Taxes and fees is something that is something that you should always ask when you consider when buying a property in Koh Samui Thailand you are better of accounting for then before any deal because you could have a surprise of receiving a tax bill a few month later your acquisition.
With any dea that you could make in Koh Samui or simply in buying property or land in Thailand there is four potential taxes/fees to be paid or negotiated with the seller . Which of these taxes/fees will be applicable depends on the details of the transaction, the seller and the duration of the seller’s ownership. Do not get confused by the numbers because the fees are calculated to the government’s “tax assessment value” of the property and this value is usually well below the market value especially for the land.
Withholding Tax or Income Tax: Between 1% and 3%
Complex calculation from the appraised value of the property with the time it has been owned. Paid by the seller (normally)
If the seller is a company, the withholding tax on the sale of the property is calculated at 1% of the official appraised value or the contracted price, whichever is higher. If the seller is an individual, the withholding tax is based on the individual’s marginal tax rate (except that the first 100,000 baht is taxed at 5% rather than falling under the tax-free threshold) after deducting from the official appraisal price a standard deduction based on the number of years of ownership
Transfer fee: 2% of the registered value of the property
This is the fee from the Thailand Land department charges to transfer the land or property to another company or owner, paid by the buyer somehow it is regularly shared 50/50
Stamp Duty: 0.5% of registered value
The Land department charges the 0,5% on the value or purchase price of the property only is the business Tax is not applicable. Normally paid by the seller
Specific Business Tax: 3.3%
This tax is to avoid speculation it’s only apply if the seller own the property for less than 5 years the they apply the 3.3% on the appraised value of the land
The seller pays this Tax
Depending on the negotiation it may happen that the seller ask for a net price and that the Buyer have to pay all the taxes, also very common to share 50/50 those taxes . In the case the owner get a good price he may pay all of them .
Always keep in mind that on top of each deal you have to think that the possibility for you to pay the whole package of taxes estimated at a maximum of 6.8% always to be negotiated during the deal to avoid any surprise.
Any lawyer offices have accountant that can calculate those taxes. A good idea to include that in your due diligence and raise the question before signing any contract
Owner Property Taxes
In the case that you are the owner of the property, there are 2 different types of tax on a property in Thailand that you need to be accounting for:
The “Land Tax”
Not the most expensive but the hardest to follow
This is an annual tax based on land ownership worth to just a few Baht per 1600 sq.m or rai that you own as private residences. For properties held by a Thai limited company the tax is usually higher but still relatively very cheap. With the current legislation in Koh Samui and Thailand the owner should pay it at the local government office or “Tessabaan” each year. The Stange concept for a foreigner is that no tax bill sent out or issued and generally no one will come and collect it. Therefore the problem is issued on the unpaid tax only when the property is being transferred, and please note that no transfer will be done while the unpaid taxes on the property is not solved.
Talk about restructuring the tax on land and property is ongoing by the government , which would apply a general tax on all permanent structures built on the land with different tax rates for commercial property, private residences and agricultural land. Even undeveloped land will also come under the new taxation but no one knows when that will be official
Tax on renting a property or commercial building is called “Structures Usage Tax”
Only applicable on rental properties or commercial units. The applicable rate is 12.5% on the actual or assessed gross rental value of the property. Remember the assessed value is always far below the real value of the land or property.
Purchasing under a Thai Limited company, consider that the corporate tax is higher than personal
A foreigner buying must always ensure that your funds are transferred to Thailand in foreign currency and converted to Thai Baht here. The receiving bank will issue a Foreign Exchange Transaction Form (TOR TOR 3) confirming the transaction for individual inward transfers exceeding 20,000 US$, this is the document you will need if you wish to repatriate funds in the future without incurring tax penalties on the amount you brought in the Kingdom of Thailand
If you don’t have this document when sending foreign currency out of the country this will be seen as an income and therefore you will need to pay tax on them