The Royal Decree on Revenue Exemption (No. 760) B.E. 2566 (2023) issued by virtue of the Revenue Code has been issued for supporting and motivating the private sector to carry out the implementation of greenhouse gas emission reduction.
In line with Chapter 3 Part 3 Title 2 of the Revenue Code, this royal decree exempts companies or juristic partnerships from collecting corporate income tax on the profit generated from domestic carbon credit sales made through the Thailand Voluntary Emission Reduction Program (T-VER) governed by the Thailand Greenhouse Gas Management Organization (TGO).
The exemption will remain valid for three fiscal years or until 31 December B.E. 2570 (2027). The first fiscal year will begin on the date when TGO issues the participants with their carbon credit sales certification.
This royal decree has been published in the Gazette on 19 March B.E. 2566 (2023) and will be effective from the date after publication in the Gazette until 31 December 2570 (2027).
Taxes on Land and Buildings be Reduced for the Fiscal Year of 2023
As of March 19, 2023, the Royal Decree on Reduction of Taxes for a Certain Type of Lands and Buildings (No. 3) B.E. 2566 (2023) (“Royal Decree”) has been implemented to reduce taxes on certain types of lands and buildings for the tax year 2023. The Royal Decree states that the tax amount for lands and buildings falling under certain categories can be reduced by 15%, according to Section 42 of the Land and Building Tax Act B.E. 2562 (2019). The categories include lands and buildings used for agriculture, residential purposes, other purposes apart from agriculture or residential purposes, and lands and buildings that are not being used or utilized appropriately based on their condition.
Furthermore, a further reduction at the rate of 15% of the tax amount calculated after the initial tax reduction for the tax collection of the tax year 2023 for the aforementioned lands and buildings will also be applied.
Standards and Safety System of Hotel Building to be Changed
The Department of Public Works and Town and Country Planning has recently conducted a public hearing to hear feedback on the Draft Ministerial Regulation Defining the Characteristics of Other Types of Buildings Used for Hotel Business (No. 4) B.E. …. (“Draft Ministerial Regulation No. 4”) and the Draft Ministerial Regulation Defining the Characteristics and Safety System of Hotels B.E. …. (“Draft Ministerial Regulation for Safety System”).
The objective of the Draft Ministerial Regulation No. 4 is to amend the Ministerial Regulation Defining the Characteristics of Other Types of Buildings Used for Hotel Business (No. 3) B.E. 2564 (2021) which will be expired on August 18, 2024. It also adds requirements for buildings to be converted to be used in the hotel business. For the Draft Ministerial Regulations for Safety System, it is to enhance the standards of stability and safety systems against fire hazards.
The Draft Ministerial Regulation No. 4 will be effective for 9 years. The buildings which will be converted to be used for the hotel business (“Hotel”) must obtain approval for modification or change. Moreover, the buildings must not be in conditions that may be harmful to health, causes a nuisance, or environmental impact, and must not violate urban planning, environmental protection, and the relevant laws. Furthermore, this draft also adds additional requirements for the buildings’ maximum load-bearing capacity and safety system for fire hazards.
For the Draft Ministerial Regulation for Safety System, presently, buildings used for hotel business have various features. Generally, all new buildings which will be used for the hotel business, must have appropriate safety standards and proper features. This Draft Ministerial Regulation for Safety System sets out the definitions such as “guest room”, “main structure”, “permanent materials” etc. for the existing buildings to be converted for using in the hotel business. Keys provisions categorized safety structure and standards of the buildings are as follows:
Category 1 specifies the structure, stability, and construction materials: the structure must be strong and stable to support the load-bearing capacity of the buildings and the main structure. For 4 floors or more buildings, it must be constructed with fire-resistant materials that exceed the requirement. The buildings less than 3 floors that are constructed with non-fire resistance must provide a fire prevention and suppression system.
Category 2 specifies the fire prevention and suppression system: hotels must provide fire prevention and suppression system. The hotel room must have a fire alarm system with at least 2 components: a fire signal device and fire automatic detection which include a manual alarm device and fire alarm control panel. Moreover, hotels must have enough light from emergency lighting systems and fire escape signs on all levels.
Category 3 specifies the stairs, fire escape ladder, fire escape routes, and fire escape doors: The size, quantity, and width of stairs, fires escape ladders, and the minimum standard for fire escape routes and fire escape doors are specified.
Category 4 specifies characteristics of buildings, interior space, various distances, and vacant space outside the building: The hotel rooms must have the bed size, plumbing distance, internal aisles width, and vacant space (not less than 10%) appropriately for the hotel size and not less than the minimum requirements.
Category 5 specifies special characteristics of buildings: The building which have different characteristics, shapes, sizes, and areas from general buildings such as a raft, vehicle wreckage, etc. is required to be in compliance with provisions of the Draft Ministerial Regulation for Safety System.
It should be noted that the Draft Ministerial Regulation No. 4 and the Draft Ministerial Regulation for Safety System are not in effect yet but they are expected to do approved by the Cabinet soon.
Small Accommodations Be Legalized Under Hotel Business Operation Act
Present, many types of building (such as raft, container, tent, and etc.) are being converted into hotels, which are popular among visitors and guests, but its structure is contrary to the Hotel Act B.E. 2547 (2004). As a result, in order to have such buildings being eligible for obtaining the Hotel Business License and operating the hotel business, the Department of Provincial Administration has issued a Draft Ministerial Regulation for Defining Types and Guidelines on Hotel Business Operation (No. ..) B.E. …. (“Draft Hotel Business Operation”) creating special conditions of buildings and specifying safety standards appropriated for those kinds of building.
This Draft Hotel Business Operation aimed to amend and add the following matters:
To define the conditions of restroom and bathroom for each type of building to be adequate for the number of guests and the size of the hotel, as well as in compliance with the related laws such as building control and entertainment place laws.
The visible number in every bed for hostel business, as well as the quantity of restroom and bathroom must be appropriate with the number of guests for ease of service and guest safety.
To define the documents using for such buildings to be in compliance with the building control and other relevant laws.
It is to be noted that the hotel business license granted before this Draft Ministerial Regulation becomes effective is still valid.
The cabinet has recently approved the guideline for managing foreign working after February 13th, 2023, as proposed by the Ministry of Labor in collaboration with the Ministry of Interior, Ministry of Public health, Royal Thai Police, and Department of Provincial Administration. The guideline below will be applied to foreign workers whose work permits expire on or before February 13th, 2023, by allowing the following foreigners to stay in Thailand as a special case until May 15th, 2023.
1. Foreigners who have completed and submitted an application for a renewal of their work permit and paid for the application fee and renewal work permit fee within February 13th, 2023 and that 1.) those foreigners were granted a visa or permitted to temporarily stay in Thailand until February 13th, 2023 but have not yet applied for a temporary stay in Thailand until 2024 or 2025 or have a gradually expired passport since February 14th, 2023 onwards or 2.) those foreigners who were granted a visa or permitted to temporarily stay in Thailand until February 13th, 2023 and have been granted to stay temporarily in Thailand until 2024 or 2025 or have a passport expired from February 14th, 2023 onwards.
According to the Notification of the Ministry of Labor issued by virtue of Section 14 of the Royal Ordinance on the Management of Foreign Workers Employment B.E. 2560 (2017) and its amendments, foreigners as mentioned above in Item 1 will be allowed to work in Thailand until February 13th, 2024, or 2025 as the right is granted.
2. Foreigners, who have incompleted but submitted an application for a renewal of their work permit and paid the application fee within February 13th, 2023 under the circumstances of 1.) those foreigners do not have a passport or document in lieu of a passport, 2.) those foreigners who have a passport or document in lieu of passport but fail to extend their visa or 3.) those foreigners whose status is not legal but whose employers have applied for their work permits on their behalf and have already paid the fee in the process of biometrics collection prohibited disease diagnosis, will be granted temporary visas until May 15th, 2023. In case they wish to continue working in Thailand, they will be granted temporary visas and work permits until February 13th, 2024 or February 13th, 2025 as the case may be.
3. Those foreigners, who have passports or documents in lieu of passports and have been granted visas or have permission to temporarily stay in Thailand but passports or documents in lieu of passports expired before February 13th, 2023, will be allowed to temporarily stay and work until February 13th, 2024, or February 13th, 2025, as the case may be.
The new Land and Building Tax Act B.E. 2562 (2019) (the “Act”) has come into effect since March 13, 2019. Section 8 of the Act specifies the properties that will be exempted from the land and building tax payment. On January 10th, 2023, the Cabinet approved a draft ministerial regulation specifying a property exempted from land and building tax (no. [unidentified]) B.E. 2565 (2022) (“Draft Ministerial Regulation”) as proposed by the Ministry of Finance (“Ministry”). This article provides an example of the property owned by a state enterprise approved for tax payment exemption by way of issuing of the ministerial regulation under Section 8 (12) of the Act.
Dhanarak Assets Development Co., Ltd. (“DAD”) is a state enterprise owned by the Ministry and tasked with managing and maintaining the government’s real estate. Established in 2004, it serves two main purposes: to manage government assets in accordance with governmental policies and to construct and operate the Bangkok Changwattana Government Building Complex as a new type of government building. DAD earns rental revenue from leasing DAD’s lands and buildings located in the Government Complex Commemorating His Majesty The King’s 80th Birthday Anniversary, 5th December, B.E. 2550 (2007) (“Government Complex”) to various government agencies for use as offices.
Previously, DAD had enjoyed a tax reduction of 90%, but the tax reduction measure applicable to DAD ceased to be enforced. As a result, DAD lands and buildings are not currently exempted from the collection of land and building tax under the Act.
Therefore, in this regard, the Ministry proposed this Draft Ministerial Regulation by virtue of the Land and Buildings Tax Act to the Cabinet for its approval and the Draft Ministerial Regulation shall come into force backdated from January 1st, 2023 onwards.
This Draft Ministerial Regulation proposes a land and building tax exemption for DAD’s lands and buildings located in the Government Complex, which was constructed using the fund from securitization funding, only for the lands and buildings leased by the Treasury Department to provide office places and public utilities for various government agencies. According to the Draft Ministerial Regulation, the said public utilities shall refer to Building A, Building B, the Administrative Court Buildings, sewage disposal buildings, waste yards, security engineering buildings, parking buildings and also the areas within Building A, Building B and Administrative Court Buildings using for electrical systems, plumbing systems, engineering systems, fire protection systems, security systems, maintenance systems, air conditioning, and ventilation systems, wastewater treatment systems, garbage disposal systems, telecommunication systems, internal transportation systems, buildings, toilets, parking places and corridors within the buildings which are not used for benefit.
Acquisition of Land for Use as Residence by Potential Foreigners in Thailand
On 25th October 2022, the Cabinet approved in principle a draft Notification of Ministry of Interior on Acquisition of Land for Use as Residence for Foreigners in accordance with Economic and Investment Stimulus Measures by Attracting High Potential Foreigners to Thailand by B.E. .… (the “Draft Ministerial Regulation”).
The Draft Ministerial Regulation allows four groups of high potential foreigners, namely wealthy global citizens, wealthy pensioners, foreigners who want to work from Thailand, and highly skilled professionals or specialists, to purchase and own land for residential purpose. The Draft Ministerial Regulations introduces new criteria regarding types and duration of investment specifically for such groups of foreigners. These new criteria will be added to general requirements prescribed in the currently implemented Ministerial Regulation Re: Rules, Procedures and Conditions for Acquisition of Land by Aliens B.E. 2545 (2002) (the “Ministerial Regulation B.E.2545 (2002)”) which have already permits foreigners to own land for residential purposes if they meet the requirements of making at least 40 million Baht investments for at least 5 years in, for example, Thai government bonds or Bank of Thailand bonds, real estate funds or mutual funds for resolving financial institution problems established under the law on securities and stock exchange, shares capital of juristic persons who received investment promotion under the law on investment promotion, or businesses that qualify for investment promotion under the law on investment promotion as announced by the Board of Investment (BOI).
The Draft Ministerial Regulation stipulates that high potential foreigners who invest and maintain the investment capital of at least 40 million Baht for 3 years reducing from 5 years in businesses that are beneficial to the economy and society of Thailand or in businesses that are eligible for investment promotion as announced by the BOI under the law on investment promotion will be entitled to own land for residential purposes with an area not exceeding 1 Rai or 1,600 sq.m. or about 0.4 Acres.
In addition to types of investment mentioned in the Ministerial Regulation B.E.2545 (2002), the Draft Ministerial Regulations also includes investment in infrastructure funds and Real Estate Investment Trusts (REIT) established under the law on Trust for Transactions in Capital Market. However, the land acquired must be located in Bangkok, Pattaya city area, municipal area or within the area designated as a residential area according to the Town and Country Planning Act.
The Ministerial Regulation will be in force for 5 years after its publication in the Government Gazette. For the next step, the Draft Ministerial Regulation will be submitted to the Council of State for its consideration before the Draft Ministerial Regulation retuned to the Cabinet for its final consideration and approval.
Foreign Entity Could Possibly Own Land Used for Office and Residence in Thailand
The Board of Investment (“Board”) has recently issued the announcement of the Board of Investment with the subject of criteria for permission of the Promoted Entity for investment to own land used for office and residence (“Announcement”) with the purpose to facilitate business operations of foreign juristic entities who receive investment promotion from the Board (“Promoted Entity”) to own land used for office and residence purposes in Thailand.
Under the Investment Promotion Act B.E. 2520 (1977), the Board has authority to permit the Promoted Entity to own land in order to carry on the Promoted Business, in which such land shall have extent as the Board deems appropriate, despite the fact that other laws may prohibit otherwise.
Promoted Entity with registered and paid-up capital of not less than 50 million baht, is able to hold ownership of land for use as office and residence purposes in Thailand. Criteria, conditions and permissible ownership of land shall be as follows:
The Promoted Entity shall not hold ownership of more than 5 rai of the land for use as the office of the promoted business.
The Promoted Entity shall not hold ownership of more than 10 rai of the land for use as a residence of executives or experts.
The Promoted Entity shall not hold ownership of more than 20 rai of the land for use as a residence of workers.
The land for office and residence purposes can be either located in the same area with a place of business operation or elsewhere.
In case of special reasons and necessities, the Board will consider granting the appropriate permission for ownership of land on a case-by-case basis.
In the case where the Promoted Entity dissolves or transfers his promoted privileges, he shall dispose of the land which has been permitted to own within one year of the date of dissolution or transfer.
The Board has the authority to issue announcements prescribing additional rules as appropriate, such as the types of business, distances from the place of business operation, etc.
Since this Announcement has just been issued, there is no practical guideline available at this stage. Therefore, it causes doubts to the investors who would like to operate their businesses. For example, whether the Promoted Entity is entitled to own the constructions located on the land and whether the land held by the Promoted Entity is able to be several pieces of land located in several locations but in total not more than the quota allowed. The responsible officers at this stage also are not able to respond to these kinds of inquiries as well and leave for being considered on a case-by-case basis.
Aiming to attract foreigners with capacity of wealth and talent to contribute and generate income to Thailand’s domestic market and support the local economic growth subject to the relevant regulations.
Targeting size of the LTR visa is about 1 million of wealthy or talented foreigners who aim to get resident in the kingdom for the next 5 years.
Revocation of the LTR visa can be due to incompliance to the Ministry of Interior’s announcement and unable to meet with the qualifications as prescribed.
Qualifications
Types
Qualifications
Wealthy global citizens
1. Owning at least 1 million USD assets globally; or 2. Having at least 80,000 USD income for 2 years continuously; or at least 500,000 USD investment in assets in Thailand
Wealthy retirees
1. Owning at least 80,000 USD assets globally; or in case of owning assets between 40,000 – 80,000 USD, they must invest in Thai property for at least 250,000 USD; or 2. Having 50 years older with annual pension or stable income
Work-from Thailand professional
1. Owning assets between 40,000 – 80,000 USD for 2 years continuously; or having at least master’s degree or owning intellectual property or receiving a series of funding; or 2. Working for a SET-listed corporation or business operates for at least 3 years with total revenue of 150 million USD in the last 3 years; or 3. Having at least 5 years of experience in the specified fields over the past 10 years.
Highly skilled professional
1. Highly skilled professional holding of assets between USD 40,000 – 80,000 for 2 years continuously; or having at least a master’s degree in science and technology or having special expertise relevant to the job assignment in Thailand; or 2. No work experience required for PhD degree in the relevant fields of the targeted industries; or 3. Working in the business in any targeted industries with at least 5 years of experience
Highly skilled professional working with government agencies
1. No minimum personal income; or 2. No work experience required; or 3. Employing with higher educational institution, research institution, specialised training institution or Thai government agencies
Dependants
Spouse and children under 20 years old of LTR visa holder (maximum of 4 dependents in total per one LTR visa holder)
Key privileges for LTR visa holders
10 years renewable visa.
Fast track service at international airports in Thailand
90 days report extending to 1 year report and exemption of re-entry permit
Permission to work in Thailand (digital work permit)
Immigration and work permit facilitation service at one stop service center for visa and work permit
Relevant Authorities
Board of Investment, Immigration Bureau and Ministry of Labour.
Asset Management Company (AMC) does business through purchasing or auctioning NPLs (non-performance loans) from commercial banks or financial institutions and manages such NPLs through restructuring of NPLs. The AMC business is governed by the Bank of Thailand (BOT), where the selective NPLs from the banks will be sold to the AMCs through auction. The banks will notify the debtors and creditors before and after the auctions of debt. AMCs that win such auctions have the duty to inform the debtors of their rights to claim the debt in place of the banks. Still, the original right to claim the capital, interest, and other relatives’ rights and obligations agreed with the banks are still enforceable. The debtors just have to perform their obligations with the AMCs.
Under this current situation, a joint venture agreement between AMCs and commercial banks is to be entered into giving the banks more flexibility in managing bad debts and also helping AMC in playing a key role in the country’s bad asset management as some have capital limitations in terms of buying distressed debt.
According to the published news in May 2022, All Inspire Development Plc. is one of the companies operating AMC businesses. The company aims to buy the NPLs for about 500-1000 million baht with an estimated return of around 4 – 4.5 billion baht.
Based on Bangkok Commercial Asset Management or BAM’s forecast, the value of NPLs from the banks will be around 200-300 billion baht, and other financial institutions will be around 9 billion baht.
Under the BOT rules and regulations, a limited company or public limited company with a registered capital not less than 25 million baht and having a purpose of business to be transferred of NPLs from the banks or financial institutions to manage the NPLs are able to apply for operating of AMCs business with the BOT. The AMC that did not comply with the regulations and rules set by the BOT will result in revocation of registration.
The joint venture entities will be operated for not more than 15 years from the date of approval for their operation, and after that, those will need to be liquidated or changed of shares proportion held to be in accordance with the relevant laws and regulations governed their business.
The booming of AMC business is the gravely additional tool or assistance for the banks to manage the NPLs during this downhill of economic due to the pandemic. However, this AMC tool is not a long-term resolution in which the government is needed to launch and implement the economic policy to solve this problem on a long-term basis.
