As part of the steady economic recovery from the COVID-19 crisis, Thailand is gradually attracting tourists back into the country. Due to the increased number of visitors, short-term rentals through platforms such as Airbnb, including daily rentals, are in high demand, encouraging villa and condominium owners to set up short-term rentals by allowing tourists to stay in their properties. However, it is important to understand the legal implications of setting up short-term rentals in Thailand as a host.
Below, we classify three different property scenarios:
In most condominiums, daily rentals are usually prohibited as condominiums are not legally recognized as hotels under the law. As a result, condominium unit owners must check the rules and regulations of that particular condominium and the previous minutes from co-owner meetings before deciding to proceed with short-term rentals through Airbnb, booking.com, Agoda, or similar websites, as there may be certain restrictions.
2. Landed Property
Whereas for villas, short-term rentals are much more flexible as, in most cases, there are no rules and regulations applicable as in the case of condominiums. It must be noted that according to Article 1 of the Ministerial Regulation B.E. 2551 (2008), a hotel license is needed for villas or buildings with over four rooms and a capacity for over 20 guests. For most villas, this threshold for a hotel license is usually not met. Furthermore, Section 4 (2) of the Hotel Act B.E. 2547 states that the definition of “hotel” does not include accommodations established for the purpose of monthly rentals. As a result, if the villa qualifies as a hotel in terms of size and capacity, but the property is rented out monthly only, it will not be subject to the Hotel Act, which means that a hotel license or a notification of a non-hotel is not required.
3. “Non-Hotel” Notification
If the condominium units or villas qualify as a non-hotel through daily rentals by having less than four rooms and for a capacity of 20 guests or less, a notification must be submitted to the local district office using the following documents:
It is important to note that the illegal operation of a hotel is subject to a jail sentence for up to one year or a fine of up to THB 20,000 and an additional fine of up to THB 10,000 a day throughout the period of violation, according to Section 59 of the Hotel Act.
If you have any questions related to property in Thailand, please do not hesitate to contact us at [email protected]
The Thai government recently announced that they are making some changes to the Long-Term Resident Visa (“LTR”) requirements intending to attract more foreign residents to come to Thailand.
Kindly note that although the Thai cabinet and the Board of Investment (BOI) approve of this new LTR visa, there still has not been any official announcement from the Immigration Department as yet. Therefore we are still awaiting final confirmation for the time being.
This article will detail some of the currently discussed criteria and requirements for different application categories to live, work, and do business in the country. There are four categories of eligible persons:
1. Wealthy global citizen
The following is required to be eligible as a “Wealthy global citizen”:
a. Personal Income of no less than $80,000 USD per year in the two years before applying for the visa.
b. Directly invest in Thailand as an individual investor no less than $500,000 in at least one of the below items before applying for the visa:
c. The net asset value should be no less than $1,000,000 at the time of application (excluding assets without proof of applicant’s ownership and assets without reliable market appraisal evidence such as artworks, amulets, cryptocurrencies, or memberships).
d. Health insurance with coverage not less than $50,000 with a remaining maturity of no less than ten months at the time of application or valid social security benefits which insures for hospitalization and treatment in Thailand or a deposit not less than $100,000 in a bank account at least 12 months before completing the application.
2. Wealthy Pensioner
The following is required to be eligible as a “Wealthy pensioner”:
a. 50 Years of age or older and receives a regular pension income of no less than $80,000 per year.
b. In case personal income is less than $80,000 but no less than $40,000 per year, applicants must have an investment not less than $250,000 in any of the following categories:
c. Health insurance with no less than $50,000 coverage through the entire period of stay in Thailand or social security healthcare, which insurers hospitalization treatment in Thailand.
3. Work-from-Thailand Professional
The following is required to be eligible as “work from Thailand professional”:
a. Before applying for the visa, personal income should be no less than $80,000 per year in the past two years leading up to the application. In case annual personal income is less than $80,000 but not less than $40,000 in the past two years, applicants must have a master’s degree (or above) and own intellectual property.
b. Health insurance policy with no less than $50,000 coverage through the entire period of stay in Thailand or social security healthcare, which insures for hospitalization treatment in Thailand
c. At least five years of working experience in the relevant field to the current employment
d. The current employer must have one of the following types:
4. Highly-Skilled professional
The following is required to be eligible as a “highly skilled professional”:
a. Highly skilled professionals working in business in targeted industries in Thailand.
b. Experts in targeted industries, working for a Thai government agency or a higher education institution, or a specialized training institution in Thailand
c. Personal income of no less than $80,000 per year in the past two years
d. In case annual personal income is below $80,000 but no less than $40,000 in the past two years, applicants must have a science and technology master’s degree or above or have particular highly-skilled expertise relevant to the job assignment in Thailand
e. No minimum personal income for experts working for a Thai government agency or a state-owned higher education institution, or a state-owned specialized training institution in Thailand
f. Heath insurance policy of no less than $50,000 coverage through the entire period of stay in Thailand or social security healthcare, which insures for hospitalization treatment in Thailand
g. At least five years of working experience in the targeted industries except for applicants working for a Thai government agency or a state-owned higher education institution or a state-owned specialized training institution in Thailand or applicants with a doctorate
For more information about our immigration or work permit services in Thailand, please visit www.franklegaltax.com/services/immigration-work-permits or contact us at [email protected]
Thailand’s cabinet has decided to halve the long-term resident (LTR) visa fee, bringing it down to 50,000 baht. The visa is designed for foreigners who have “high capability or potential” and would like to live in Thailand for up to ten years. This means that eligible highly skilled foreigners can now apply for the visa and pay a one-time fee of 50,000 THB in order to stay in Thailand for up to 10 years.
For full details about the long-term visa offering, please read our article here: www.franklegaltax.com/thailand-to-offer-10-year-visas-targeting-wealthy-foreigners/
The visa targets four groups of foreigners, their partners, and at most four children who are 20 years old or younger. Included in the scheme are high-income individuals, foreign pensioners, people who wish to conduct their work in Thailand, and experts from specialist fields.
Based on the revised guidelines, groups included in the scheme, such as pensioners and wealthy foreigners, are required to hold insurance coverage that is at least US$50,000, which will cover medical fees, and is valid for at least ten months, or they may show a social security certificate that covers the individual’s medical expenses while residing in Thailand. Alternatively, the applicant may use a cash deposit of at least US$100,000 that has been held in a domestic or a foreign bank account for 12 months prior to applying for the visa.
Those in the high-income earner bracket must have an average annual income of US$80,000 for two years before applying for the visa.
In order to apply under the foreign specialist’s category, the applicant is required to produce an employment contract from a company in Thailand or abroad. They must also provide evidence that they have worked in the “targeted industries” for a minimum of five of the ten years before applying for the long-term visa.
There are for those who plan to work in Thai state universities, government research institutes, specified state training institutes, or applicants who hold a Ph.D.
If you have any questions related to relocating to Thailand or related matters, please get in touch with us at [email protected]
The pledge provides security in terms of performance by transferring a movable property from pledger to pledgee. Therefore, anything considered movable property can be pledged, even an instrument. An instrument is a document in which the issuer promises payment or right to a specific person, such as a bill of lading, a bill of exchange, or a share certificate.
In the case of a share pledge, the share certificate is not pledged property but what is pledged is the right to that share. A share certificate is only a certificate that certifies the right over that share to the owner.
There are specific requirements for the share pledge as prescribed under the Civil and Commercial Code (“CCC”), including:
In practice, the share pledge is used as security for collateral. The Pledger gets the money, and the Pledgee gets the right over such pledged share. While the shares are pledged, the dividend is still paid to the shareholders.
Please do not hesitate to contact us if you have any questions at [email protected]
The Tourism Authority of Thailand (TAT) recently released the new “Flexible Plus Programme” under the Thailand Privilege Card scheme. This programme is designed to attract high-income foreigners to stay and invest in Thailand by giving them a work permit and other privileges.
The initiative offers valid cardmember privileges for at least ten years, and the minimum fee is one million baht. Under the programme, they offer three types of cards which are:
Members of this program must invest at least USD one million within a year of the approval of their membership. It should be noted that the investment options must be from one of the following categories:
Moreover, this program also gives privileges to the cardholder by changing the type of visa from Privilege Entry (PE) to a Non-Immigrant (B). Including their spouse and children, the member can change their visa type to Non-Immigrant (B). The benefit of this is that a Non-Immigrant (B) visa allows cardholders to apply for a work permit lawfully.
It should be noted that the program does not provide any benefits related to property ownership by foreigners.
Any member who wishes to extend their “Flexible Plus Programme” must show evidence of investments made every year to the TAT. Otherwise, the status will only be valid for five years.
Please let us know if you have any questions by contacting us at [email protected]
The revenue department’s announcement regarding taxing cryptocurrency has been in effect on 13 May 2018; however, investors continue to face confusion, controversy, and other difficulties.
In January, the department held a public hearing with representatives from the public and private sectors. To explore digital asset tax guidelines, representatives from the Bank of Thailand, the Securities and Exchange Commission (SEC), the Thai Digital Asset Association, the Fiscal Policy Office and investor groups met to arrive at a digital asset tax collection approach appropriate for the current situation.
The guidelines are under the Revenue Code Amendment Act (No. 19) B.E. 2561 (2018). The taxable transactions must be conducted through the digital asset exchange platform under the SEC only. These are as follows:
The Revenue Department has classified cryptocurrency and digital token income earners who are expected to file personal income tax by submitting a personal income tax return (PND 90/91) by 31 March 2023 into five categories:
1.Exchange or disposal of cryptocurrencies or digital tokens
The income derived from trading, exchanging, selling, transferring, or disposal of cryptocurrency/digital tokens is regarded as assessable income under Section 40 (4) (g) of the Revenue Code Amendment Act (No. 19).
The income and profit from the sale, payment, transfer, or trading of the cryptocurrency and digital token shall be calculated as follows:
Once a costing method is selected, it must be followed throughout the tax year. And the cost must include the necessary expense such as transfer fees and other expenses.
As of the date of receipt of mining cryptocurrencies, they are not considered assessable income.
When the mined cryptocurrencies are sold, paid, transferred, or traded, they are considered assessable income under Thai Revenue Code Section 40(8) by deducting expenses incurred as necessary and reasonable. However, the miners must keep relevant documentation and prepare the cost accounting such as computer maintenance costs, employee wages, electricity bill and internet fees that occurred in the tax year, including expenses that are in the nature of investments in assets such as computers, which are gradually deducted from the property’s depreciation as required by law.
3.Getting paid in cryptocurrencies as salary or wages
The employees are paid a salary in cryptocurrencies as income, as employment is considered under Section 40 (1) assessable income.
The employees who received remuneration in cryptocurrencies are deemed as income whether from the job, or the position employees are employed. Whether a full-time or a part-time job, it is considered the recipient of the assessable income under Section 40(2).
If the employees are receiving a salary that is assessable income under Section 40 (1) and receiving wage which is assessable income under Section 40 (2) from the same employer, the recipient of the income must collectively present it under Section 40 (1).
4.Receiving cryptocurrencies as a gift, award, prize
Receiving cryptocurrency/digital tokens from giving or receiving as a gift is considered income under section 40 (8), for example, as a giveaway when participating in an event or receiving promotional rewards.
A digital cryptocurrency valuation can be made by calculating cost and revenue using its value at the time of acquisition or its average price on the date of purchase.
When receiving cryptocurrency/digital tokens and the value has been taxed, they can be used as a cost in calculating tax when sold.
5.Return on Investment from holding a digital token or cryptocurrencies such as Yield Farming or Staking.
Under Section 40 (4)(h), it is considered income: profit-sharing or similar benefits derived from holding digital tokens.
Both cost and revenue measurements for digital tokens are based on the value at the time of acquisition or the average price on the date of purchase.
In the case of receiving digital tokens and the value has been taxed, they can be used as a cost in calculating tax when sold.
If you have any questions, please contact us at [email protected] or +66 02 117 9131.
Due to the increasing popularity of condominiums and apartments in the city, which comes with several issues related to rental and utility bills; as a result, the Contract Committee of the Consumer Protection Board has issued a new notification, the Stipulation of Residential Property Leasing as a Contract-Controlled Business B.E. 2562 (2019) (the „Notification“), published on 31 October, 2019, this new Notification has canceled the earlier Notification the Stipulation of Residential Property Leasing as a Contract-Controlled Business Contract-Controlled Business B.E. 2561 (2018).
Some of the key requirements under the new Notification are detailed as follows:
Under the new Notification, clauses that have the following effects shall be invalid.
The rental company has grown exponentially in recent years, and the consumer protection council has noticed a growing problem. As a result, a new notification has been issued to bring the legislation up to date. The major difference between this new notification and the previous version is the right of the lessee to terminate the contract and specifics related to the advance rental payment.
Feel free to contact us at [email protected] if you have any questions about the above information.
On February 10, 2021, the Royal Thai Government Gazette publicized the Revenue Code Amendment Act (No.53), which mainly stipulates that non-resident electronic service providers and electronic platforms are required to register for VAT under certain conditions and allows tax documents and evidence to be provided electronically.
What is an e-Service?
Section 77/1 (10/1) of the Revenue Code defines an e-Service as „services including incorporeal property which are delivered over the Internet or any other electronic network and the nature of which renders their service essentially automated and impossible to ensure in the absence of information technology.“
Here are some examples of electronic services:
The authorities gave a non-exhaustive list of e-Services excluded from this new e-Service VAT rule:
Criteria for VAT registration
Foreign electronic service providers and foreign electronic platforms providing e-Services from abroad and used in Thailand will now be required to register for VAT and will be liable to pay VAT when the following criteria are met:
Non-resident electronic service providers and electronic platforms that provide electronic services to non-VAT registrants in Thailand must apply for VAT registration within 30 days of the day that income from such services exceeds THB 1.8 million. It will be possible to register for VAT with the Revenue Department by September 1, 2021.
The required documents for VAT registration vary, depending on whether the provider is a Juristic Person or Individual.
I. Juristic Person
All documents must be submitted to the Revenue Department by uploading to the SVE on the Revenue Department’s website. When the VAT registration is complete, the VAT registrant will be notified of the VAT registration via SVE, and the list of VAT registrants on SVE will be announced on the Revenue Department’s website.
Please feel free to contact us if you have any questions at [email protected]
Thailand’s Board of Investment (BOI) announced the merging of its list of promoted digital activities into a single new category for software development, digital services platforms, or digital content (5.10) to support software development platform, digital services, digital content, and development of Thailand personnel in information technology.
Promotion terms and conditions
According to the BOI announcement, category 5.10 Development of Software, Digital Platform, or Digital Content has the following conditions:
1. To be eligible for investment promotion, projects must involve activities to develop whole new software, digital platforms, or digital content in Thailand
2. Where a project has a developed product before applying for promotion, further developments or improvements in Thailand of the product are required and must not be on the list appended to this explanatory note. In these cases, the applicant must provide comparison information between the developed product before applying for promotion and the further developments or improvements after applying for promotion.
The comparison information must contain the following details at a minimum:
3. The minimum investment capital of each project must not be less than Baht 1,500,000 per year calculated based on the expenditure on salaries for Thai information technology personnel additionally employed after applying for investment promotion.
4. Projects must have software, digital platform, or digital content development process in Thailand as stipulated by the Office.
5. Projects are allowed to utilize the existing or used machinery.
6. The investment promotion of this activity does not include the retail and wholesale of all types of products.
7. The revenue eligible for corporate income tax exemption must be derived from sales or services directly related to the promoted development of software, digital platform, or digital content as stipulated by the Office.
9. The projects cannot apply for additional incentives for competitiveness enhancement and the incentives according to Investment Promotion Measure for Small and Medium Enterprises (SMEs).
10. Should the projects want to apply for the incentives according to the Investment Promotion Measure in the Eastern Economic Corridor (EEC) for human resource development, they must inform about their request when applying for investment promotion. They are not allowed to change their request after investment promotion approval.
The rights and benefits of corporate income exemption
The revenue applicable to corporate income tax exemption must come from selling and providing services directly related to software development, digital platform, or digital content in the promoted activities. The types of the prescribed incomes are:
However, the revenues applicable to a request for exercising rights and benefits of corporate income tax exemption do not include revenue earned in the form of commission, expenses, and other services fees which are not directly related to the software or digital platform of the promoted projects and earnings from data distribution or data analysis reports without software development in the project, or any other incomes that the Office considers not relevant to the specified criteria. The Office will primarily consider the revenue types or intents acquired.
Because of the high volume of applications related to the digital industry, The Board of Investment (BOI) decided to combine the above categories into one category, 5.10 (Development of Software, Digital Platform, or Digital Content), including adding new conditions to attract investors. Furthermore, it should be highlighted that the development process in the project is a key element for BOI promotion under new category 5.10.
Feel free to contact us if you have any questions at [email protected]
This article will compare the legal and tax implications of a share deal with those of an asset deal. It will discuss the relevant taxes and transaction costs that will be incurred for an asset deal compared to a share deal from a Thai tax perspective.
The acquisition of a Thai business can generally be structured as an asset deal acquiring the specific assets that together make up the business to be acquired, or as a share deal by acquiring shares in a legal entity and thus such legal entity’s entire business.
In order to decide whether to pursue an acquisition of a business via an asset deal or a share deal, various aspects, advantages, and disadvantages from different perspectives should be taken into consideration.
If the transaction is structured as an asset deal, the taxes to be considered are in particular the following:
If the transaction is structured as an asset deal, the taxes to be considered are in particular the following:
a. Corporate income tax („CIT“)
Corporate Income Tax at the rate of 20% of the net taxable profits generated from the sale of land or real estate or/and any company asset (moveable properties) will be subject to CIT tax at a rate of 20% and subsequent years.
b. Value-added tax („VAT“)
VAT 7% applied for sale of the company asset according to Section 77/2 TRC (exception: in the case of an Entire Business Transfer)
c. Taxes related to the sale of immovable property
If the assets include immovable property, the following transfer fees and taxes need to be considered:
d. Conclusion for an asset deal
If the company has only moveable property and no immovable property, the assets sold by the company will be subject to VAT 7% and CIT 20% of the net profit. It should be noted that assets must not be sold for less than the market value (such as a car, motorcycle, or laptop). If the market value of an asset is not available, such asset should not be sold for less than the book value.
2. Taxation of a share deal
If the transaction is structured as a share deal, the taxes to be considered are in particular the following (note that the following applies only to the sale of shares of a company limited that is not listed on the Stock Exchange of Thailand):
a. income tax
Personal income tax on the capital gains in case the shares are sold/transferred with profit over the par value according to Section 40(4)(g) TRC. The personal income tax is levied at a progressive rate of 5-35%.
If a company holds the shares and receives profit from the sale of these shares, then CIT at a rate of 20% on the net profit applies. If the company distributes dividends, the company’s shareholders will be subject to an additional WHT of 10% on the dividend.
b. Witholding tax (WHT)
Thai Withholding Tax at a rate of 15% applies on capital gains if the seller sells his shares with profit and the seller stays in Thailand less than 180 days, Sections 40 (4)(g), 50(2) TRC. If the seller remains in Thailand over 180 days and the seller has the duty to pay PIT, but and the buyer deducted WHT at the rate of 5-35% applies on capital gains, Sections 40 (4)(g), TRC, the seller can use the WHT paid as a tax credit. WHT will be applied in any case if the buyer is a Thai company.
c. Stamp duty
Stamp duty should be affixed to the original sale-purchase agreement („SPA“) / share transfer agreement/share transfer instrument for the transfer of shares. The amount of tax is calculated as follows: For every 1,000 THB or fraction thereof of the paid-up value of shares, or of the nominal value of the instrument (whichever is greater), a stamp duty of 1 THB (0.1%) applies. The stamp duty is calculated according to the price of the shares stipulated. If the SPA/share transfer agreement/share transfer instrument is made in duplicate, stamp duty in the amount of 5 THB must be affixed according to Section 103 TRC.
If the company has a high profit, the shares must be sold with profit, and the stamp duty is calculated based on the value of the share transferred as shown in SPA. If the company has losses, and the purchase price of the shares is lower than the par value, the stamp duty is calculated from the par value of the shares.
It is the transferor’s duty to pay stamp duty unless agreed otherwise. If the transferee pays it, the purchase of stamp duty value must be treated as income or other benefits received by the transferor and must be included in the income tax calculation.
d. Conclusion for a share deal
If an individual sells the shares at par value and does not generate any profit/capital gain, such sale is not subject to personal income tax. If the company’s shares are sold with profit, such profit is subject to it is subject to PIT at the rate of 5-35%. As the transfer of shares is not regarded as sale of goods or provision of service, it is not subject to SBT at a rate of 3.3% and VAT at a rate of 7%. The transfer of shares is subject to stamp duty at the rate of 0.1% of the transfer price or the paid-up share value, whichever is higher.
3. Comparison of asset and share purchases
In comparison, the asset and share purchases have very different consequences from a legal and tax perspective:
a. Advantages of asset purchases
Asset purchases have the following advantages:
b. Disadvantages of asset purchase
On the other hand, asset purchases have the following disadvantages:
c. Conclusion: comparing the tax burden of the „Sale of Shares“ and „Sale of Assets.“
In a Sale of Business, sellers and buyers in Thailand can agree to buy a business as „Buy Shares“ and „Buy Assets“, the following table shows the main fees and taxes that apply:
Please feel free to contact us if you have any inquiries regarding the information in this article at [email protected]