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Laws governing 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 havelost or relinquished Thai nationality.

2) “Alien Juristic Persons” According to Section 97 and 98 of the LandCode, the term, “Alien Juristic Persons” under Section 97 of the Land Code isdefined as follows:

 

1. Limited companies with more than forty nine percent of their registeredcapital being held by aliens or with more than half of their shareholdersbeing aliens and, in the case of bearer shares (shares whose name ofholders are not specified and which can be transferable only by means ofdelivery 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 capitalcontribution by aliens being valued at more than forty nice percent of theirtotal capital or with more than half of their partners being aliens.

 

3. Associations, including cooperatives, in which more than half of themembers are aliens or which operate especially or substantially in theinterest of aliens;

 

4. Foundations whose objects are especially or substantially in the interest ofaliens.

 

Section 98 of the Land Code also deals with alien juristic persons and provides asfollows:In the case where a juristic person under Section 97 becomes the owner ofthe capital, a shareholder, or a partner, as the case may be, in anotherjuristic 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 CouncilAnnouncement No.281 (NEC 281) dated 24 November B.E. 2515 of1972 including.- Juristic persons without Thai nationality;- Juristic persons with half or more than half of the capitalbelonging to aliens;- Juristic persons with half or more than half of theirshareholders, partners or members being aliens, regardless ofthe amount of the capital invested by aliens;- Limited partnerships or registered ordinary partnerships, themanaging partner or manager of which is an alien.

 

Laws governing the acquisition of immovable propertyBy Aliens and Alien Juristic PersonsAliens wishing to acquire immovable property in Thailand must comply with all lawsapplicable to transactions and types of property concerned. In general, laws governingthe acquisition of immovable property by aliens as well as alien juristic persons can bedivided 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 juristicpersons;5. Lease of immovable property by aliens and alien juristicpersons.

 

2: Acquisition of land by aliensIn the past, the ministry of interior had issued a Ministerial Regulation by virtue of theLand Code providing that aliens of the countries having treaties with Thailand could ownland in Thailand. As the Ministerial Regulation was entirely repealed on 27 November1971, neither aliens nor alien juristic persons had right to own land in Thailand sincethen.Since 19 May 1999, however, the Amendment Land Code Act has come into force; itssalient features are as follows:Aliens wishing to acquire land in Thailand must bring foreign currency intoThailand for certain specified types of investments in an amount to be specified inministerial regulations which shall in no event be less than 40 Million Baht andobtain permission from the Minister of Interior. Any aliens meeting suchrequirements may be granted a permission to own land in an area not exceeding 1rai for residential purposes. Certain specified types of investments and amounts of capital for investment mentionedabove will be subsequently prescribed in ministerial regulations. Except for suchresidential purposes described above, there is no other change to the Land Act in respectof 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 beas follows:Any Thai having an alien spouse may purchase or accept land as a giftwith no consideration and register the ownership of such land during marriage under acondition that the spouse must jointly provide a written legal confirmation stating that theentire source of funds for such purchase or gift is solely from the “Personal Property” (asdefined 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 toobtain 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 oraccept land as a gift with no consideration and register the ownership of such land if itdoes 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 giftwith no consideration and register the ownership of such land if it does not appear afterinvestigation 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 situatedthereon in Thailand. This is as a result of the revocation of treaties between Thailand andother countries as mentioned earlier. However, certain exceptions are made available forthe following alien juristic persons:1. Alien juristic persons under the Investment Promotion Act:2. Juristic persons without qualifications under Section 97 and 98 and theLand 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 aliensand 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 investigationby the Land Department (according to Section 27 of the Investment PromotionAct 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 isowned by aliens is permitted to purchase land, in practice, the Land Departmentrequires that any juristic person having its shareholders proportion or the capitalcontribution by aliens ranging from forty to forty nine percent must obtain anapproval 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 outsideBangkok area.Prior to registration of land ownership’s transfer to any juristic person, the LandDepartment will conduct an investigation as to whether the juristic person is an alienjuristic person under Section 97 and 98 of the Land Code. If so, such alien juristic personwill not be allowed to own land. The following are criteria for the investigation.Criteria for Investigation and Approval of Land Acquisition by Alienjuristic 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 juristicpersons and such juristic persons shareholders having shareholders being otherjuristic persons, the investigation will be to ascertain whether or not all such juristicperson are alien juristic persons.In the case of a public limited company, a letter from the Stock Exchange of Thailandcertifying that it will monitor and control so that the alien shareholders proportion ofthe company will at any time not be greater than forty nine percent of the registeredcapital 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 dateApril 28, 1999.In a condominium, total ownership of aliens or alien juristic persons may not exceedforty 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 alienjuristic persons to own up to 100% of the aggregate unit space as registered in acondominium. This case is subject to the conditions that:- The condominium building must be situated in Bangkok, municipality or anyother local government authority as prescribed by the Municipal Regulations.- The land where the condominium and its common area is situated must notexceed 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 theInvestment 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 unitownership must hold residence permits and may use Thai Baht to purchase condominiumunits.

Criteria for Applying for a Residence Permit1)

Such persons must be resident in Thailand2) Such persons must not posses any forbidden traits under the immigration Lawsuch as not having been imprisoned except for petty offences, not having beendeported from Thailand, not having had a residence permit withdrawn, or nothaving behaved in a manner regarded as dangerous to society or threateningthe public.3) Approval must be sought from the Ministry of Interior4) The yearly quota of aliens must not exceed one hundred persons per countryand, additionally, for stateless aliens, fifty persons per year; however, thefollowing are some exceptions for aliens to be permitted to reside in Thailandin larger numbers than those specified above.Exceptions:- Ones must bring into Thailand foreign currency of not less than the amountequivalent to 10 Million Baht for investment.- The portion of this extra quota must not be more than 5 percent of the yearlyquota 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 fortaking such exceptions has been precisely outlined yet while the BOI has set forth moreexplicit criteria for granting a permanent residence by virtue of the Investment PromotionLaw. Any aliens wishing to acquire a residence permit, may select to follow the criteriaof 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 Criteria1.

Foreign investors must bring in not less than 10 Million Baht to invest in aproject which:* is new and eligible for investment promotion;* is eligible for approval by the Committee for Granting ResidencePermits.

Criteria for Projects Eligible for Investment Promotion

1. Investors must bring in funds to invest in a new project that has notstarted operations.2. For operating the proposed project, such investment must be in theform of a joint venture in a newly or already established company.3. The proposed project must be conducive to the economy of thecountry such as by assisting in export marketing or by bringing inappropriate 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 thefollowing ways:· Produce for export· Increase employment· Utilize local raw materials· Locate in regional area· Encourage technology transfer to Thai nationals2. The proposed projects must not be:· Those restricted under the NEC. 281;· Those competing in such a way as to harm existingdomestic businesses;· Those hindering the growth of existing domesticbusinesses, which have already been operated, or whichhave not been developed yet.2. Funds remitted for investment must be invested in ordinary shares of private limitedcompany set up to implement the proposed project with the proportion of its shareholdingof 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 forGranting Residence Permit may relax the above proportion ofshareholding requirement.3. The investor must at all times comply with the criteria detailed in 1 and 2 above for atleast 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 forhimself but also for his spouse, parents, and not more than three children who areunmarried and under 20 years old.

2. Investment in SecuritiesCriteria

1. Foreign investors must bring in funds to invest in state enterprise bondsguaranteed 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 beenregistered 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 condominiumunits 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 notrequired to bring foreign currency into Thailand for investment in the above mentionedmanner.

1. Experts or AcademicsRequirements

1. They must possess know-how or expertise in the fields that they are indemand and will benefit the country. Educational and employment referencescertified by the Royal Thai Embassy or Consulate are also required to besubmitted. In the country where there is neither the Royal Thai Embassy norConsulate, such documents must be instead certified by the notary Public.2. Documentation evidencing that they used to have an annual income of not lessthan US$10,000 must be submitted.3. They must be over the age of 25. Furthermore, a residence permit will also begranted to their family members, i.e, spouses, parents, and unmarried childrenunder 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 indemand and will benefit the country. Educational and employment referencesmust be submitted.2. They must be over the age of 20. Furthermore, a residence permit will beadditionally granted to their family members, i.e., spouses, parents, andunmarried 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. 2520CriteriaUpon obtaining the permission of BOI, they may enter Thailand for the purposeof either studying investment opportunities or doing any other things to benefitinvestment. The purchase of a condominium unit may be made with BahtCurrency.(This type of alien is not required to have residence in Thailand or to holda residence permit so as to have the right to acquire condominium unitownership)

Exceptions:Certain groups of aliens, i.e:Skilled WorkersExpertsSpouses and dependants of the skilled workers and experts.These are not required to obtain promotion status if they are brought intoThailand by any promoted persons. In such cases, they may owncondominium 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 enterThailand as fully described above may own condominium units by meansof bringing foreign currency into Thailand, using foreign currency fromtheir accounts in Thailand, or using Baht currency from their accountseither in or outside Thailand to pay for the purchase of condominiumunits.

4. Spouses of Aliens

According to the most urgent letter No.Mor.Thor.0710/Vor.792 datedMarch 23, 1999, the procedures for the acquisition of condominium unitby Thais having spouses being aliens, either by lawful marriage (withproper registration of marriage) or unlawful marriage (without properregistration of marriage) and children of aliens have been changed to be asfollows:Any Thai having an alien spouse may purchase or accept condominiumunits as a gift with no consideration and register the ownership of suchcondominium unit during marriage under a condition that the spouse mustjointly provide a written legal confirmation stating that the entire source offunds for such purchase or gift is solely from the “Personal Property” (asdefined by Thai laws) of such Thai. Without written confirmation from analien spouse, the request for such registration must be referred to the LandDepartment in order to obtain an approval from the Minister. However,such approval will be unnecessary if the purchase of condominium units ismade by means of bringing foreign currency into Thailand, using foreigncurrency from their accounts in Thailand, or using Baht currency fromtheir accounts either in or outside Thailand.

Spouses of Aliens with Divorcement·

Any Thai who has divorced or separated from an alien spouses maypurchase or accept condominium unit as a gift with no considerationand register the ownership of such condominium unit if it does notappear 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 acceptcondominium units as a gift with no consideration and register theownership of such condominium unit if it does not appear afterinvestigation that he/she has done so to avoid the law.

Procedures and Required Documents for Registration of Condominium Unit Transfer1. Aliens permitted to Reside in Thailand under the ImmigrationLaw Required Documents

1. Passport indicating the nationality of an alien and certificate of permanentresidence (in form of either Tor. Mor. 11, Tor. Or. 15, or Tor, Mor, 17, asthe case may be) issued by the Immigration Division of the PoliceDepartment.2. Alien book issued by the Police Station having jurisdiction over an alien’splace of residence.

2. Aliens permitted to Enter Thailand under the Investment Promotion LawRequired Documents

1. Passport indicating the nationality of an alien2. Certificate evidencing that the alien is permitted to legally enter Thailandunder the Investment Promotion Law.

3. Other Aliens Without Qualifications Under the Immigration Law and the Investment Promotion LawRequired Documents

1. Passport indicating the nationality of an alien2. The documents showing the remittance of foreign currency into Thailand,Or the withdrawal of foreign or Baht currency, as the case may be, ineither of the following form:- Evidence of depositing into a foreign currency account with anycommercial banks in Thailand (in form Thor. Tor. 3) together withits signature and seal;- Foreign Currency declaration from the Customs Department;- Evidence of receipt of purchasing foreign currency issued byauthorized company or person attached with the evidence of itsbeing authorized by the Bank of Thailand (currently, other thancommercial banks in Thailand, there is no other authorized companyor person designated by the Bank of Thailand to handle suchtransaction);- Evidence of withdrawal of foreign currency from the account inThailand;- Evidence of withdrawal of Baht currency from the account either inor outside Thailand.

4. Spouses of Aliens and Spouses of Aliens with Divorcement Case of Purchase or Accept Condominium Unit as a Gift by “PersonalProperty”;

Required Document - Written legal confirmation from alien spouseCase of Purchase or Accept Condominium Unit as a Gift By: “CommunalMarriage Property”Required Documents - The documents showing the remittance of foreign currency into Thailand, or thewithdrawal of foreign or Baht currency, similar to those prescribed under heading“3. OTHER ALIENS WITHOUT QUALIFICATIONS UNDER THEIMMIGRATION LAW AND THE INVESTMENT PROMOTION LAW”5. Children of AliensRequired 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 notexceed forty nine percent of the aggregate unit space as registered within suchcondominium (also see EXCEPTIONS under this clause)Alien Juristic Persons Permitted to own Condominium UnitThe 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 andregistered as juristic persons under Thai Law.2. Alien Juristic persons under the Announcement of the National Executive CouncilNo. 281 dated 24 November B.E. 2515 and having promotion privileges under theInvestment Promotion Act B.E. 2520Those permitted under (1) and (2) may purchase condominiumunits with Thai Baht.3. Other alien juristic persons without qualifications specified in (1) and (2) abovemay acquire condominium unit ownership under the condition that they mustbring foreign currency into Thailand to make payment for the purchase ofcondominium unit, or use foreign currency from their accounts in Thailand, or useBaht currency from their accounts either in or outside Thailand.

Procedures and Required Documents for Registration of Condominium Unit Transfer1. 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 behalfof 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) orpassport indicating the nationality (of such directors)8. Power of attorney

Restrictions: In this case, the registration of condominium unit transfercan be made only after the investigation and approval of:1. The Land Department, in the case of condominium unit situated inBangkok area;2. The relevant Governor, in the case of condominium unit situatedoutside Bangkok area.Or otherwise the purchase must be made by way of bringing intoThailand Foreign Currency to make payment.Note: Although as a matter of law a juristic person whose no more thanhalf of shareholders is aliens or whose no more than forty nine percent ofcapital is owned by aliens is permitted to purchase condominium, inpractice, the Land Department requires that any juristic person having itsshareholders proportion or the capital contribution by aliens of over fortypercent 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 havingPromotion Privileges under the Investment Promotion Act B.E. 2520.Required Documents 

1. Certificate of Incorporation (“Affidavit”) issued no longer than one month2. Memorandum of Association3. List of shareholders issued no longer than one month4. Form Kor. (specimen signature of directors duly authorized to sign on behalfof such juristic person)5. Set of specimen signatures of directors6. Minutes o the meeting7. Copies of Identification Card and the register of household (director) orpassport indicating the nationality (of such director)8. Investment promotion certificate pursuant to the Investment Promotion Law9. Certificate from BOI certifying that it is the promoted juristic person under theInvestment Promotion Law10. 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 otherAlien Juristic Persons without Qualifications under theAnnouncement of the National Executive CouncilRequired Documents Similar to the case of alien natural persons, the documents showing the remittanceof foreign currency into Thailand or the withdrawal of foreign or Baht currencyare required.1. Evidence of depositing into a foreign currency account with any commercialbanks in Thailand (in form Thor.Tor 3) together with its signature and seal2. Foreign currency declaration from the Customs Department3. Evidence of receipt of purchasing foreign currency issued by authorizedcompany or person (none)4. Evidence of withdrawal of foreign currency from the account in Thailand5. Evidence of withdrawal of Baht currency from the account either in or outsideThailand6. Certificate of Incorporation (“Affidavit”)7. Memorandum of Association8. List of Shareholders9. Set of specimen signatures of directors10. Minutes of the meeting of the board of directors11. 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 ImmovableProperty 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 immovableproperty 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 byrenewal of the lease contract upon its expiration. Should it be uncertain whether thelessor will lease out such property after the lease contract has expired, an additionalprovision in respect of the lessor’s promise of doing so must be included in the leasecontract by simply stating that “at any time prior to the expiration of the lease, the lesseemay renew the lease contract upon giving a written notice stating its intention to do so inadvance to the lessor”.The duration of a lease of land on which building/s on it take many years to beconstructed could be varied as follows;· The parties may agree that the lease term will commence only after aspecified date which maybe estimated on the date immediately upon thecompletion of the construction;· The parties may specify in the contract that the lessee will constructbuilding/s upon the lessor’s land and will thereafter take on lease landincluding said building/s for a period of 30 Years as from the date of thecompletion of such construction.Exceptions:The lease term for the purpose of carrying on the business of commerce or industry maybe 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 mustbe evidenced at least in writing but is not required for registration with the LandDepartment.· A lease for more than 3 years and up to 30 years or for life of the lessor or lessee mustbe made in writing and registered with the relevant Land Department, otherwise;· Such lease is enforceable only for 3 years. The foregoing however shall notbe prejudicial to the right of either party to be indemnified by the other againstall damages arising from the breach of the lease contract. In addition, neitherparty shall be entitled to take any action or proceeding whatsoever against anythird party.· The promise given by the lessor in the aforementioned manner shall bebound upon the parties concerned only, in the event of the death of eitherparty prior to the declaration of intention to perform as so promised, suchpromise 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 LandDepartment; otherwise the lease is void.- The lease of land more than 100 rais must be approved by the DirectorGeneral 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’sobligations 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 inwhole or in part, to any third person, except as otherwise provided in the leaseagreement. The following are some salient features of the differences betweensublease and transferThe transfer of lease right is the event where the lessee assigns or transfers theentire rights, obligations and liabilities with regard to the lease to a third party andthen 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 tothe lease agreement.· Upon the transfer, the transferee shall become the lessee or otherwise anew party to the lease agreement in place of the original transferee (theassignor)· 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 orall of the leased property. In other words, another contract, the sublease agreement, shallbe made between the original lessee (the sublessor) and the sub lessee. Legalconsequences of this sublease arrangement include;· With respect to the sublease agreement, the lessee shall become the sublessor.· With respect to the lease agreement, the lessee shall still be in its positionas 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 fullyresponsible 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 partto any third person, except as otherwise provided in the lease agreement.· Any amendment of the registration of a lease, sublease, mortgage of leaseright, transfer of lease right or an inheritance may not be asserted againstany third party unless made in writing and registered with the relevantLand 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 propertyto a third party, the lease agreement shall be binding upon the transferee. As thetransferee must assume all rights and obligations of the transferor (the formerlessor), it shall become a new lessor in place of the original lessor since then.

7. Expenses of Ownership Transfer of Immovable PropertyThe transfer of an immovable property, including the purchase of land, land withbuilding or a condominium unit owned by a natural person, including an alien and analien juristic person shall be subject to the following costs and taxes:

1. Transfer FeeThe transfer fee shall be collected at the rate of 2% of the appraised value of the propertyof the Land Department.

2. Stamp DutyThe stamp duty shall be collected at the rate of 0.5% of the actual purchase price or theappraised 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 thepayment of the stamp duty. However, if the stamp duty has already been paid tothe Land Department, the seller shall have the right to claim for the refund infull within 6 months after the payment.

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

1. Withholding Personal Income Tax: The computation shall be based on theappraised value of the Land Department.

2. Withholding Corporate Tax: The computation shall be based on theappraised 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 ofinheritance or gift.

Exceptions:om the income tax as follows:1. Transfer of the ownership of the immovable property acquired by way ofinheritance to heir either the statutory heir or legatee;2. Transfer of the ownership of the immovable property to a lawful child andwithout consideration, but excluding the case of an adopted child;3. Transfer of the ownership of the immovable property acquired by way ofinheritance or gift to any third party, only in the part which is notexceeding Baht 200,000 throughout the tax year and that immovableproperty 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 governmentagency and the state enterprise without consideration;5. Exchange of the ownership of the immovable property with the governmentagency and the state enterprise;6. Transfer of the ownership of the property to the government agency and thestate enterprise in a way that transferor receives the remuneration in a kindof the right to use such property transferred for the production of his/herown products;7. Expropriation of the immovable property before the 27th of February 1982under the provisions of the law governing the expropriation of theimmovable property;8. Division of “Communal Marriage Property” on the part of the immovableproperty that each spouse receives an equal payment out of it;9. Amendment or addition of the name of either spouse to the document ofright in connection with the immovable property which is the “CommunalMarriage Property”.

Computation of Withholding Personal Income TaxSale of Immovable Property Acquired by way of Inheritanceor Gift In this case, withholding tax shall be imposed on the seller at the occurrenceof the purchasing of the immovable property. At the end of the tax year, theseller shall compute his/her annual income tax payable in accordance withthe normal personal income tax rate.

Method of Computing Withholding Personal Income Tax

1st Step The appraised value of the immovable property shall be deductedby the income exempted from tax (according to the Revenue Code)but not more than Baht 200,000 throughout the tax year (Thededuction is allowed only in case where the immovable property issituated outside Bangkok, municipality, sanitation district orPattaya.2nd Step The result shall be deducted at the lump sum rate of 50% asexpenses3rd 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 10years or in case of exceeding 10 years, it shall be counted only at10 years).(The number of years in possession means the number of yearsstarting 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 atprogressive rates as follows;Income Tax Rate % Tax Liability on bracket50,001-100,000 5 2,500100,001-500,000 10 40,000500,001-1,000,000 20 100,0001,000,001-4,000,000 30 90,0004,000,001-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 taxpayable 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 classifiedinto 2 types as follows:(1) Sale of the immovable property acquired by way of purchase orexchange without trade or profit seeking purpose;(2) Sale of the immovable property acquired by way of purchase orexchange with trade or profit seeking purpose.In both cases, withholding tax shall be imposed on the seller at theoccurrence of the purchasing of the immovable property. At theend of the tax year, the seller has the right to elect the method ofcomputing the annual personal income tax. The seller mayinclude the income derived from the sale of the immovableproperty into the total assessable income of the tax year forcomputing the annual income tax payable, depending on whichmethod 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 Tax1st Step The appraised value of the immovable property shall be deductedwith expenses at the lump sum rates as follows:· The rates prescribed by the Royal Decree (No. 165) B.E. 2529No of years in possession 1 2 3 4 5 6 7 8 or moreRate of deduction as expenses % 92 84 77 71 65 60 55 502nd 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 exceeding10 years or in case of exceeding 10 years, it shall be countedonly at 10 years)3rd Step The result shall be multiplied by the personal income tax atprogressive rates.4th Step The result shall be multiplied by the number of years inpossession.5th Step The result shall be the amount of the withholding income taxpayable to the Land Department.

Method of Computing Annual Personal Income Tax

1. In the case where the seller elects not to include the income derivedfrom the sale of the immovable property into the total assessableincome of the tax year, the seller can compute his/her annual incometax payable as usual. This is because it is deemed that the seller hasalready paid the amount of the withholding income tax on the sale ofthe immovable property to the Land Department.3. In the case where the seller elects to include the income derived fromthe sale of the immovable property into the total assessable income ofthe tax year, the seller must take careful consideration on whether theinclusion of the income will cause higher net annual income basewhich will then result in higher tax rate or not. The method ofcomputation shall be as follows:1st Step Income from other sources shall be deducted with expensesaccording to the normal rules (refer to the Revenue Code)2nd Step The appraised value of the immovable property shall be deductedwith expenses in two options:Option 1: Elect to deduct the expenses at the lump sum rateprescribed by the Royal Decree (No. 165) B.E. 2529 that wasalready 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 2ndstep.4th Step The total income in the 3rd step shall be multiplied by thepersonal income tax at progressive rates (refer to the RevenueCode)5th Step The result shall be the amount of the annual income tax payablefor 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 TaxThe computation shall be preceded in 5 steps in the same manner as in clause“Sale ofImmovable Property Acquired by way of Purchase or Exchange without Trade or ProfitSeeking Purpose”(in the previous section)Method of Computing Annual Personal Income Tax- Similar to the “Method of Computing Annual Personal IncomeTax” under the section of “Sale of Immovable PropertyAcquired by way of Purchase or Exchange without Trade orProfit Seeking Purpose”(in previous section”. However, in thecase that the seller elects to include the income derived fromthe sale of the immovable property into the total assessableincome of the tax year, the deduction of expenses under the 2ndstep must be based on the lump sum rate, not the actualexpenses paid.

Withholding Corporate Income Tax

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

4. Specific Business TaxThe specific business tax shall only be collected from the sale of the immovable propertywith trade or profit seeking purpose at the rate of 3.3% of the appraised value or theactual 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 regulationsregarding the land Subdivision.2. The sale of a condominium unit which is registered under the CondominiumAct.3. The sale of a building which is constructed for sale or indicated as constructedfor sale, including the sale of land where the building e.g. Shophouses,Commercial Building, House or Townhouse, is situated whether or no thesales are made separately.4. The sale of the Immovable Property that does not fall within the descriptionsof 1, 2 or 3 but is made plot in the same manner as the statutory landsubdivision, the sale of a condominium or the sale of divided buildings, or thesale of the property without being divided, but clearly investigated that theproperty will be divided after the sale.5. The sale of the immovable property, which is possessed for conductingbusiness, in order to move to a new place, except for the sale of land used foragriculture but not including the building on such land, e.g. the sale of a fieldfor growing rice, crop or plant.6. The sale of the immovable property that does not fall within the descriptionsof 1-5 but is made within 5 years from the date of acquisition of suchimmovable property.Exceptions:Sale of Immovable Property Exempt from Specific Business Tax1. The immovable property that is sold or expropriated under the law governingexpropriation of the immovable property.2. The sale of the immovable property acquired by way of inheritance which isonly on the part of “Communal Marriage property” of the dead person and thesales of the immovable property acquired by way of inheritance by theadministration of the undivided estate of the dead person.3. The sale of the immovable property used as the principal place of residencesubject to the following conditions:· The seller is named in the house registration (according to the lawgoverning citizenship registration) and has resided therein for notless than 1 year from the date of the acquisition of the immovableproperty.· In case of the land and the building or structure acquired ondifferent periodIf the name of the seller does not appear in the house registrationbut he/she wishes to be eligible for the exemption of the specificbusiness tax, the seller must have possessed the immovableproperty for not less than 5 years from the date of acquisition. Incase that the seller wishes to sell land and building or structureseparately, the period of possession shall be counted from theacquired date of the immovable property intended to sell. In casethat the seller wishes to sell the land including building or structuretogether, the period of possession shall be counted from theimmovable property acquired a the last.· In case of the sale of the immovable property that is a “CommunalMarriage Property”, both spouse or either of them must be namedin the house registration of the house of residence for not less than1 year.· In case either spouse gives the ownership of “Communal MarriageProperty”, on his/her part to the other, the giver must be named inthe house registration for not less than 1 year.4. The transfer of the ownership without any consideration to the lawful childexcept for the adopted child.5. The transfer of the ownership by way of inheritance to the heir of the legateewho is the statutory heir and without any consideration.6. The transfer of the ownership to the government agency or to the governmentorganization without any consideration.7. The exchange of the ownership with the government agency or the governmentorganization without any consideration.

5. Local Development Tax

The local development tax shall be collected from the possession of the landowner onland 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 ofeach year shall have to duty to pay the Local Development Tax atthe rate computed on the medium value of the land of the yearconcerned according to rate prescribed by the government agencypursuant to the law· The medium value of the land is appraised on the last purchaseprice in good faith of lands in the same area of not less than 3previous purchases within the period not exceeding 1 year beforethe date of appraisal, which shall then be averaged to obtain themedium value of the land without taking into account the value ofthe building and structure.

Local Development Tax Rate Under article 7 Table 1 Class Medium Value of Land Tax per Rai Remarks Baht Stang30 More than 10,000 Baht (1) Agricultural landto 15,000 Baht per rai 55 0 used only for growingannual crops31 More than 15,000 Baht - it shall beto 20,000 Baht per rai 60 0 chargeable at halfthe rate, however if the32 More than 20,000 Baht land owner does theto 25,000 Baht per rai 65 0 farming himself /herself, the maximum33 More than 25,000 Baht tax charged shall notto 30,000 Baht per rai 70 0 exceed 5 Baht per rai34 More than 30,000 Baht p/raitax shall be paid per raias follows:(1) Tax of 70 Baht for theFirst 30,000 Baht.(2) Fraction (2) Land left idle shall- Fraction of 5,000 baht shall be chargeable at twicebe counted as 10,000 Baht, the ratethe tax shall be 25 Baht.If less shall be discharged35 More than 40,000 Bahtto 50,000 Baht per rai 90 036 More than 50,000 Bahtto 60,000 Baht per rai 100 037 More than 60,000 Bahtto 80,000 Baht per rai 150 038 More than 80,000 Bahtto 100,000 Baht per rai 200 039 More than 100,000 Bahtto 200,000 Baht per rai 250 040 More than 200,000 Bahtto 300,000 Baht per rai 300 041 More than 300,000 Bahtto 400,000 Baht per rai 350 042 More than 400,000 Bahtto 500,000 Baht per rai 400 043 More than 500,000 Baht p/raitax shall be paid per rai asfollows:(1) Tax of 100 Baht of every100,000 Baht(2) FractionFraction of 50,000 BahtShall be counted as 100,000Baht, is less shall beDischarged.REMARKS: 1. The above tax rates do not include Class 1 – 29 as theirMedium value is very low2. (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 bedisregarded

8. Expenses of Lease of Immovable Property

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

1. Lease Register Fee

The lease register fee shall be collected at the rate of 1% of the total rental throughout thelease term.(Rental shall include the remuneration for lease, the remuneration during theconstruction, the key money, the fee for the land’s surface, the construction costcontribution or other amount of money which is paid by the lessee to the lessor for thelease benefits).

2. Stamp Duty

The stamp duty shall be collected on the register of lease at the rate of 0.1% of the totalrental 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 rentalaccording 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 begained 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 theimmovable property has been registered)

1. Lease Register Fee: The lease register fee shall be jointly paid by the transferorand 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 atthe rate as specified in Clause 2 above.3. Value Added Tax: The value added tax shall be collected at the rate of 7% ofthe remuneration of the transfer of the lease right. The transferor is responsible topay the tax and must also apply for value added tax registration before thepayment.The value added tax shall be paid only in case the remuneration of the transfer ofthe lease right throughout the remaining lease term exceeds 1.2 Million Baht orhigher.

5. Income TaxThe lessor is subject to the following income tax:

1. Personal Income Tax1. The total income under the lease agreement shall be divided bythe number of the lease years (in case the lease term is morethan 1 year) in order to compute the rental on each year.2. Expenses from lease shall be deducted from the result in 1 asfollows:House, building or other construction shall bededucted at the lump sum rate of 30%. Land used foragriculture purposes shall be deducted at the lumpsum rate of 20%. Land used for other purposes shallbe deducted at the lump sum rate of 15% (in the caseof being Sub-lessor, the deduction shall be allowed atthe same aforementioned rates).3. The result shall be computed for the personal income tax inaccordance with the personal income tax at progressive rates.Condition: In case of an alien who has resided in Thailandless than 180 days, the tax shall be collected at the rate of 15%of the rental paid.

2. Corporate Income Tax1. The total income under the lease agreement shall be divided bythe number of the lease years (in case the lease term is morethan 1 year) in order to compute the rental on each year.2. Expenses from lease shall be deducted from the result in 1 atthe actual amount paid.4. The result shall be computed for the corporate income tax atthe rate of 30% of the net profits of the juristic person.Condition: In case of an alien juristic person, which is notcarrying on the business in Thailand but has received income fromthe 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 onBehalf of the lessor.

Source: bluevisionagency.com/thailand-laws-governing-the-acquisition-of-immovable-property.html