THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
Natural Person or Individual When an individual sells an immovable property, the withholding tax is generally calculated based on the official appraised value of such property, less certain deductions. The deductions depend on the duration of ownership of the property to be transferred. The calculation is done using a specific formula created by the legislature which takes into account how long the property has been owned and the progressive tax rates applicable to individuals, but may be calculated without including any of the seller’s other annual taxable income. It should be noted that even if the transfer of immovable property is without consideration (ie, a gift) by an individual, it will be deemed a sale subject to personal income tax. 8.5 Tax Benefits The following maximum depreciation rates apply. • Permanent buildings – generally 5% per year; however, under certain conditions, 25% in the first year and 5% per year in the following years for the remainder of the value. • Temporary buildings – 100%. Land does not depreciate. Deductions on rental income are applicable and actual expenses may be deducted in the case of houses, buildings or other constructions. If the property is let by the owner, a standard deduc - tion of 30% is allowed as expenses. Rental income tax recipients have the option to define the taxable income by sufficiently documenting their actual rental income-related expenses. If these expenses are higher than the standard 30% deduction, are reasonable and sufficient - ly documented, then such deduction can be effected.
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 “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 profit of the whole accounting year is the basis of taxation and not a single taxable event, such as the sale of immovable property. is a natural or juristic person. Juristic Person or Company
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