THAI LAW - Sticky Situations
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| Thai law |
Thai law | In the last two weeks, I have been appointed the legal
representative and advisor for the Indian embassy in Thailand. They required
for me to handle the transfer of land to the Indian embassy for the
construction of the house of the local ambassador, as such I had found my way
to the land department to see this through. While waiting for the process I
noticed an American man with a Thai partner in an argument in front of an
officer of the land office. They didn’t understand each other and also
misunderstood or didn’t understand what the land officer was trying to explain
to them with regards to tax. I was sitting next to them and understood what all
parties were trying to achieve, when things began to get heated I asked if they
would mind if I can help give the man the explanation.
So the story of the American man is when he arrived in
Thailand four years ago he had bought a condominium under his name and that day
at the land department he planned to sell it. The problem that was holding up
the sale was that he felt he had to pay too much tax, he explained to me that
he had to pay 2% tax for the transfer fee as he had promised the buyer that he
would take care of this as well as a 3.3% special tax to the land department
which were also requiring him to pay personal income tax. He did not want to
pay and as such the officer would not let the transfer go through, as his
partner did not know the tax system and cannot give a proper explanation and
with the officer unable to speak English. The man began to fight with his
partner and the officer very loudly, this is when I chose to step in and
introduce myself.
Although the man was skeptical he allowed me the chance to
explain to him why he had to pay so much tax, I started by pointing out that
the 2% transfer fee is necessary under Thai law whenever there is a transfer of property from
one party to another. This fee by law must be paid fifty-fifty between the
buyer and the seller unless the contract states that one party will pay it in
full which was true in his case. The 3.3% special tax is required to be paid by
the seller on the condition that the property which was purchased is being sold
in less than five years of the purchase date. This tax is for business people
who make a profit from buying and selling property and as the man had only
bought the property four years ago, he was eligible to pay it. Lastly the
personal income tax is required to be paid by anyone who receives income in
Thailand, this can be anyone from company employees, to retirees on a pension coming
from abroad or the income generated from the sale of a property. The way to
calculate personal income tax and any tax breaks are a bit difficult to explain
and we will summarize them in a future article.
So when you are transferring property you have to pay the
government transfer fee of 2%, a special tax of 3.3% if you are selling the
property within five years of purchase and your personal income tax or the
transfer will not be allowed to go through.
THAI
LAW - Sticky Situations
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