The Thai government announced on 18 May 2009 an extension of a property tax reduction, in which specific business tax is reduced from 3.3% to 0.1%, while transfer fees see a reduction from 2% to 0.01%. This extension comes to an end on 28 March 2010.

A refund can therefore be requested from the Revenue Department for any property transactions made, where 3.3% was paid, between the previous expiration date of 28 March, 2009 and 18 May, 2009.

If you plan to buy or sell a property, I advise for you to do this as soon as you can, so that you may enjoy the curent Thai tax promotion rate.

As with the majority of cases of buying property in Thailand, the buyer has to pay the tax and transfer fee or at least pay 50/50, therefore, tax will be one of the major costs. Before buying or selling any property, you should know the different tax liabilities of selling property as an individual (private) or as part of a company.

The following information will hopefully help:

1. Income tax
Income tax on selling property as an individual person will be calculated base on the official price (land valued price by the land department),not the true selling price. Therefore, the income tax for the individual will be much cheaper than the corporate price as they have to use the selling price as the tax base.

2. Withholding tax
Withholding tax on selling property from any company is always 1% of the selling price, but on an individual?s selling land, withholding tax will be much lower as beside using the official price, you are also allowed to deduct expenses based on how long you have owned the land, with the shortest time being the biggest deduction.

3. Specific business tax(SBT)
Both the corporate and individual will have to pay SBT based on the selling price but for the individual, if he or she has held the land for more than 5 years or if his name was in the Tabian baan (housing registration) of the selling plot for more than a year, he does not need to pay SBT.

4. Duty stamp
Both the corporate and the individual who has been exempt from SBT will need to pay a duty stamp of 0.5% tax on the selling price 5.The transfer fee Transfer fee will be based on the official price

6. Declaration in the annual income tax return
For the corporate, they have to include the selling price as income in their year end tax return and they are also able to use the withholding tax of 1% deducted by the land office as the tax credit. The individual has to include the withholding tax in the year-end tax return and use the withholding tax as a tax credit.

The law stipulates that if you have paid SBT on selling the land then the withholding tax will be considered as the final tax, therefore you do not need to include them in the year-end tax return. Therefore, an individual will pay considerably less tax than a corporate when selling the property. I therefore recommend that if a foreigner plans to buy a villa in Thailand (bearing in mind that the law does not allow them to own the land but they can own a villa under their name), it is better to buy the villa under a person?s name as it will save tax for you when you sell the villa in the future.

I also always recommend that a leasehold is the safest and most legal way for a foreigner to own land.