Property Taxes

Corporate ownership is another way for foreigners to acquire property in Pattaya. Via establishing private limited companies, Thailand becomes lenient towards permitting aliens to own land in the country. Nevertheless, forming business organizations alone is not enough to enjoy such a privilege. One should see to it that 51% of the shareholders are Thai. Aside from the legal requirements, there is another aspect that foreign investors must consider prior to building companies and obtaining land in the country. This is tax planning.

What is tax planning?

Briefly defined, tax planning is the process of formulating strategic options that would reduce or lessen the amount of taxes being paid. In relation to this, it cannot be denied that in property acquisitions, an individual is compelled to pay certain taxes. Tax planning is something that should be readily examined and evaluated before any foreign shareholder purchase land in Pattaya. This importance stems from the fact that taxes are also determinants of a sound investment.

Importance of tax planning

It should be understood that taxes are designed to support government activities. It is the primary source of income of many states. Taxes are protected by laws and statutes, thus making it hard to ignore or disregard. Doing so may result in imprisonment and expensive fines. In Thailand, there is the so-called structure-usage tax. Such is imposed on properties that are specifically utilized for commercial purposes. It is pegged at 12.5% and is based on the property’s gross rental value. Moreover, there is also a land tax that should be addressed. Also, it should be remembered that corporate taxes are bigger compared to personal taxes. Needless to say, in terms of taxation matters, corporate ownership of properties is far more expensive and thus requires efficient tax planning.

Another importance of tax planning is that taxes influence or impacts financial decisions and transactions. As mentioned, private limited companies require that the majority of the shareholders are Thai. Certain disagreements and conflicts may arise, most especially if the company is forced to shell out huge amounts on property taxes. Evidently, such a situation further emphasizes the need for tax planning.

How to conduct effective tax planning

There are several ways in which foreigners can implement superb tax planning when buying properties in Pattaya. These are the following:

  • Understand tax deductions – Tax deductions are the amounts deducted on taxable income.
  • Capitalize on tax credits – Tax credits are more valuable compared to tax deductions. In tax credits, the actual tax is reduced. This is in stark contrast to deductions wherein only the taxable income is deducted.
  • Taking advantage on capital gains – Capital gains are the profits garnered by the property. There are capital gains if the asset has been sold at a much higher price.
  • Hiring a law firm – Tax planning depend on taxation laws. Thus, it is best to hire the services of reputable law firms who specialize in this field.

Call us today for more information on taxes in Thailand and how it affects your real estate investments.

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