Duensing Kippen

You might have heard something like the following all too common assertion: “the party named in a building permit is considered to be the owner of the that building.” To have heard such may have been particularly disturbing to many foreigners who are allowed to legally own buildings in Thailand.

It is a common misunderstanding that foreigners are per se restricted from owning land in Thailand. One of the most interesting exceptions from the restrictions of foreign ownership of land in Thailand has been enacted for foreigners who bring at least Thai baht forty million equivalent into Thailand for certain prescribed investments.

The Foreign Business Act (1999) of Thailand (the "Act") generally restricts foreigners from engaging in most business activities in Thailand, without special permission as provided by the Act. Serious violations of the Act by a foreigner or facilitated by a Thai carry significant criminal penalties.

Many purchasers of real estate in Thailand are not using their newly purchased home as a permanent personal residence. Such assets are often meant to be used as a holiday home only and are unoccupied for the remainder of the year. This article will discuss the taxation of individuals who own real estate in Thailand and who receive rental income from renting out the property.

What people commonly suspect in the Thai real estate market is that if a company sells immovable property such as land it is subject to a specific “capital gains tax” or that the sale of that land is taxed at the corporate income tax (“CIT”) rate of 30%. However, such is not necessarily the case.

If you or your company own a condominium unit or villa here in Thailand that was used for even one day (with or without having actually received rental income) during the tax (i.e. generally the "calendar") year then you or your company will most likely be obliged to pay an annual “house and land tax” (“HLT”) in accordance with the House and Land Tax Act (A.D. 1932) and as further amended.

One of the advantages of arbitration proceedings over domestic court proceedings is the opportunity for the parties to select the person(s) that will decide on the issue in question, the arbitrator(s). In arbitration proceedings the parties are enabled to nominate arbitrators that have a certain specialized and up-to-date know-how that might be required to understand the technical background of the issues in question.

Arbitration proceedings offer various important advantages to the normal local court proceedings in Thailand.

In Thailand, Section 11 of the Arbitration Act (2002)(the "Act") specifically requires that the parties, must enter into a written "Arbitration Agreement" that is signed by both parties. Furthermore, the Arbitration Agreement must state that the parties want arbitration proceedings govern all disputes arising out of a specified legal relationship, like a contract.

The use of off-shore entities, such as a company incorporated in the British Virgin Islands (“BVI”) to own real estate is not uncommon in Thailand. This article will analyze the tax consequences of an off-shore entity renting out real estate it owns in Thailand.

If you are doing business in Thailand you might have already had some experience with the local court system. An all too common complaint of the local business community is that court proceedings in Thailand are agonizingly slow.