THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
ed in the contract between the parties) in cer - tain commercial projects such as condominium buildings and consumer-related construction agreements. In both cases, any delay in com - pletion of the project is subject to a daily penalty of 0.01% of the total contractual amount, limited to 10% of the contractual amount. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance One or more of the following securities is typi - cally provided: • a bank guarantee by the contractor for advance payment received from the owner; • a performance bond by the contractor to secure the owner against the contractor’s fail - ings in performance of the contract; • a warranty bond provided by the contractor during the warranty period; and/or • retention of part of the payment of each required instalment by the owner until expiry of the warranty period. 7.6 Liens or Encumbrances in the Event of Non-payment By law, a contractor obtains a preferential right on the immovable property for work done on such immovable property. Such preferential right allows the creditor to receive performance of the obligation out of such immovable property in preference to other creditors. Since the prefer - ential right is an ancillary right to the obligation, it will be extinguished by the performance of the obligation. 7.7 Requirements Before Use or Inhabitation Use-Controlled Buildings Certain “use-controlled buildings” are required to receive “use certification” after completion of construction. Such buildings are:
• hotels, condominiums, warehouses, hospi - tals, hazardous goods storage rooms, dor - mitories or common residential buildings (eg, apartment blocks) which are classified as a “large building” under the law; • convention halls or office buildings having a total floor area of 300 square metres or more; • any building used for any commercial pur - pose and having a total floor area of 300 square metres or more; or • any building used for any industrial or educa - tional purpose is a building subject to control over its use. Inspection and Use Certification On completion of the construction of the use- controlled building, notification must be given to the local government administration to inspect the structure. After the inspection, if the local government administration determines that the construction was completed in accordance with its building permit, permission to use the build - ing will be granted and use certification for the purpose applied for in the building permit will be issued. If, however, the local administrative office does not inspect the building within 30 days of the notification of completion, the owner or possessor of the building may go ahead and use, or allow others to use, the building for the purpose stated in the building permit.
8. Tax 8.1 VAT and Sales Tax
VAT is not applicable to the sale and purchase of real estate. However, specific business tax (SBT) of 3.3% applies to the sale of immovable property by juristic persons. Exemptions to the SBT requirement may apply to a sale by a natu - ral person. Where SBT is not applicable, stamp duty at a rate of 0.5% applies.
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