Thailand Real Estate Sales Personal Tax
On 18 Oct 2016, the Thailand Government approved a draft Revenue Code Amendment Act for the purpose of amending the sales price rule for immovable property (real estate) sales.
For real estate sales in Thailand, Section 39 of the Revenue Code (the definitions section for both corporate tax and personal tax) prescribes that the sale price shall be the value according to that prescribed in Section 49 bis of the Revenue Code, which is as follows:
Section 49 bis. In the case when ownership or possession right in immovable property is transferred whether with or without consideration, regardless of the market price that the property should fetch in a normal sale and purchase, the sales price of the property shall be the appraised value of the property for the purpose of collecting fees and registering rights and acts under the Land Code on the date of transfer.
But whilst the corporate tax law contains a further additional prescription (in Section 65 bis (4) of the Revenue Code) that requires sales of property to be transferred at "market price", there is no such further additional law for personal tax, and Section 49 bis is the one and only law for real estate sales for individuals - that being, the sales price for personal tax purposes is the Land Department’s appraised value of the real estate - regardless of the price that the property should fetch in a normal sale and purchase.
This has been the law for individuals selling real estate in Thailand ever since enactment of the Revenue Code Amendment Act (No 28) in 1991, and for 25 years this law has provided individuals selling real estate in Thailand a nice (and legal) personal tax advantage.
The draft Revenue Code Amendment Act approved at the Government's Cabinet Meeting on 18 October 2016 amends the prescription in Section 49 bis of the Revenue Code to be as follows (underlining added for emphasis):
Section 49 bis. In the case where ownership or possession right in immovable property is transferred whether with or without consideration, the sale price of the property shall be the actual sale price of the property or the appraised value of the property for the purpose of collecting fees and registering rights and acts under the Land Code on the date of transfer, whichever is the higher.
Upon enactment of this Amendment Act, individuals selling real estate at a price higher than the Land Department's appraised value will no longer be afforded the privilege of ignoring the higher price for the purpose of their personal tax computations, and the nice (and legal) personal tax advantage is going to diminish somewhat.
This Tax Insight is general information only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.