LAWS GOVERNING THE ACQUISITION OF IMMOVABLE PROPERTY BY ALIENS IN THAILAND
1: Definition of “Aliens “ and “Alien Juristic Persons”.
1) “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.
2) “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.
2: 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 with Divorcement
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.
3: 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.
1) 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).
2) 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:
- The Land Department, in the case of land located in Bangkok area;
- 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
1. 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.
2. Registered Ordinary Partnership or Limited Partnership
- Investigate its registration certificate
3. Association or Cooperative
- Investigate its membership register
4: 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
The following aliens are permitted to own condominium unit:
1) Aliens permitted to reside in Thailand under the immigration Law;
2) Aliens permitted to enter Thailand under the Investment Promotion Law;
3) Other aliens without qualifications under the immigration Law and the
Investment Promotion Law;
4) Spouses of aliens, and aliens’ spouses with divorcement;
5) Aliens’ minors having Thai nationality.
1. 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 offences, 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.
1) Direct Investment
Criteria
1. Foreign investors must bring in not less than 10 Million Baht to invest in a
project which:
* is new and eligible for investment promotion;
* 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. The proposed project must be conducive to the economy of the
country such as by assisting in export marketing or by bringing in
appropriate technology for using in such a project.
Criteria for Considering Projects not Eligible for Investment Promotion but
Eligible for Approval by the Committee for Granting a Residence Permit.
1. 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
2. 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.
2. 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 shareholding
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
shareholding requirement.
3. 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.
4. 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.
2. 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)
3. 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:
- 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.
1. Experts or Academics
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.
2. 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.
2. 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 dependants 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.
3. Other Aliens Without Qualifications Under the Immigration Law
and the Investment Promotion Law
Any aliens other than those lawfully permitted to reside in or enter
Thailand as fully described above may own condominium units by means
of bringing foreign currency into Thailand, using foreign currency from
their accounts in Thailand, or using Baht currency from their accounts
either in or outside Thailand to pay for the purchase of condominium
units.
4. 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 condominium unit
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 condominium
units as a gift with no consideration and register the ownership of such
condominium unit 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. However,
such approval will be unnecessary if the purchase of condominium units is
made by means of bringing foreign currency into Thailand, using foreign
currency from their accounts in Thailand, or using Baht currency from
their accounts either in or outside Thailand.
Spouses of Aliens with Divorcement
· Any Thai who has divorced or separated from an alien spouses may
purchase or accept condominium unit as a gift with no consideration
and register the ownership of such condominium unit if it does not
appear after investigation that he/she has done so to avoid the law.
5. Children of Aliens
· Any alien’s minor having Thai nationality may purchase or accept
condominium units as a gift with no consideration and register the
ownership of such condominium unit if it does not appear after
investigation that he/she has done so to avoid the law.
Procedures and Required Documents for Registration of
Condominium Unit Transfer
1. Aliens permitted to Reside in Thailand under the Immigration
Law
Required Documents
1. Passport indicating the nationality of an alien and certificate of permanent
residence (in form of either Tor. Mor. 11, Tor. Or. 15, or Tor, Mor, 17, as
the case may be) issued by the Immigration Division of the Police
Department.
2. Alien book issued by the Police Station having jurisdiction over an alien’s
place of residence.
2. Aliens permitted to Enter Thailand under the Investment
Promotion Law
Required Documents
1. Passport indicating the nationality of an alien
2. Certificate evidencing that the alien is permitted to legally enter Thailand
under the Investment Promotion Law.
3. 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.
4. Spouses of Aliens and Spouses of Aliens with Divorcement
Case of Purchase or Accept Condominium Unit as a Gift by “Personal
Property”;
Required Document
- Written legal confirmation from alien spouse
Case of Purchase or Accept Condominium Unit as a Gift By: “Communal
Marriage Property”
Required Documents
- 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”
5. Children of Aliens
Required Document
- Written legal confirmation from parents or guardian.
5. 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
1. 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
1. Certificate of Incorporation (“Affidavit”) issued no longer than one month.
2. Memorandum of Association.
3. List of Shareholders issued no longer than one month.
4. Form Kor. (Specimen signature of directors duly authorized to sign on behalf
of such juristic person)
5. Set of specimen signatures of directors.
6. Minutes of the meeting.
7. Copies of Identification card and the register of household (director) or
passport indicating the nationality (of such directors)
8. Power of attorney
Restrictions: In this case, the registration of condominium unit transfer
can be made only after the investigation and approval of:
1. The Land Department, in the case of condominium unit situated in
Bangkok area;
2. 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.
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.
Required Documents
1. Certificate of Incorporation (“Affidavit”) issued no longer than one month
2. Memorandum of Association
3. List of shareholders issued no longer than one month
4. Form Kor. (specimen signature of directors duly authorized to sign on behalf
of such juristic person)
5. Set of specimen signatures of directors
6. Minutes o the meeting
7. Copies of Identification Card and the register of household (director) or
passport indicating the nationality (of such director)
8. Investment promotion certificate pursuant to the Investment Promotion Law
9. Certificate from BOI certifying that it is the promoted juristic person under the
Investment Promotion Law
10. Power of attorney
3. 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.
1. 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
2. Foreign currency declaration from the Customs Department
3. Evidence of receipt of purchasing foreign currency issued by authorized
company or person (none)
4. Evidence of withdrawal of foreign currency from the account in Thailand
5. Evidence of withdrawal of Baht currency from the account either in or outside
Thailand
6. Certificate of Incorporation (“Affidavit”)
7. Memorandum of Association
8. List of Shareholders
9. Set of specimen signatures of directors
10. Minutes of the meeting of the board of directors
11. Copy of passport indicating the nationality (of such directors)
12. Power of attorney
6. 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.
1. Lease Term
· The term of any lease contract may not exceed 30 years
· 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”.
The duration of a lease of land on which building/s on it take many years to be
constructed could be varied as follows;
· 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;
· 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.
2. Criteria for Executing Lease Contract
· 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.
· 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;
· 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.
· The promise given by the lessor in the aforementioned manner shall be
bound upon the parties concerned only, in the event of the death of either
party prior to the declaration of intention to perform as so promised, such
promise may not be enforceable against the heir of such 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.
3. Transfer of Lease Right and Sublease of Immovable Property
· The law provides that the lessee may not sublet 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 sublessor) 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.
· The lessee shall sublet or transfer the lease right either in whole or in part
to any third person, except as otherwise provided in the lease agreement.
· 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.
4. 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.
7. 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:
1. Transfer Fee
The transfer fee shall be collected at the rate of 2% of the appraised value of the property
of the Land Department.
2. 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.
3. 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:
1. Withholding Personal Income Tax: The computation shall be based on the
appraised value of the Land Department.
2. 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:
1. Sale of an immovable property acquired by way of inheritance or gift;
2. Sale of an immovable property acquired by other way that is not by way of
inheritance or gift.
Exceptions:
The sale or transfer o the ownership of an immovable property in some cases is
exempted from the income tax as follows:
1. Transfer of the ownership of the immovable property acquired by way of
inheritance to heir either the statutory heir or legatee;
2. Transfer of the ownership of the immovable property to a lawful child and
without consideration, but excluding the case of an adopted child;
3. 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;
4. Transfer of the ownership of the immovable property to the government
agency and the state enterprise without consideration;
5. Exchange of the ownership of the immovable property with the government
agency and the state enterprise;
6. 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;
7. Expropriation of the immovable property before the 27th of February 1982
under the provisions of the law governing the expropriation of the
immovable property;
8. Division of “Communal Marriage Property” on the part of the immovable
property that each spouse receives an equal payment out of it;
9. 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:
(1) Sale of the immovable property acquired by way of purchase or
exchange without trade or profit seeking purpose;
(2) 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
1. 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.
3. 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” (in previous section”. 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.
4. 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
1. The sale of land subdivision which is registered under the regulations
regarding the land Subdivision.
2. The sale of a condominium unit which is registered under the Condominium
Act.
3. 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. Shophouses,
Commercial Building, House or Townhouse, is situated whether or no the
sales are made separately.
4. 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.
5. 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.
6. 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
1. The immovable property that is sold or expropriated under the law governing
expropriation of the immovable property.
2. 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.
3. 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.
4. The transfer of the ownership without any consideration to the lawful child
except for the adopted child.
5. The transfer of the ownership by way of inheritance to the heir of the legatee
who is the statutory heir and without any consideration.
6. The transfer of the ownership to the government agency or to the government
organization without any consideration.
7. The exchange of the ownership with the government agency or the government
organization without any consideration.
5. 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 Remarks
Baht Stang
30 More than 10,000 Baht (1) Agricultural land
to 15,000 Baht per rai 55 0 used only for growing
annual crops
31 More than 15,000 Baht - it shall be
to 20,000 Baht per rai 60 0 chargeable at half
the rate, however if the
32 More than 20,000 Baht land owner does the
to 25,000 Baht per rai 65 0 farming himself /
herself, the maximum
33 More than 25,000 Baht tax charged shall not
to 30,000 Baht per rai 70 0 exceed 5 Baht per rai
34 More than 30,000 Baht p/rai
tax shall be paid per rai
as follows:
(1) Tax of 70 Baht for the
First 30,000 Baht.
(2) Fraction (2) Land left idle shall
- Fraction of 5,000 baht shall be chargeable at twice
be counted as 10,000 Baht, the rate
the tax shall be 25 Baht.
If less shall be discharged
35 More than 40,000 Baht
to 50,000 Baht per rai 90 0
36 More than 50,000 Baht
to 60,000 Baht per rai 100 0
37 More than 60,000 Baht
to 80,000 Baht per rai 150 0
38 More than 80,000 Baht
to 100,000 Baht per rai 200 0
39 More than 100,000 Baht
to 200,000 Baht per rai 250 0
40 More than 200,000 Baht
to 300,000 Baht per rai 300 0
41 More than 300,000 Baht
to 400,000 Baht per rai 350 0
42 More than 400,000 Baht
to 500,000 Baht per rai 400 0
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, is less shall be
Discharged.
REMARKS: 1. The above tax rates do not include Class 1 – 29 as their
Medium value is very low
2. (1) Fraction of a rai, the rate shall be reduced proportionately
(2) Fractions of a square wah shall be disregarded.
3. When the tax is calculated, fractions of 10 stang shall be
disregarded
8. Expenses of Lease of Immovable Property
Expenses of lease of an immovable property pursuant to the Land Code shall be as
follows:
1. Lease Register Fee
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 Duty
The 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)
4. 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)
1. 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.
2. Stamp Duty: The stamp duty shall be collected on the new register of lease at
the rate as specified in Clause 2 above.
3. 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.
5. Income Tax
The lessor is subject to the following income tax:
1. Personal Income Tax
1. 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.
2. Expenses from lease shall be deducted from the result in 1 as
follows:
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).
3. The result shall be computed for the personal income tax in
accordance with the personal income tax at progressive rates.
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.
2. Corporate Income Tax
1. 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.
2. Expenses from lease shall be deducted from the result in 1 at
the actual amount paid.
4. The result shall be computed for the corporate income tax at
the rate of 30% of the net profits of the juristic person.
Condition: In case of an alien juristic person, which is not
carrying on the business in Thailand but has received income from
the lease in Thailand, the lessee shall deduct tax at the rate of 15%
of the rental paid and then remit it to the Revenue Department on
Behalf of the lessor.
