Tag: Property and Real Estate

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Suspension of the Incentives for Owning Lands by Foreigners in Thailand

On 21 January 2022, it is official that the incentives for foreigners owning the lands and real estates in Thailand has been halted. It was previously controversial that the governmental body for economy drive under the Covid-19 situation is deliberating the additional incentives for foreigners to own the lands and real estates in Thailand (the “New Incentives”).

assorted color wall paint house photo

Prior to the deliberation on the New Incentives, foreigners, mostly individuals, are not permitted to own the lands in Thailand under general circumstances. Foreigners residing in Thailand are permitted to own only residential units in apartments or condominium with the regulated ratio that the foreign ownership in any specific condominium must not exceed 49% of the total space. The leasehold up to 30 years is also another option permitted by the laws.

Until late 2021, the economy driving body has proposed to deliberate on the New Incentives with details as follows:

  1. Lifting 49% restriction foreign ownership in condominium – this incentive is later halted due to the requirement to amend the Building Control Act B.E.2522. The amendment process will take approximately 1 year which will not be a swift action to tackle to economic crisis;
  2. Extending the leasehold from 30 years to 50 years – this incentive is not practicable. The 30-year leasehold is currently legitimated under the Thai Civil Commercial Code. The extension of the leasehold by foreigners to 50 years may require amending on Civil Commercial Code or passing a new act with a specific purpose to extend the timing limit of the leasehold by foreigners. This is not the swift response to spontaneous economic crisis; and
  3. Permitting foreigners to own the land for a space not more 1 rai (approximately 1,600 sq.m) – the responsibilities lie upon Department of Lands to work on the legitimation and the existing land laws of this incentive. As it is a sensitive issue, this incentive is now also suspended. 
family celebrating christmas dinner while taking selfie

The ownership of lands/real estates by foreigners in Thailand for residential purpose is still under the existing options stated above. For the business and commercial purpose, the land ownership by foreigners is based on the similar principles. It is however can be slightly different depending on the type of business which require specific consultations with competent bodies and authorities.

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On 7 December 2021, the Cabinet has approved to remain the rate of land and building taxation and the draft Royal Decree Stipulating the Rate of Land and Building Tax B.E. …. (“Draft Royal Decree”) as proposed by the Ministry of Finance and reviewed by the Council of State.

The Ministry of Finance considered and has approved to remain the rate of land and building taxas specified in the transitory provision, i.e., Section 94 of Land and Buildings Tax Act B.E. 2562 for the collection of land and building tax from 2022 onwards under the following reasons:

calculators on the table
  • Most taxpayers, under hearings arranged by the Fiscal Policy Office of the Ministry of Finance, agreed with the current land and building taxation e.g., basis tax calculated by assessed value, different rates of tax depending on the types of utilization, and tax burden of the taxpayers are reduced or remains the same as compared with the tax burden by house and land tax or land development tax.
  • Progressive tax rates are fair and appropriate to the current situation. This makes people with higher land or building values have a greater tax burden than those with lower land or building values. It also does not create an unreasonable tax burden.
  • Due to mitigation of  impact of covid-19 epidemic, the Royal Decree on Land and Certain Types of Land Tax Reduction B.E. 2563 and The Royal Decree on Land and Certain Types of Land Tax Reduction (No.2) B.E. 2564 have reduced the amount of tax at a rate of 90% of the amount of tax calculation, in which the taxpayer has not yet been aware of the full real tax burden. Therefore, the same tax rate should be remained for a while.
  • Due to changing of tax administration and procedure, the Department of Local Administration does not have the database of land and building tax of each taxpayer that can be efficiently processed the  taxes Collection.

The rates of land and building tax under the Draft Royal Decree are as follows:

Types of utilizationTax rates in percentage according to the value of land and/or building
(1) Land and building used for agricultural purpose0.01 – 0.1
(2) Land and building used for residential purpose0.02 – 0.1
(3) Land and building used otherwise than in (1) or (2)0.3 – 0.7
(4) Land and building left empty or unused as otherwise reasonable for its condition0.3 – 0.7

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On 19 October 2021, The Cabinet has approved in principle of the draft Notification of the Ministry of Interior regarding the Permission of Foreigners Granted Thailand Privilege Card to Stay in Thailand for Working as a Special Case (“Draft Notification”) and the draft Rules and Conditions for Allowing Foreigners Received Thailand Privilege Card to stay in Thailand for Working as a Special Case (“Draft Rules and Conditions”) as proposed by the Ministry of Tourism and Sports and considers this matter as an urgent matter.

beige temple reflecting on body of water

The main points of the 2 drafts are as follows:

  • Draft Notification
    1. The aliens who receive Thailand Privilege Card under the conditions as specified in  the Ministry of Interior’s Notification regarding permission of certain classes of aliens to stay in Thailand as a special case dated 22 February 2013 and have minimum investment of USD 1,000,000 per year, in a specified business, including their spouses and their under-20-year-old children, can request to change the type of visa to Non-Immigrant Visa for a term of 5 years throughout the investment period in the Flexible Plus Program.
    2. The aliens whom their types of visa have been changed as mentioned above, can apply for a work permit under the law on foreigners working management.
    3. The termination of the permission of aliens and their dependents to stay in Thailand according to this Draft Notification is under one of the following cases:
      • The minimum investment, in a specified business, does not reach USD 1,000,000 within one year from the date of entering into the program;
      • The work permit has been terminated under the law on foreigners working management; or
      • Such aliens have presumably into believing that their behavior that is danger to society, have been issued a warrant of arrest by a foreign government, being deported by the Thai government or foreign governments, or being revoked the right to stay in Thailand.
  • Draft Rules and Conditions
    1. Aliens must be a special member holding Thailand Privilege Card:
      • For the remaining members, Thailand Privilege Card must be validity at least 5 years; or
      • For the new members, they must apply for Thailand Privilege Card with a minimum card value of 1 million Baht and the validity of the card is for more than 10 years.
    2. An alien must receive a special Privilege Entry Visa (PE).
    3. An alien must invest in Thailand within 1 year from the date of requesting to join the Flexible Plus Program or from the date of approval to be a special member with a total investment value not less than USD 1,000,000 which consists of 3 types:
      • Investment in real estate according to the rights of foreigners;
      • Investment in a limited company or a public limited company; or
      • Investment in stock exchanges such as ordinary shares, debentures, or investment units which has been approved by the Securities and Exchange Commission.
    4. An alien must have all qualifications under the law on foreigners working management.

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On 29 September 2021, the Cabinet has approved a draft Announcement of the Office of the Prime Minister and the Ministry of Interior (MOI) regarding Limitation of Numbers of Alien Annually having residence in Thailand as proposed by MOI.

The aliens under nationality of each country having residence in Thailand of the year 2021 will be limited to not exceeding 100 persons per country and stateless aliens will be limited to not exceeding 50 persons.

low angle photography of high rise building

This Announcement is structured to be in accordance with Section 40 paragraph one and Section 41 of the Immigration Act B.E. 2522 (1979) and Section 5 paragraph one of the Immigration Act B.E. 2522 (1979), as amended by the National Council for Peace and Order Announcement No. 87/2557 dated 10 July 2014.

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A Draft Ministerial Regulations on Rules and Procedures for Filing Appeals and Methods for Consideration and Adjudication of Appeals on the Town Planning and Particular Town Planning B.E. …., enacted by virtue of the Town Planning Act B.E. 2562 (the “Draft Ministerial Regulations”), had been proposed by the Ministry of Interior and was approved in principle by the Cabinet on 10 August 2021.

Summary of this Draft Ministerial Regulations are as follows:

The Draft Ministerial Regulations prescribes rules and procedures for filing appeals and methods for consideration and adjudication of appeals of the orders or notifications of town planning committee, provincial town planning committee, local town planning management committee, town planning officer or other related government officer, details are as follows:

  1. The appeallate bodies: There are 3 appellate bodies considering of appeals which are appellate committee, provincial town planning committee and local town planning management committee.
  2. Appeals must be in writing: At least, there must be the following items contained in the appeals, such as date, month and year that the appeals are filed, orders or rulings which are grounds of appeals together with facts, arguments or provisions of law and reasonable referencing in the appeals.
  3. Filing of appeals: In Bangkok area, the appeals shall be submitted at the Office of Urban Planning and Development Bangkok. For other provinces, they shall be submitted at the Provincial Public Works and Town Planning Office.
  4. Consideration and adjudication of the appeallate committee: In the case that appeals filed under Section 90 (1), consideration shall be subject to policies of town planning in the essence of sanitation, public safety, welfare of society or public interest including activities using benefits on lands, conditions of lands and and other properties related to lands, investment or benefits or nuisances caused effect to the people from such activities.
  5. Consideration and adjudication of the provincial town planning committee. In the case that appeals filed under Section 90 (3), consideration shall be subject to objectives and projects of the appellants to be in accordance with the principal of provincial town planning together with reasons for issung orders of the officers and benefits or nuisances caused effect to the people in the area.
  6. Consideration and adjudication of the local town planning management committee. In the case that appeals filed under Section 90 (6), consideration shall be subject to actual demolition or relocation of buildings on the cost-effective basis of the owners/possessors of such buildings. The expenses shall be calculated by deducting from the compensation payable to the owners/possessors of the buildings but not exceeding the amount of such compensation.

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Elite Membership is one of the visas schemes for tourists managed by the Tourism Authority of Thailand (“TAT”) having varieties of package ranging from 5-10 years of membership.

TAT has proposed for extending its privileges to the Cabinet for approval in order to magnetize wealthy foreigners around the world to visit and stay in Thailand for long term periods.

On 8 June 2021, the Cabinet approved in principle for such proposed Flexible Plus Program as one of the national economic reliefs responding to the effect from Covid-19 pandemic. The Thailand Flexible Plus Program has 4 target groups, i.e. Wealthy Global Citizen, Wealthy Pensioner, Work-from-Thailand-Professional, and High-Skilled Professional.

Details of the project after working with the working team under supervision of the Deputy Prime Minister Supattanapong Punmeechaow was referred to the Cabinet but was rejected by the Secretariat of the Prime Minister thereafter. The Secretariat of the Prime Minister deemed that the matter is related to the Ministry of Interior and, therefore, ordered the TAT to schedule a meeting for further discussions in which the meeting was held on 9 July 2021.

stylish businesspeople in outerwear shaking hands

The proposed plan includes a new type of Long-term Resident Visa (LTR VISA) and establishment of the LTR service unit to accommodate this plan. The LTR service unit will be established in a form of private entity having a concession granted by the Ministry of Finance to specifically manage this project. The key current requirements for the Elite Flexible Plus Program, as far as the TAT can confirm to the public at this moment, are making investment in Thailand in real estate, shares both in limited companies and stock market, debentures, or depositing in the bank accounts for a minimum of 1 million USD or around 30 million THB. The investment can be diversified and collectively reaches the minimum amount or can be invested wholly in one category. Other details will be announced later once it becomes clear.

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The Ministry of Interior has issued its Announcement Re: Collecting of Fees for Registration of Rights and Juristic Acts under the Land Code: Establishment and Operation of Public Financial Institutions (“Announcement”) in which summary of such Announcement are as follows:

  • Registration fee for transferring of ownership of the immovable asset is at the rate of 0.01% in case that such transferring of ownership transaction is from a juristic person, individual or group of people other than a public financial organization to the public financial institution.
  • Registration fee for the mortgage of immovable assets is at the rate of 0.01% in case that such mortgage is for being collateral for a credit facility between a member of a public financial institution and a public financial institution.

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A Draft Ministerial Regulation on Application Forms for Permission, Permits, Certificates, Orders and Other Related Forms (the “First Draft Ministerial Regulation”) and a Draft Ministerial Regulation on Rules, Procedures and Conditions in regard to Granting of Permits, Permission, Renewal of Permits, Transferring of Permits, Issuing of Certificates and Replacement of Certificates (the “Second Draft Ministerial Regulation”), enacted by virtue of the Building Control Act B.E. .… (the “Draft Ministerial Regulations”), had been proposed by the Ministry of Interior and was approved by the Cabinet on 12 November 2020.

Summary of these 2 Draft Ministerial Regulations are as follows:

  1. The first Draft Ministerial Regulation is aimed to set application forms and permit forms (i.e. construction permit, modification permit, demolition permit, relocation permit, change of occupancy permit, amendment of permit of layout plan, construction plan and its related documents) including their renewal of permit, substitute permit or substitute certificate, certificate and transferring of permit.
  2. The second Draft Ministerial Regulation is aimed to set rules, procedures and conditions for an applicant, a permit holder or a relevant officer to follow such rules, procedures, and conditions, which are as follows:
    • A person, who would like to be granted a construction permit, modification permit, demolition permit or relocation permit (the “applicant”), shall submit Kor. 1 Form to a local officer together with its related documents.
    • After receiving the application form, a responsible officer will review the application, including its information, documents and evidence. If it is a corrected and completed one, the officer will issue a receipt of such application to the applicant and will send the said application to the local officer for further proceedings. If it is incorrect or lacking of any information, documents or evidence, the officer will notify the applicant immediately.
    • When the local officer has received the application, he or she will examine an area plan, a building plan, an element list of the building plan and a calculation list (if any). In case that those are correct and in accordance with the Draft Ministerial Regulations, the local ordinances or the announcements of the Minister of Interior issued under the Building Control Act B.E. 2522, the local officer will issue a permit following Aor. 1 Form to the applicant.
    • A holder owning construction permit, modification permit or relocation permit of the usage control building (i.e. buildings used as a warehouse, hotel, condominium or hospital and buildings used for commercial, industrial, educational, public health businesses or other businesses) who has completed the construction, modification or relocation of such building, the owner or the occupier of the building shall submit a request for a certificate of such construction, modification or relocation of the usage control building to the local officer. After receiving such request and the local officer finds that those are correct and in accordance with the permits, the local officer will then issue a certification following Aor. 5 Form to the applicant. In regard to this matter, the owner or the occupier, who would like to change the usage of the building, shall submit Kor. 2 Form to the local officer with its related documents.
    • Any permit holder, who would like to renew the construction permit, modification permit or relocation permit, shall submit Kor. 4 Form to a local officer together with its related documents before its experiment.
    • In case that a permit of the certificate is lost, destroyed or materially damaged, a permit holder or a certificate holder shall submit Kor. 5 Form for a substitute permit or certificate to a local officer together with its related documents issued in the Kor. 5 Form within 15 days from the date of acknowledgement of such loss, destruction or damage.
    • Any permit holder, who would like to amend an area plan, a building plan and an element list of the building plan deviating from the permission, shall submit Kor. 6 Form to a local officer together with its related documents.
    • Any permit holder, who would like to transfer the construction permit, modification permit, relocation permit, change of building usage permit to another person, shall submit Kor. 7 Form to a local officer together with its related documents.

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A draft Ministerial Regulation on Weight Bearing Capacity, Resistance, Durability of Building and its Supporting Ground for Vibration of Earthquake B.E. …. reviewed and revised by the Council of State was proposed to and approved by the Cabinet (“Ministerial Regulations”) in which it focuses on determining the risk in regard to an earthquake, types of building that shall be concerned on vibration resistance from the earthquake and improving principles of the weight bearing capacity, resistance and durability of building for supporting earthquake vibration. There are various important points specified in the Ministerial Regulation as follows:

  1. Revising and adding the definitions of areas where those can be affected by the earthquake vibration dividing into 3 levels (i.e., area 1: ordinary level of earthquake vibration, area 2:  mid-level of earthquake vibration and area 3: high-level of earthquake vibration)
  2. Adding the definitions of planner and plan calculator.
  3. Amending the building-planning processes that the planner shall consider for the building’s plan based on each area according to item a. For example, the planner of the building located at area 3 shall consider architectural components consisting of stability and indestructibility.
  4. Amending the building-planning process and building-construction calculation in that the planner and plan calculator of the building located at area 2 or 3 have to arrange for the whole structure, its details and joining parts according to the ministerial regulation and rules and regulations prescribed by the relevant authorities. In the case that ministerial regulation and rules and regulations prescribed by the relevant authorities have not yet been announced. The plan and plan calculation for construction of building shall be prescribed by the licensed engineering juristic person. In any case, the licensed engineering juristic person has to engage the engineer with B.Eng. (Civil Engineering) complied with the Engineer Act B.E. 2542 as its consultant who has an authority to certificate such calculation.

Author: Panisa Suwanmatajarn and Parita Preamsawat