THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
8.2 Mitigation of Tax Liability If the real estate asset to be transferred is the only or main asset of the selling entity, an entire business transfer might be beneficial. The trans - fer of the real estate asset that is part of an entire business transfer is not subject to SBT. However, in order to take advantage of the tax benefits, the selling entity must be dissolved within the same accounting period as the business transfer takes place. 8.3 Municipal Taxes Municipal taxes do not apply specifically to busi - ness premises. However, real estate is subject to property tax, which is a local tax. 8.4 Income Tax Withholding for Foreign Investors Withholding taxes apply to the rental and sale of immovable property. A “tax resident” of Thailand is any person stay - ing in Thailand for a period or periods aggregat - ing 180 days or more per year. However, it is important to note that the duty to pay tax on rental income in Thailand does not depend on being a tax resident of Thailand or whether the income is received in Thailand. Rental income is considered taxable income regardless of Thai tax residency under the Thai Revenue Code. The relevant law states that a taxpayer (ie, “anyone”) who in the previous tax year derived assessable income from a property situated in Thailand must pay tax, whether such income is paid within or outside Thailand. Thus, anyone, tax resident or not, who earns rental income from a property in Thailand, must pay tax on that income, no mat - ter whether the rental income is paid on-shore or off-shore. It is the duty of the payer of the rent to deduct withholding tax from the rental payment and
submit it to the local revenue department. How - ever, both the lessee and the lessor are jointly liable for the payment of this withholding tax. The amount of withholding tax depends on whether the lessor is a tax resident of Thailand and also whether the lessee is a juristic person or an individual. If the lessor is not a tax resident of Thailand the withholding tax rate is 15%. The legal status of the lessee does not matter if the owner is not a tax resident of Thailand. If the les - sor is a tax resident of Thailand and the lessee is a juristic person, the withholding tax rate is 5%. If the lessor is a tax resident of Thailand and the lessee is a natural person, there is no withhold - ing tax applicable. The taxation of a “capital gain” on the sale of real estate in Thailand depends on whether the seller When a corporate entity sells an immovable property, withholding tax at the rate of 1% of the sale price is required to be deducted from the sale price and paid to the authorities on transfer. This is a prepayment of the corporate seller’s income tax for that tax year, and it will be credited against any tax owed for that year. However, both parties – the seller and any buyer – jointly bear the legal duty to withhold and pay this tax. A surcharge on any late or inadequate payment of the withholding tax at a rate of 1.5% per month of the late amount is applicable. Any gain realised on the sale of immovable prop - erty must be declared by the selling company in the accounting period when the sale took place. Section 65 of the Revenue Code defines “net profit” as the result of income from business or arising out of business in one accounting year, less certain expenses. In other words, the net is a natural or juristic person. Juristic Person or Company
955 CHAMBERS.COM
Powered by FlippingBook