All land transfers and leases over 3 years must be registered with the land department. Taxes and transfer fees will be payable at this time.
- Specific Business Tax with a flat rate of 3.3% on a selling price
- Transfer Fees with a flat rate of 2% of an official appraised price
- Stamp Duties with a flat rate of 0.5% of the officially appraised price
- Income Tax with a flat rate of 1% on the selling price for a juristic person or a progressive rate on the selling price for a natural person.
Specific Business Tax
Specific Business Tax is a flat tax rate of 3.3% on the actual selling price is collected if the seller owns the land not more than 5 years. If the seller is not subject to the Specific Business Tax, the stamp duty of 0.5% will be applied.
Transfer Fees and Stamp Duties
The Government fee for the transfer of land of 2% on the official appraised value is collected on the registration of transfer with the land office. The stamp duty of 0.5% is collected if the seller is exempted from Specific Business Tax.(own the land more than 5 years) You should always negotiate hard with the seller and put this in the sales and purchase agreement as to who pays the tax. We charge 15,000 Baht to negotiate on behalf of our clients (who have found a house, land, condo on their own). If they don’t save at least 25,000 Baht from the seller’s final price (they have negotiated by themselves), the professional fee is waived. We strongly advocate that the Income Tax and Specific Business Tax is the responsibility of the seller as he is getting the income. In most cases, we are able to convince the seller to split the transfer tax and stamp duty( if the seller was exempted from paying Specific Business Tax.
Most sellers will want the buyer to pay for everything as this they claim this is “standard” Nice try! This may be more than 6% of the selling price while with our negotiations, in a number of cases, it was only 1% tax for the buyer.
Capital Gains Tax
The annual corporate income tax for an SME is 15% from the net profits on the first million Baht in net profits, 25% tax from 1 million to 3 million and over 3 million baht in net profits is 30%. An SME is a company with registered capital lower than 5 million Baht.
Income Tax (Withholding Tax)
The income tax is imposed on the recipient of taxable income from the sale of real property. This income tax will be withheld by the land office upon the registration for transfer of the land. The recipient can be either a natural person or juristic person which is limited companies, limited partnerships, condominium juristic persons, associations and foundation etc.
For the transfer of real property with the Land Office which is either only land or land and building, the seller or owner of the property will have to pay.
Natural Person Taxpayer
A natural person is subject to all taxes prescribed by law. The tax rate will be under the progressive rate as per the schedule under the Revenue Code with a maximum tax of 37%.
Juristic Person Taxpayer
If the recipient of taxable income is a juristic person, the tax will be calculated with a flat rate of 1%.
The income tax for both a natural and juristic person is based upon the actual selling price which cannot be lower than the officially appraised price. If the selling price is lower than the appraised price then the tax is based on the appraised price. It should also be noted for juristic persons that when selling the property, as the nature of the juristic person was established to perform business for profitability, it would be inappropriate to sell the property for less than it was bought for.
How to calculate the Income Tax
If the company is the owner, the tax is 1% of the actual selling price and it cannot be lower than the officially appraised value.
If the Seller is a natural person, you have to look at the income in the schedule of the progressive rate under the Revenue Code of Thailand:
- not more than 150,000 – 0%
- more than 150,001 – 500,000 – 10%
- more than 500,000 – 1,000,000 – 20%
- more than 1,000,000 – 4,000,000 – 30%
- more than 4,000,000 – 37%
To calculate you need to first calculate the amount of tax to be paid under the progressive rate, the gross amount of income will be first deducted by deductible allowance with the percentage according to the number of years the owner owns the land.
1 year 92% , 2 years 84%, 3 years 77%, 4 years 71%, 5 years 65%, 6 years 60%, 7 years 55%, 8 years 50%
For example, if you sell the land you own for three years for the price of 4,000,000 baht, you may first deduct the allowance of 71% for the rate of 4 years that would be 2,840,000 baht. The sales price of 4,000,000 baht deducted by 2,840,000 baht is 1,160,000 baht.
The deducted amount of 1,160,000 baht divided by 4 years results in 290,000 Baht which will be used as the base to calculate the progressive tax rate. 0% for the amount not more than 150,000 baht results in 0 Baht 10% of 140,000 baht results in 14,000 Baht. The result is 14,000 baht.
The amount of 14,000 baht must be multiplied once again by the number of years the seller owns the land. In this case it was 4 years. The amount of tax to be paid is 56,000 baht.