Transfer fees who pays what?
August 26th, 2010
First let me say that it is between seller and buyer to negotiate who pays what in regards to taxes when transferring property or land in Thailand. The norm back in 2007 was that both seller and buyer shared the cost equally of property taxes in transfering a property, however as there are no absolute laws in Thailand concerning the transfer of property and how the costs are bourne; the norm since the above date are as follows which is generally accepted:
|TAX||WHICH PARTY NORMALLY PAYS||AMOUNT|
|Transfer fee||Buyer||2% of registered value|
|Stamp Duty||Seller||0.5% of registered value|
|Withholding Tax||Seller||1% of appraised value|
|Business Tax||Seller||3.3% of appraised value|
TAX AND COST CALCULATION FOR TRANSFERRING PROPERTY IN THAILAND
|Example of how to Calculate Taxes and Costs:|
1. Suppose that the government assessed price is Baht 50,000 per Sq.m.
2. All areas are 100 Sq.m.
3. The total assessed price is Baht 5,000,000
4. Actual selling price is 6,000,000
5. The Seller possessed this property for 3 years
|1. Withholding Taxes|
The government assessed price = 5,000,000 Baht
Deduction with the expense of possession for 3 years for 77% = 3,850,000
Balance = 1,150,000 (5,000,000 – 3,850,000)
Divided by the 3 year of possession
Balance = 383,333.33 (1,150,000/3)
Taxation on progression rate
1 to 80,000 = exempt
80,001 – 100,000 = 5% (1,000)
100,001 383,333.33 = 10% (28,333.23)
Total = 29,333.23 (1,000 + 28,333.23)
Multiply by the year of possession = 87,999.69 (29,333.23 x 3)
In this case withholding tax is Baht 87,999.69 (A)
|2. Government Fee for Transfer|
Is 2% based on the government assessed price so 5,000,000 x 2% Balance = 100,000
Transfer fee is 100,000 (B)
|3. Stamp Duty|
In this case is exempt. This is because transaction is subject to the specific Business Tax (possession of less than 5 year before sale).
|4. Specific Business Tax|
3.3% for Specific Business Tax based on the government assessed price or sale whichever is higher. In this case sale price is higher than government so 6,000,000 x 3.3% = 198,000.
Specific Business Tax is Baht 198,000 (C)
Total expenses are: Baht 385,999.69 (A+B+C)
Above examples courtesy of Siam Legal http://www.siam-legal.com