THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
tax for this transaction with neither the income nor tax included in the seller’s annual personal income tax. • Corporate income withholding tax – if the seller is a juristic entity, a withholding tax equal to 1% of the actual sale price or the government’s official valua - tion of the property, whichever is higher, is applica - ble. This withheld tax is then credited to the seller’s overall payable income tax for that tax year. Most of these fees and taxes are the legal liability of the seller. However, it is not uncommon for the parties to agree to share these costs on a 50/50 basis. In the case of a lease, a registration plus stamp duty fee in an amount equal to 1.1% of the total rent pay - able for the entire lease term being registered is appli - cable. The payment of this is subject to negotiation – however, the lessor will most commonly require the tenant to bear this cost. Stamp duty of 0.001% of the share value applies to share transfers. There is no additional tax triggered by any change of corporate ownership and control of a company. Effective from 10 April 2024, the registration fees for registering the sale and mortgage at the same time of detached houses, semi-detached houses, terraced houses, commercial buildings or any of the said struc - tures with the accompanying land or condominium units, where (i) the sale price and the official appraised value of the property; and (ii) the mortgage amount, each does not exceed THB7 million and the purchaser is a Thai individual, are currently as follows: • sale: 0.01% of the official appraised value (reduced from the normal rate of 2%); and • mortgage: 0.01% of the mortgage amount (reduced from the normal rate of 1% but not exceeding THB200,000). The reduced rates were valid until 31 December 2024. 2.11 Legal Restrictions on Foreign Investors The Land Code generally restricts foreign owner - ship of land unless otherwise permitted by law. Such exemptions are available under certain conditions if
the foreign party intends to make a business invest - ment of the type that the Thai government wishes to attract at that time, and in some cases, at a particular location under either the Investment Promotion Act or the Industrial Estate Authority Act. There is no prohibition against foreign investors own - ing a building or against leasing land or a building. Foreign investors may also own up to 49% of the titled floor space of a condominium project. However, the money to purchase a condominium must either be brought into Thailand as foreign currency or held by the foreigner in a Thai foreign currency account. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate Although sometimes financed by private equity, com - mercial real estate transactions in Thailand are most commonly financed by loans made by banks. The terms of such bank loans vary depending on the prop - erty, the type of development project, the borrower’s history and reputation, any available guarantee (and in such case, the guarantor’s standing) and the lender’s preferences. The loan may be made all at once or pro - vided via a draw-down facility. Interest may be fixed or variable. Thailand recently enacted a formal real estate invest - ment trust (REIT) structure. Thailand’s REIT is similar to what is found under the same name elsewhere, eg, the USA. REITs in Thailand are listed on the stock exchange of Thailand and, although they initially got off to a slow start, they are picking up momentum and are now providing a modernised financing vehicle for large-scale commercial real estate investments in Thailand. 3.2 Typical Security Created by Commercial Investors Typical security provided by commercial real estate developers to their lenders includes one or more of the following: mortgage, pledge, business collateral, assignment and guarantee.
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