Tax Obligations and Compliance for Foreign Residents in Thailand
Under Thailand’s taxation framework, foreign individuals residing in the country are subject to specific tax obligations, particularly when they are also liable for taxation in other jurisdictions. This article provides a comprehensive overview of the Thai tax system for individuals residing in Thailand for 180 days or more, including the requirements for filing tax returns, allowable deductions, the application of Double Taxation Agreements, and penalties for non-compliance.
Tax Residency and Taxable Income in Thailand:
According to Thai tax law, an individual who resides in Thailand for a cumulative period of 180 days or more within a calendar year (1 January to 31 December) is classified as a “tax resident of Thailand.” Tax residents are subject to Personal Income Tax (PIT) on the following categories of income:
Income Derived from Sources Within Thailand: Such income is taxable regardless of whether it is paid within Thailand or abroad.
Foreign-Sourced Income: Such income is subject to Thai PIT if it is earned on or after 1 January 2024 and remitted to Thailand in any year. However, foreign-sourced income earned prior to 1 January 2024 is exempt from Thai PIT, even if remitted to Thailand on or after 1 January 2024.
Tax Return Filing Requirements:
Thai tax residents who earn income from sources within Thailand or who remit foreign-sourced income to Thailand (as described above) are required to file a tax return with the Thai Revenue Department within 31 March of the following year for the preceding calendar year’s income.
Deductions and Allowances:
Not all income is subject to taxation, as certain types of income are exempt, including severance pay up to a specified amount, retirement benefits, and bank interest that has already been withheld at source. Additionally, taxpayers may claim deductions for various expenses based on the type of income received.
Double Taxation Agreements (DTAs) and Tax Credits:
To mitigate the risk of double taxation, Thailand has entered into DTAs with various countries. These agreements aim to prevent income from being taxed in both Thailand and the country where it was earned. Foreign residents subject to Thai PIT may be eligible for either a tax exemption or a foreign tax credit, depending on the provisions of the applicable DTAs and the type of income involved.
Penalties for Non-Compliance:
Failure to comply with the above requirements results in fines and surcharges.
Conclusion:
Foreign residents in Thailand who meet the 180-day residency threshold must carefully navigate their tax obligations to ensure compliance with Thai tax law. This includes understanding the scope of taxable income, both from Thai and foreign sources, fulfilling tax return filing requirements, leveraging allowable deductions and DTAs benefits, and adhering to deadlines to avoid penalties. By maintaining accurate records and submitting properly certified documentation, taxpayers can effectively manage their tax liabilities and ensure compliance with the Thai Revenue Department’s regulations.
Sharing Economy Update: Refining Thailand’s Accommodation Act to Meet Modern Tourism Trends
Following the previously published article “Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends” (Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends – The Legal Co., Ltd.), which provided an overview of the first draft of the Accommodation Act (“Act”) and its efforts to modernize regulatory frameworks in response to emerging tourism models and sharing-economy platforms, the second draft of the Act has now been released and is currently open for public hearing. Whereas the first draft focused primarily on updating definitions, easing certain regulatory burdens, and recognizing new forms of accommodation, the second draft aims to enhance regulatory clarity, balance consumer protection with business flexibility, and address concerns raised during the initial hearing process.
Key Revisions in the Second Draft
The second draft introduces the following substantive revisions:
1. Electronic Systems and Electronic Transactions
The second draft establishes a clear one-year deadline for implementing the required electronic system, ensuring timely and practical deployment. It also expands the scope of electronic transactions by permitting applications, notifications, all complaints, and any other relevant issues under the Act to be submitted electronically. This enhancement improves accessibility, reduces administrative delays, and safeguards operators’ rights during system transitions.
2. Enhanced Control Over Registrar Discretion
Registrars are now explicitly prohibited from refusing registration when applicants satisfy all legal qualifications. This provision minimizes the risk of arbitrary decision-making, reduces opportunities for misconduct, and strengthens overall transparency in the registration process.
3. Exclusion of Monthly Condominium Units from the Accommodation Framework
The second draft excludes monthly condominium rentals from classification as an accommodation under this Act, thereby preventing regulatory overlap with the Condominium Act. This exclusion eliminates unnecessary regulatory burdens on long-term residents and resolves ambiguity regarding whether monthly units should fall within the definitions of hotels or accommodation.
4. Enhanced Protection for Accommodation Service Users
A new chapter introduces comprehensive consumer protection measures, including formal recognition of platform services (e.g., Agoda, Booking.com, Airbnb), fair-contract requirements preventing unilateral amendments by operators, and strengthened safety and information disclosure standards. These provisions reflect contemporary digital-era booking practices and ensure greater transparency and fairness for users.
5. Restructured Penalties and Expanded Director Liability
Penalty provisions have been reorganized to clearly distinguish criminal penalties from administrative fines, creating a more systematic enforcement structure. Director liability has been expanded to prevent avoidance of responsibility for corporate violations, while enhanced penalties have been introduced to incentivize operator compliance.
Conclusion
The second draft of the Accommodation Act, currently undergoing public hearing until 3 December 2025, reflects the government’s continued commitment to modernizing Thailand’s accommodation regulatory framework. The draft seeks to enhance regulatory clarity, balance consumer protection with business flexibility, and address stakeholder concerns raised during the initial hearing process.
Overall, the revised draft demonstrates a forward-looking approach that aligns with evolving tourism trends and supports a more efficient, transparent, and adaptable accommodation system in Thailand.
Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends
The tourism industry in Thailand has undergone significant transformation in recent years, driven by economic shifts and evolving consumer preferences. Previously dominated by mass tourism, the sector is now witnessing a surge in niche tourism categories, including luxury tourism, creative tourism, slow tourism, solo tourism, medical and wellness tourism, and sports tourism. This shift has fueled steady growth in Thailand’s tourism market, with small-scale accommodations such as homestays, tents, campsites, and rafts gaining popularity. Concurrently, technological advancements have revolutionized how consumers access and book accommodations, with platforms such as Airbnb, Booking.com, and Agoda facilitating seamless transactions. To address these changes and support the burgeoning accommodation sector, the Thai government is drafting the Accommodation Act B.E. ….(“Accommodation Act”), which aims to modernize and streamline legislation governing accommodation businesses. This article outlines the key provisions of the draft legislation and its implications for the industry.
Redefining “Hotel” as “Accommodation”
The existing Hotel Act B.E. 2547 (2004) defines a “hotel” as a permanent structure with comprehensive public utilities, operated for profit. This restrictive definition excludes many contemporary accommodation types, such as homestays, tents, rafts, hostels, and other non-traditional lodging options, rendering them unable to obtain legal licenses. As a result, many such businesses operate outside the regulatory framework. The draft Accommodation Act introduces a broader and more inclusive term, “accommodation,” defined as any establishment providing temporary lodging to travelers or individuals for payment or monetary benefit. This redefinition encompasses all forms of lodging, including traditional hotels, and enables these businesses to obtain legal recognition and licensing while retaining the term “hotel” within the legislative framework.
Categorization of Accommodations
To accommodate the diverse range of lodging options, the draft bill introduces three distinct categories of accommodation, each with specific regulatory requirements:
1. Accommodation Requiring Notification: This category includes small-scale establishments with no more than eight rooms and a capacity of up to 30 guests, as well as alternative lodging types such as homestays, tents, campsites, rafts, and mobile homes. Operators in this category must notify the registrar prior to commencing operations. This provision is designed to support small-scale entrepreneurs and legalize popular, non-traditional accommodation types.
2. Accommodation Requiring Registration: This category applies to mid-sized establishments, such as hotels with more than eight but no more than 40 rooms, and condominium units rented for short-term stays (less than one month). These businesses must register with the registrar before operating.
3. Accommodation Requiring a License: This category encompasses larger establishments, such as hotels with more than 40 rooms, which must obtain a formal license before beginning operations.
These categories ensure that regulatory requirements are proportionate to the scale and nature of the accommodation, fostering compliance while supporting diverse business models.
Streamlining Business Operations
The draft Accommodation Act prioritizes operational efficiency for accommodation businesses. It introduces an electronic licensing and registration system to simplify administrative processes. Additionally, the legislation proposes a “Super License” system, which consolidates multiple regulatory requirements into a single license. This innovation reduces administrative burdens and redundancies, enabling entrepreneurs to focus on business development while maintaining compliance with safety and operational standards.
Addressing Gaps in Current Legislation
The Hotel Act B.E. 2547 (2004), which currently governs many accommodation businesses, is outdated and does not account for the diversity of modern lodging options. Small-scale accommodations, tents, homestays, and rafts often lack the full amenities required under the existing law, leaving them unregulated and vulnerable to legal ambiguities. The draft Accommodation Act addresses this gap by providing a comprehensive regulatory framework that encompasses all types of lodging while maintaining high safety standards for guests. This legislative update aligns with contemporary consumer demands and the growing influence of online booking platforms, ensuring that Thailand’s accommodation sector remains competitive and responsive to market trends.
Key Takeaways
• The draft Accommodation Act modernizes Thailand’s regulatory framework to accommodate the evolving tourism industry, particularly the rise of niche and small-scale accommodations.
• The introduction of the term “accommodation” replaces the restrictive “hotel” definition, enabling legal recognition and licensing for diverse lodging types.
• Three distinct categories—notification, registration, and licensing—cater to different scales and types of accommodation businesses, promoting compliance and flexibility.
• The electronic licensing system and “Super License” initiative streamline administrative processes, supporting entrepreneurs and reducing operational redundancies.
• By addressing gaps in the Hotel Act B.E. 2547 (2004), the new legislation ensures safety standards and aligns with modern consumer preferences and technological advancements in booking platforms.
Investment: Government Advances 99-Year Property Lease Law to Boost Investment
The Thai government is accelerating efforts to amend the Right-Based Property ActB.E. 2562 (2019), aiming to extend the lease term for real estate from 30 years to 99 years. This legislative push is designed to attract foreign investment, stimulate economic growth, and support key national policies such as the “Housing for Thais” initiative, the Land Bridge project, and land reclamation efforts. The proposed law introduces a novel legal concept known as “right-based property”, which offers a framework for long-term property leases while ensuring assets revert to state ownership after the lease term expires. This article explores the objectives of the law, the significance of right-based property, and its anticipated economic impact.
Understanding Right-Based Property:
Right-based property, as defined under the Right-Based Property Act B.E. 2562 (2019), is a new category of property introduced to enhance the economic utility of real estate in Thailand. According to the Civil and Commercial Code, “property” refers to tangible objects, while “assets” encompass both tangible and intangible items that hold economic value and can be legally possessed. Real estate, or immovable property, includes land, structures permanently affixed to it, and associated property rights. Movable property covers all other assets, including related rights.
Right-based property, however, is a distinct legal construct that refers to the right to use and benefit from immovable property for a specified period, as stipulated in the Right-Based Property Act B.E. 2562 (2019). Unlike traditional leases under the Civil and Commercial Code, which are limited to contractual rights between parties, right-based property can be transferred, inherited, or used as collateral for debt through mortgaging. This makes it a more flexible and economically viable instrument for long-term investment.
To establish right-based property, the owner of immovable property, such as titled land, land with buildings, or condominium units, must apply to the relevant authority, typically the Land Department. The application requires the submission of documents specifying the lease term, which is currently capped at 30 years but proposed to be extended to 99 years. Once registered, a certificate of right-based property is issued, and the property cannot be subdivided or merged with other parcels during the lease term. Any modifications, such as new constructions, revert to the original property owner upon the lease’s expiration, unless otherwise agreed.
Government’s Push for 99-Year Leases:
The Thai government is prioritizing the amendment of the Right-Based Property Act B.E. 2562 (2019) to extend the maximum lease term to 99 years. The amendment aims to remove legal barriers to foreign investment, encourage large-scale real estate projects, and attract high-income individuals and skilled professionals to Thailand.
The government anticipates that the extended lease term will support transformative projects, including:
1. Land Bridge Project: A mega-infrastructure initiative to connect the Gulf of Thailand and the Andaman Sea, fostering trade and logistics.
2. Land Reclamation: Private-sector-led coastal reclamation projects to create new investment zones, with long-term leases incentivizing participation.
3. Housing for Thais: Affordable urban housing schemes integrated with reduced public transport costs (e.g., 20-baht flat-rate fares) to lower living expenses for middle-income Thais.
4. Green Energy Initiatives: Long-term land leases for projects like solar farms, particularly in the Northeast, to produce affordable electricity (estimated at 3 baht per unit) for economic hubs like Bangkok and data centers.
5. Talent Hub Development: Attracting high-skilled global professionals by offering long-term property rights, enhancing Thailand’s appeal as a destination for talent.
Economic and Legal Implications:
The proposed law is expected to yield significant economic benefits while addressing legal loopholes. Key advantages include:
• Increased Foreign Investment: The 99-year lease term aligns Thailand with countries like the United Kingdom, where leases can extend up to 99 years. This makes Thailand more competitive in attracting foreign investors for high-end real estate projects, such as luxury hotels, office buildings, and residential complexes. The influx of capital is expected to stimulate economic activity without funds leaving the country.
• Enhanced Transparency: The law aims to curb illegal practices, such as the use of Thai nominees to bypass foreign ownership restrictions. By requiring assets under the right-based property scheme to be managed by the Treasury Department and revert to state ownership after 99 years, the government ensures national control over land resources, refuting claims of “selling out” the country.
• Support for Diverse Industries: Beyond real estate, the law facilitates long-term investments in sectors like international education (e.g., foreign ownership of international schools) and financial hubs, fostering economic diversification.
• Addressing Demographic Challenges: With Thailand’s population projected to decline to 37 million within 50 years, the law seeks to attract high-skilled foreign workers to bolster economic growth. The extended lease term provides the stability needed to encourage long-term residency.
Safeguards and Conditions:
To address concerns about national sovereignty, the government has incorporated safeguards into the proposed law. Notably, assets under the right-based property scheme will transfer to the Treasury Department upon lease expiration, becoming part of the nation’s sovereign wealth. Agricultural land is explicitly excluded from the program to protect food security and rural livelihoods. Additionally, any property encumbered by mortgages or other rights requires consent from relevant parties before entering the right-based property scheme.
Legislative Timeline:
The government is fast-tracking the amendment process, aiming for parliamentary approval and enactment by 2025.
Conclusion:
Thailand’s push to extend property lease terms to 99 years through the Right-Based Property Law represents a strategic effort to unlock economic potential, attract global investment, and support transformative national projects. By introducing the concept of right-based property, the government offers a flexible, legally robust mechanism to enhance the economic utility of real estate while safeguarding national interests. If enacted as planned in 2025, this law could position Thailand as a leading destination for foreign capital and talent, driving sustainable economic growth in the face of demographic and global challenges.
Closing Nominee Loopholes: Thailand’s Legal Reform to Safeguard Property Ownership
On 24 June 2025, the Cabinet formally acknowledged the “Findings and Recommendations of the Ombudsman Regarding the Ownership or Possession of Land or Real Estate by Nominees Acting on Behalf of Foreigners.” These recommendations were submitted in response to growing concerns over the circumvention of land ownership laws by foreign nationals through the use of Thai nominees.
This initiative follows the discovery of widespread land and property acquisitions by foreign nationals, raising significant concerns regarding national security, economic stability, and equality of opportunity for Thai citizens. In numerous instances, foreigners have circumvented legal restrictions by utilizing Thai nominees to bypass requirements such as marriage to Thai citizens, land ownership through Thai children, long-term leases, and company structures that disguise actual control.
One prevalent mechanism involves establishing a Thai-registered legal entity that appears to be locally owned but is ultimately controlled by foreign interests through nominee shareholders or preference shares. This practice not only undermines the intent of existing legislation but also contributes to rising land prices, thereby reducing accessibility for Thai nationals—particularly in high-demand areas such as Bangkok and Chiang Mai.
Key Recommendations
1. Department of Business Development (DBD)
The DBD has been designated to play a central role in preventing and monitoring nominee arrangements, particularly in legal entities with foreign shareholding:
System Development
Developing an AI-driven system to process and analyze corporate data to identify high-risk juristic persons potentially acting as nominees.
Amendment to the Foreign Business Act B.E. 2542 (1999) (FBA) to include:
A broader definition of “foreigner” to encompass those exercising control or management through Thai nominees.
Clear definitions of “nominee” and “disguised transaction” to cover indirect ownership and concealed financial or property dealings.
Explicit inclusion of both direct and indirect shareholding in regulatory scrutiny, with enhanced qualifications for the 51% Thai shareholders.
Classification of legal entities controlled through preference shares as foreign juristic persons.
Updated requirements for registered capital, including mandatory submission of evidence demonstrating actual payment (e.g., bank statements) to prevent false declarations.
Designation of FBA violations as predicate offenses under the Anti-Money Laundering Act, enabling asset seizure during investigations.
Granting the DBD investigative and arrest powers in nominee-related offenses.
2. Department of Lands
Enforcement Guidelines
Issuance of clear enforcement guidelines and their widespread circulation to prevent land ownership by foreign nationals through nominee arrangements.
Amendments to the Land Code to:
Increase penalties for foreigners violating land ownership laws.
Forfeit unlawfully held land to the state without compensation to the foreign holder.
3. Lawyers Council of Thailand
Code of Ethics
Introduction and enforcement of a binding code of ethics that prohibits legal professionals from advising on or facilitating nominee structures.
Professional Conduct Rules
Establishment of professional conduct rules to ensure lawyers do not support arrangements that bypass foreign ownership restrictions.
Implementation Framework
The Ministry of Commerce has been designated as the principal agency to deliberate on this matter in collaboration with relevant agencies and to submit the outcome of such deliberations to the Cabinet Secretariat within 30 days for further consideration by the Cabinet.
The Cabinet has acknowledged the Ombudsman’s findings and recommendations, directing the Ministry of Commerce to conduct a comprehensive review of the issue. The Ministry of Commerce will collaborate with 13 other agencies, including Ministry of Finance, Ministry of Agriculture and Cooperatives, Ministry of Natural Resources and Environment, Ministry of Interior, Ministry of Justice, Ministry of Labor, Ministry of Industry, Board of Investment, Royal Thai Police, Anti-Money Laundering Office, Internal Security Operations Command and Bank of Thailand.
This joint effort aims to reach a definitive resolution within 30 days, with the Ministry of Commerce responsible for submitting a summary of its findings, actions taken, and overall recommendations to the Cabinet Secretariat for further consideration.
Conclusion
The Cabinet’s recognition of the Ombudsman’s findings represents a crucial step in addressing a long-standing loophole in Thailand’s property ownership regulations. While foreign investment remains vital to Thailand’s economy, the misuse of nominee structures has distorted the property market and undermined legal integrity. The lack of unified enforcement and ambiguous legal definitions have limited the government’s ability to effectively regulate foreign participation in land ownership.
With a whole-of-government approach now underway, Thai authorities aim to restore fairness, uphold legal safeguards, and ensure that land and property ownership align with national interests. The forthcoming recommendations from the Ministry of Commerce and its partner agencies will be decisive in shaping future land policies and enforcement mechanisms.
The Tax Court’s Expanding Authority: Overstepping into Criminal Jurisdiction
The Cabinet has recently approved the draft Act for the Establishment of the Tax Court and the Procedures for Tax Cases (Amendment No. ..) B.E. …. (Criminal Tax Case Adjudication). The key aspect of the draft is to grant the Tax Court the authority to adjudicate criminal tax cases. The Criminal Procedure Code or the Act on the Establishment of and Procedure for District Courts will be applied mutatis mutandis to these cases. The draft also amends the notification of court schedules in tax cases, excluding criminal tax cases, and revises the criteria for appeals and petitions in tax cases. This change aims to allow parties to handle their cases in one court, reducing the burden of time and costs for litigants, the court, and judicial personnel. It also enhances the efficiency of tax law enforcement, ensuring the state’s revenue collection and providing more accurate and fair criminal tax case adjudication.
Currently, tax cases are handled by the Central Tax Court, which specializes in tax law, tax accounting, and double taxation agreements. While tax law covers both civil and criminal cases, the specialized court only has jurisdiction over civil cases according to Article 7 of the Act on the Establishment of and Procedure for Tax Court B.E. 2528 (1985). Criminal tax cases are handled by criminal courts, which are not ideally suited for these cases due to the differences in intent and nature of tax-related offenses compared to standard criminal cases. Many pieces of evidence relevant to civil cases are also applicable to criminal cases, making it inconvenient for litigants to present such evidence in separate proceedings. Additionally, penalties may vary across different criminal courts due to their differing authorities.
This proposal has been agreed upon by a cabinet resolution. The next steps will involve consideration by the House of Representatives and the Senate and then require publishing in the Gazette.
The effect of this proposed bill is expected to benefit both juristic persons and individuals, as it would allow tax cases to be addressed in a single proceeding for both civil and criminal aspects. This consolidation is anticipated to make it easier for the accused to handle their cases and for the examination of witnesses to be more convenient, given that the evidence is often similar for both civil and criminal cases. This amendment is expected to be advantageous for investors.
Key Takeaways:
The Thai Cabinet has approved the proposed bill to expand the Tax Court’s authority to include criminal tax cases. The bill will now proceed to the House of Representatives and the Senate for consideration.
The consolidation of civil and criminal tax cases in one court is expected to benefit both individuals and businesses, making the legal process more efficient and investor-friendly.
The new law aims to streamline the legal process, reduce costs, and ensure fairer outcomes in tax-related criminal cases.
Thailand Implements FATCA Agreement: A Milestone in International Tax Compliance
The Kingdom of Thailand has taken a significant step forward in international tax compliance by fully implementing the Foreign Account Tax Compliance Act (FATCA) agreement with the United States. This development marks a crucial milestone in the ongoing efforts to improve global financial transparency and combat tax evasion.
The Director-General of the Thai Revenue Department, acting as the competent authority for Thailand, has recently signed a Competent Authority Arrangement (CAA) with their United States counterpart. This arrangement establishes the necessary procedures for the practical implementation of FATCA in Thailand, as agreed upon in the intergovernmental agreement signed in 2016.
The CAA’s signing is a pivotal moment, as it enables Thailand to commence the exchange of financial account information in accordance with the FATCA agreement. Consequently, Thai financial institutions and other reporting entities can now fulfill their reporting obligations through the International Data Exchange Service (IDES), a secure online platform designed for the automatic exchange of tax information between participating countries.
This implementation is rooted in Thailand’s commitment to enhancing tax transparency and bolstering the efficiency of tax administration. By joining the global movement towards automatic exchange of financial information, Thailand aims to prevent international tax evasion and create a more transparent financial ecosystem.
To facilitate a smooth transition and ensure compliance, the Thai Revenue Department has announced an extension for the initial reporting deadline. Reporting entities now have until 30 September 2024, to submit the required information via the IDES system without incurring penalties. This extension provides ample time for affected institutions to adapt to the new reporting requirements and resolve any technical issues that may arise during the implementation phase.
The successful implementation of FATCA in Thailand represents a significant advancement in the country’s international tax practices. It demonstrates Thailand’s dedication to aligning with global standards for financial transparency and reinforces its position as a responsible member of the international financial community.
As financial institutions and other reporting entities in Thailand begin to navigate this new reporting landscape, it is crucial for them to familiarize themselves with the specific requirements and procedures outlined in the FATCA agreement and subsequent regulations. This proactive approach will ensure smooth compliance and contribute to the overall success of this important international tax initiative.
Key Takeaways:
1. Thailand has signed a Competent Authority Arrangement (CAA) with the United States to implement FATCA.
2. Thai financial institutions can now report financial account information through the International Data Exchange Service (IDES).
3. The implementation aims to enhance tax transparency and prevent international tax evasion.
4. Reporting entities have until 30 September 2024 to submit information without penalties.
Thai Government Slashes Property Transfer and Mortgage Fees
In a move aimed at supporting Thai citizens and stimulating the real estate market, the Thai government has announced significant reductions in fees for property transfers and mortgage registrations through the end of 2024.
Driven by a Cabinet resolution on April 9, 2024, the Ministry of Interior is set to issue two announcements lowering the government fees and expenses related to real estate transactions under existing laws and regulations.
Reduced Fees for Houses, Land, and Commercial Properties: The first announcement, issued under Article 2(7)(Dor) of Ministerial Regulation No. 47 based on the Land Code B.E. 2497 (1954), reduces fees for registering transfers and mortgages on residential properties, commercial buildings, and land with buildings such as single houses, semi-detached houses, and townhouses.
Specifically, the transfer registration fee has been cut from 2% to just 0.01%, while the mortgage registration fee has been lowered from 1% to 0.01%. However, this reduced fee structure only applies to properties with a purchase price, appraised value and mortgage amount not exceeding 7 million baht. Additionally, the provision is limited to real estate purchases by natural persons of Thai nationality.
Condominiums Also Get Fee Reductions: The second announcement from the Ministry of Interior targets reductions in government fees for condominium unit transactions. Issued under Article 1(77)(Chor) of the Ministerial Regulation related to the Condominiums Act B.E. 2553 (2010), it slashes the fees for condominium units transfer registration from 2% to 0.01% and mortgage registration from 1% to 0.01%.
As with the reductions for houses and lands, the lower fees for condominium units only apply to a purchase price, appraised value, and mortgage amount below 7 million baht threshold. The reducing of condominium unit fees are also exclusively for Thai national buyers.
Temporary Relief Until End of 2024: The Ministry of Interior’s fee reduction announcements for both property types will go into effect once published in the Royal Gazette, with the lower rates remaining valid until December 31, 2024.
This temporary reprieve on transfer and mortgage fees exhibits the Thai government’s commitment to easing financial burdens around property ownership and uplifting the real estate sector during the current economic climate.
Industry analysts expect the fee cuts to provide a substantial boost for prospective homebuyers and real estate investors over the next 8 months. Developers and brokers are gearing up for heightened housing market activity in response to these government incentives.
Top-up Tax Bill: Implementing BEPS Pillar 2 in Thailand
The Organization for Economic Cooperation and Development/ the Group of Twenty (OECD/G20) has been leading a global effort to address tax avoidance by multinational entities (MNEs) through the Base Erosion and Profit Shifting (BEPS) project. This collaborative initiative involves over 140 member countries and aims to close the gaps in international tax regulations that allow MNEs to shift profits to low-tax jurisdictions, often referred to as tax havens. By exploiting loopholes and inconsistencies, these companies gain a competitive advantage over domestic entities while undermining the fairness and integrity of the tax system.
The BEPS project is divided into two main pillars:
Pillar 1: This pillar focuses on re-allocating profits and taxing rights on large MNE profits to ensure the impartiality of the tax system.
Pillar 2: This pillar introduces a global minimum tax rate of no less than 15% on MNE profits, preventing tax competition by requiring large MNEs to pay taxes at the Effective Tax Rate (ETR).
To implement Pillar 2 of the BEPS project in Thailand, the Revenue Department has conducted a public hearing regarding the drafting of the Top-Up Tax Bill B.E. …. This bill aims to collect top-up tax in accordance with the Global Anti-Base Erosion Rules (GloBE) measure, allocate profits from such taxation to the National Competitiveness Enhancement for Targeted Industries Fund, and provide information on top-up taxpayers to the Thailand Board of Investment (BOI).
Understanding Top-Up Tax
Top-up tax is considered a type of assessment tax separate from income tax. It is collected by low-tax jurisdictions when a Multinational Entity (MNE) has a Net GloBE Income but an Effective Tax Rate lower than 15%. The Net GloBE Income and Effective Tax Rate are calculated according to the provisions of the bill.
Who is Subject to Top-Up Tax?
Constituent entities established in Thailand, which are members of an MNE Group with a collective turnover of the Ultimate Parent Entity (UPE) not less than the equivalent of €750 million in Thai currency, are subject to the top-up tax under the bill. However, certain types of entities may be exempted, including governmental entities, international organizations, non-profit organizations, pension funds, investment funds, real estate investment instruments, and others specified by the Royal Decree to be issued.
Collection of Top-Up Tax
Each constituent entity located in Thailand has the responsibility to submit the following documents to the Revenue Department within 15 months from the last date of the accounting period as imposed by each entity in which the top-up tax is considered.
Notification reporting information of its MNE Group, information of the constituent entity, and the country where it is located;
GloBE Information Return; and
Top-up tax return and payment of the corresponding tax.
The bill empowers assessment officials to assess top-up tax within 10 years from the last date of submitting the GloBE Information Return.
Penalties for Non-Compliance
Taxpayers who fail to pay the required top-up tax after submitting a GloBE Information Return and assessment by the Revenue Department will be subject to a one-time penalty equivalent to the amount of the top-up tax. Additionally, taxpayers who fail to submit a GloBE Information Return and pay the top-up tax will face a penalty equivalent to two times of the top-up tax amount. In addition to the penalties, the bill imposes criminal liability on taxpayers who fail to comply with its provisions and cause damages to the state’s financial stability, such as deliberately submitting false information or making false statements.
Disclosure of Top-Up Tax Information
Under the bill, the competent authority of Thailand, specifically the Director-General of the Revenue Department, is authorized to disclose top-up tax information. However, this disclosure is limited to cases where it serves the national economic and financial stability objectives or complies with international agreements regarding the exchange of information on taxation as per the GloBE measure.
Effective Date
The principle of the bill was published for a public hearing from March 1, 2024, to March 15, 2024. The next step in the process is for the Revenue Department to analyze the impact of the public hearing results and prepare the bill for the cabinet accordingly.
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.
