evidenced at least in writing but is not required for registration with the Land Department.
2. A lease for more than 3 years and up to 30 years or for life of the lessor or lessee must be made in writing and registered with the relevant Land Department, otherwise;
3. Such lease is enforceable only for 3 years. The foregoing however shall not be prejudicial to the right of either party to be indemnified by the other against all damages arising from the breach of the lease contract. In addition, neither party shall be entitled to take any action or proceeding whatsoever against any third party.

Lease of Immovable Property for Commerce and Industry

• - The lease must be made in writing and registered with the Land Department; otherwise the lease is void.
• - The lease of land more than 100 rais must be approved by the Director General of the Land Department.
• - The Lessor must be the owner of that immovable property.
• - Lease right may be used as security for the performance of the lessee's obligations by means of mortgage.
• - Rights and duties under the lease agreement shall pass on to their heirs.

Transfer of Lease Right and Sublease of Immovable Property

• The law provides that the lessee may not sub-let or transfer the leasehold, either in whole or in part, to any third person, except as otherwise provided in the lease agreement. The following are some salient features of the differences between sublease and transfer
• The transfer of lease right is the event where the lessee assigns or transfers the entire rights, obligations and liabilities with regard to the lease to a third party and then such lessee shall not be held liable in any way to the lessor. That is to say;
• The original lessee (the assignor) shall no longer be the lessee or a party to the lease agreement.
• Upon the transfer, the transferee shall become the lessee or otherwise a new party to the lease agreement in place of the original transferee (the assignor)
• The lease agreement shall still be the only agreement between the parties, the lessor and the new lessee.
• Sublease is a lease executed by the lessee to a third party, conveying rights to use some or all of the leased property. In other words, another contract, the sublease agreement, shall be made between the original lessee (the sub-lessor) and the sub lessee. Legal consequences of this sublease arrangement include;

• With respect to the sublease agreement, the lessee shall become the sub lessor.
• With respect to the lease agreement, the lessee shall still be in its position as the lessee.
• There shall be two separate agreements for the same leased property. They are (1) the lease agreement between the lessor and the lessee, and (2) the sublease agreement between the sub lessor (the lessee in the former) and the sub lessee (the new party)
• The lessee shall have the same rights and obligations and remain fully responsible towards the lessor

Lease of Immovable Property for Commerce and Industry.

1. The lessee shall sub-let or transfer the lease right either in whole or in part to any third person, except as otherwise provided in the lease agreement.
2. Any amendment of the registration of a lease, sublease, mortgage of lease right, transfer of lease right or an inheritance may not be asserted against any third party unless made in writing and registered with the relevant Land Department.

Legal Consequences in Case of the Transfer of Ownership of Immovable Property During Lease Term

In the event that the lessor sells or transfers the ownership of the leased property to a third party, the lease agreement shall be binding upon the transferee. As the transferee must assume all rights and obligations of the transferor (the former lessor), it shall become a new lessor in place of the original lessor since then.

Expenses of Ownership Transfer of Immovable Property

The transfer of an immovable property, including the purchase of land, land with building or a condominium unit owned by a natural person, including an alien and an alien juristic person shall be subject to the following costs and taxes:

• Transfer Fee
• The transfer fee shall be collected at the rate of 2% of the appraised value of the property of the Land Department.
• Stamp Duty
• The stamp duty shall be collected at the rate of 0.5% of the actual purchase price or the appraised value of the Land Department, whichever is the higher.

Exceptions:

If the seller is subject to any specific business tax, the seller is exempt from the payment of the stamp duty. However, if the stamp duty has already been paid to the Land Department, the seller shall have the right to claim for the refund in full within 6 months after the payment.

Withholding Tax

The withholding Tax is a tax payable by the seller of an immovable property to the Land Department immediately at the occurrence of the purchasing. The collection of the withholding tax can be divided into 2 cases as follows:

• Withholding Personal Income Tax: The computation shall be based on the appraised value of the Land Department.
• Withholding Corporate Tax: The computation shall be based on the appraised value or the actual purchase price, whichever is higher.

Withholding Personal Income Tax

The collection of the withholding personal income tax shall be divided into 2 cases:

• Sale of an immovable property acquired by way of inheritance or gift;
• Sale of an immovable property acquired by other way that is not by way of inheritance or gift.

Exceptions:

The sale or transfer of the ownership of an immovable property in some cases is exempted from the income tax as follows:

• Transfer of the ownership of the immovable property acquired by way of inheritance to heir either the statutory heir or legatee;
• Transfer of the ownership of the immovable property to a lawful child and without consideration, but excluding the case of an adopted child;
• Transfer of the ownership of the immovable property acquired by way of inheritance or gift to any third party, only in the part which is not exceeding Baht 200,000 throughout the tax year and that immovable property must be situated outside Bangkok, municipality, sanitation district, Pattaya or local government administration established under specific laws;
• Transfer of the ownership of the immovable property to the government agency and the state enterprise without consideration;
• Exchange of the ownership of the immovable property with the government agency and the state enterprise;
• Transfer of the ownership of the property to the government agency and the state enterprise in a way that transferor receives the remuneration in a kind of the right to use such property transferred for the production of his/her own products;
• Expropriation of the immovable property before the 27th of February 1982 under the provisions of the law governing the expropriation of the immovable property;
• Division of "Communal Marriage Property" on the part of the immovable property that each spouse receives an equal payment out of it;
• Amendment or addition of the name of either spouse to the document of right in connection with the immovable property which is the "Communal Marriage Property".

Computation of Withholding Personal Income Tax

Sale of Immovable Property Acquired by way of Inheritance or Gift

In this case, withholding tax shall be imposed on the seller at the occurrence of the purchasing of the immovable property. At the end of the tax year, the seller shall compute his/her annual income tax payable in accordance with the normal personal income tax rate.

Method of Computing Withholding Personal Income Tax

• 1st Step: The appraised value of the immovable property shall be deducted by the income exempted from tax (according to the Revenue Code) but not more than Baht 200,000 throughout the tax year (The deduction is allowed only in case where the immovable property is situated outside Bangkok, municipality, sanitation district or Pattaya.
• 2nd Step: The result shall be deducted at the lump sum rate of 50% as expenses
• 3rd Step: The result shall be divided by the number of years in possession (this shall be counted on a year by year basis but not exceeding 10 years or in case of exceeding 10 years, it shall be counted only at 10 years).
• (The number of years in possession means the number of years starting from the year in which the property was acquired. Fraction of year shall be counted as full year).
• 4th Step: The result shall be multiplied by the personal income tax at progressive rates as follows;
• Income Tax Rate % Tax Liability on bracket
• 50,001-100,000 5 2,500
  100,001-500,000 10 40,000
  500,001-1,000,000 20 100,000
  1,000,001-4,000,000 30 90,000
  4,000,001-and up 37
  
• 5th Step: The result shall be multiplied by the number of years in possession.
• 6th Step: The result shall be the amount of the withholding income tax payable to the Land Department.

Sale of Immovable Property Acquired by any other ways than by way of Inheritance or Gift

The sale of the immovable property acquired by other ways can be classified into 2 types as follows:

• Sale of the immovable property acquired by way of purchase or exchange without trade or profit seeking purpose;
• Sale of the immovable property acquired by way of purchase or exchange with trade or profit seeking purpose.
• In both cases, withholding tax shall be imposed on the seller at the occurrence of the purchasing of the immovable property. At the end of the tax year, the seller has the right to elect the method of computing the annual personal income tax. The seller may include the income derived from the sale of the immovable property into the total assessable income of the tax year for computing the annual income tax payable, depending on which method the seller will have to pay higher or lower amount of tax.

Sale of Immovable Property Acquired by way of Purchase or Exchange Without Trade or Profit Seeking Purpose

Method of Computing Withholding Personal Income Tax

• 1st Step: The appraised value of the immovable property shall be deducted with expenses at the lump sum rates as follows:
• The rates prescribed by the Royal Decree (No. 165) B.E. 2529
• No of years in possession 1 2 3 4 5 6 7 8 or more
• Rate of deduction as expenses % 92 84 77 71 65 60 55 50
• 2nd Step: The result shall be divided by the number of years in possession (this shall be counted on a year by year basis but not exceeding 10 years or in case of exceeding 10 years, it shall be counted only at 10 years)
• 3rd Step: The result shall be multiplied by the personal income tax at progressive rates.
• 4th Step: The result shall be multiplied by the number of years in possession.
• 5th Step: The result shall be the amount of the withholding income tax payable to the Land Department.

Method of Computing Annual Personal Income Tax

• In the case where the seller elects not to include the income derived from the sale of the immovable property into the total assessable income of the tax year, the seller can compute his/her annual income tax payable as usual. This is because it is deemed that the seller has already paid the amount of the withholding income tax on the sale of the immovable property to the Land Department.
• In the case where the seller elects to include the income derived from the sale of the immovable property into the total assessable income of the tax year, the seller must take careful consideration on whether the inclusion of the income will cause higher net annual income base which will then result in higher tax rate or not. The method of computation shall be as follows:

• 1st Step: Income from other sources shall be deducted with expenses according to the normal rules (refer to the Revenue Code)
• 2nd Step: The appraised value of the immovable property shall be deducted with expenses in two options:
• Option 1: Elect to deduct the expenses at the lump sum rate prescribed by the Royal Decree (No. 165) B.E. 2529 that was already paid to the Land Department;
• Option 2: Elect to deduct the actual expenses paid.
• 3rd Step: The result of the 1st step shall be added to the result of the 2nd step.
4th Step: The total income in the 3rd step shall be multiplied by the personal income tax at progressive rates (refer to the Revenue Code)
• 5th Step: The result shall be the amount of the annual income tax payable for the tax year to the Revenue Department.

Sale of Immovable Property Acquired by way of Purchase or Exchange with Trade or Profit Seeking Purpose.

Method of Computing Withholding Personal Income Tax

The computation shall be preceded in 5 steps in the same manner as in clause "Sale of Immovable Property Acquired by way of Purchase or Exchange without Trade or Profit Seeking Purpose" (in the previous section)

Method of Computing Annual Personal Income Tax

Similar to the "Method of Computing Annual Personal Income Tax" under the section of "Sale of Immovable Property Acquired by way of Purchase or Exchange without Trade or Profit Seeking Purpose". However, in the case that the seller elects to include the income derived from the sale of the immovable property into the total assessable income of the tax year, the deduction of expenses under the 2nd step must be based on the lump sum rate, not the actual expenses paid.

Withholding Corporate Income Tax

The withholding corporate income tax shall be collected from the ownership transfer of the immovable property at the rate of 1% of the actual purchase price or the appraised value, which ever is higher.

Specific Business Tax

The specific business tax shall only be collected from the sale of the immovable property with trade or profit seeking purpose at the rate of 3.3% of the appraised value or the actual purchase price, whichever is higher.

Sale of Immovable Property Subject to Specific Business Tax

• The sale of land subdivision which is registered under the regulations regarding the land Subdivision.
• The sale of a condominium unit which is registered under the Condominium Act.
• The sale of a building which is constructed for sale or indicated as constructed for sale, including the sale of land where the building e.g. Shop-houses, Commercial Building, House or Townhouse, is situated whether or no the sales are made separately.
• The sale of the Immovable Property that does not fall within the descriptions of 1, 2 or 3 but is made plot in the same manner as the statutory land subdivision, the sale of a condominium or the sale of divided buildings, or the sale of the property without being divided, but clearly investigated that the property will be divided after the sale.
• The sale of the immovable property, which is possessed for conducting business, in order to move to a new place, except for the sale of land used for agriculture but not including the building on such land, e.g. the sale of a field for growing rice, crop or plant.
• The sale of the immovable property that does not fall within the descriptions of 1-5 but is made within 5 years from the date of acquisition of such immovable property.

Exceptions:

Sale of Immovable Property Exempt from Specific Business Tax

• The immovable property that is sold or expropriated under the law governing expropriation of the immovable property.
• The sale of the immovable property acquired by way of inheritance which is only on the part of "Communal Marriage property" of the dead person and the sales of the immovable property acquired by way of inheritance by the administration of the undivided estate of the dead person.
• The sale of the immovable property used as the principal place of residence subject to the following conditions:
• The seller is named in the house registration (according to the law governing citizenship registration) and has resided therein for not less than 1 year from the date of the acquisition of the immovable property.
• In case of the land and the building or structure acquired on different period
• If the name of the seller does not appear in the house registration but he/she wishes to be eligible for the exemption of the specific business tax, the seller must have possessed the immovable property for not less than 5 years from the date of acquisition. In case that the seller wishes to sell land and building or structure separately, the period of possession shall be counted from the acquired date of the immovable property intended to sell. In case that the seller wishes to sell the land including building or structure together, the period of possession shall be counted from the immovable property acquired a the last.
• In case of the sale of the immovable property that is a "Communal Marriage Property", both spouse or either of them must be named in the house registration of the house of residence for not less than 1 year.
• In case either spouse gives the ownership of "Communal Marriage Property", on his/her part to the other, the giver must be named in the house registration for not less than 1 year.
• The transfer of the ownership without any consideration to the lawful child except for the adopted child.
• The transfer of the ownership by way of inheritance to the heir of the legatee who is the statutory heir and without any consideration.
• The transfer of the ownership to the government agency or to the government organization without any consideration.
• The exchange of the ownership with the government agency or the government organization without any consideration.

Local Development Tax

The local development tax shall be collected from the possession of the landowner on land only in accordance with the Local Development Tac Act B.E. 2508 as follows:

• The land owner who possesses the land till the 1st of January of each year shall have to duty to pay the Local Development Tax at the rate computed on the medium value of the land of the year concerned according to rate prescribed by the government agency pursuant to the law
• The medium value of the land is appraised on the last purchase price in good faith of lands in the same area of not less than 3 previous purchases within the period not exceeding 1 year before the date of appraisal, which shall then be averaged to obtain the medium value of the land without taking into account the value of the building and structure.

Local Development Tax Rate

Under article 7

Table 1

Class	Medium Value of Land	Tax per Rai Baht	Remarks
30	More than 10,000 Baht to 15,000 Baht per rai	55	(1) Agricultural land used only for growing shall be chargeable at half the rate, however if land owner does the farming himself /herself, the maximum tax charged shall not exceed 5 Baht per rai
31	More than 15,000 Baht to 20,000 Baht per rai	60	"
32	More than 20,000 Baht to 25,000 Baht per rai	65	"
33	More than 25,000 Baht to 30,000 Baht per rai	70	"
34	More than 25,000 Baht to 30,000 Baht per rai as follows: (1) Tax of 70 Baht for the First 30,000 Baht. (2) Fraction - Fraction of 5,000 Baht shall be counted as 10,000 Baht the tax shall be 25 Baht. If less shall be discharged		(2) Land left idle shall be chargeable at twice the rate
35	More than 40,000 Baht to 50,000 Baht per rai	90	"
36	More than 50,000 Baht to 60,000 Baht per rai	100	"
37	More than 60,000 Baht to 80,000 Baht per rai	150	"
38	More than 80,000 Baht to 100,000 Baht per rai	200	"
39	More than 100,000 Baht to 200,000 Baht per rai	250	"
40	More than 200,000 Baht to 300,000 Baht per rai	300	"
41	More than 300,000 Baht to 400,000 Baht per rai	350	"
42	More than 400,000 Baht to 500,000 Baht per rai	400	"
43	More than 500,000 Baht p/rai tax shall be paid per rai as follows: (1) Tax of 100 Baht of every 100,000 Baht. (2) Fraction    Fraction of 50,000 Baht. Shall be counted as 100,000 Baht, if less shall be Discharged.		"

REMARKS:

• The above tax rates do not include Class 1 - 29 as their Medium value is very low
1. (1) Fraction of a rai, the rate shall be reduced proportionately
2. (2) Fractions of a square wah shall be disregarded.
• When the tax is calculated, fractions of 10 stang shall be disregarded

Expenses of lease of an immovable property pursuant to the Land Code shall be as follows:

Lease Register Fees
1. The lease register fee shall be collected at the rate of 1% of the total rental throughout the lease term.

(Rental shall include the remuneration for lease, the remuneration during the construction, the key money, the fee for the land's surface, the construction cost contribution or other amount of money which is paid by the lessee to the lessor for the lease benefits).

2. Stamp DutyThe stamp duty shall be collected on the register of lease at the rate of 0.1% of the total rental throughout the lease term.

3. Building and Land Tax: The house and land tax shall be collected at the rate of 12.5% of the yearly rental according to the lease agreement or the annual value assessment by the Land Department, whichever is the higher (according to the House and Land Tax Act, B.E. 2475)

(The annual value means the amount of money for which the property may reasonably be gained from the lease out of a property for each year if the property is offered for lease)

Fee for Transfer of Lease Right

In case the lessee desires to transfer the lease right to the third party (the lease on the immovable property has been registered)

Lease Register Fee: The lease register fee shall be jointly paid by the transferor and the transferee at the rates specified in Clause 1 above.

Stamp Duty: The stamp duty shall be collected on the new register of lease at the rate as specified in Clause 2 above.

Value Added Tax: The value added tax shall be collected at the rate of 7% of the remuneration of the transfer of the lease right. The transferor is responsible to pay the tax and must also apply for value added tax registration before the payment.

The value added tax shall be paid only in case the remuneration of the transfer of the lease right throughout the remaining lease term exceeds 1.2 Million Baht or higher.

Income Tax

The lessor is subject to the following income tax:

Personal Income Tax

The total income under the lease agreement shall be divided by the number of the lease years (in case the lease term is more than 1 year) in order to compute the rental on each year

Expenses from lease shall be deducted from the result in 1 as follows:

1. - House, building or other construction shall be deducted at the lump sum rate of 30%. Land used for agriculture purposes shall be deducted at the lump sum rate of 20%. Land used for other purposes shall be deducted at the lump sum rate of 15% (in the case of being Sub-lessor, the deduction shall be allowed at the same aforementioned rates).
   The result shall be computed for the personal income tax in accordance with the personal income tax at progressive rates.
2. - Condition: In case of an alien who has resided in Thailand less than 180 days, the tax shall be collected at the rate of 15% of the rental paid. The result shall be computed for the corporate income tax at the rate of 30% of the net profits of the juristic person.
3. - the rate of 30% of the net profits of the juristic person.

Corporate Income Tax

The total income under the lease agreement shall be divided by the number of the lease years (in case the lease term is more than 1 year) in order to compute the rental on each year.

Expenses from lease shall be deducted from the result in 1 at the actual amount paid.

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