Key takeaways
A developer selling condominium units always pays SBT of 3.3% and has 1% WHT withheld, which is a CIT credit. The standard transfer fee is 2% of the appraised value, and the buyer and seller may agree to share it. Check the temporary fee-reduction measure unit by unit.
Overview: who pays what
| Party | Item |
|---|---|
| Seller (developer) | SBT of 3.3%, the agreed share of the transfer fee, sundry charges, and 1% WHT, which is deducted from the amount received |
| Buyer | The agreed share of the transfer fee, and a mortgage registration fee of 1% of the mortgage amount where the buyer takes a bank loan |
WHT is the seller's tax, so it should not be counted in the buyer's costs. The transfer fee is split as set out in the contract; if the contract is silent, Section 457 of the Civil and Commercial Code provides that the parties pay equally.
1. Specific Business Tax (SBT)
The rate is 3.3%, including local tax, on the sale price or the appraised value, whichever is higher, paid at the land office when the transfer is registered.
Key point: A developer selling condominium units as the party that registered the condominium is subject to SBT regardless of the 5-year land holding period. The 5-year test applies to other sellers, such as individuals. Under the law, SBT is the seller's burden; before passing it to the consumer in the contract, check the clause against the unfair contract terms criteria.
2. Transfer fee
The standard rate is 2% of the appraised value, not the sale price. The appraised value may be lower than the sale price; for example, this article uses 70% of the sale price, but actual figures must come from the land office.
Temporary measure: According to news reports on a Ministry of Interior announcement, the transfer fee and mortgage registration fee are each reduced to 0.01% until 30 Jun 2027 for qualifying transactions, such as a Thai-national individual buyer, a residence with a sale price and appraised value not exceeding THB 7 million, and a mortgage amount not exceeding THB 7 million. Check the full announcement before applying it to each unit.
3. Stamp duty
The rate is 0.5% of the sale price or the appraised value, whichever is higher. It applies where SBT is not payable, so a developer that pays SBT does not pay stamp duty on the same transaction.
4. Withholding tax
A corporate seller bears WHT of 1% of the sale price or the appraised value, whichever is higher, collected by the official on the registration date. This amount is a tax credit, not an expense.
Example: Selling 40 units at THB 10 million each results in total WHT of THB 4 million. If the full-year CIT is calculated at THB 30 million, the company pays a further THB 26 million.
5. Mortgage registration fee
The standard rate is 1% of the mortgage amount, paid at registration. For transactions that qualify for the temporary measure, use the rate in the announcement.
6. Application fees and sundry charges
The land office charges application fees, witness fees and power of attorney fees. A budget may set aside around THB 500–1,000 per unit as an initial provision.
Example per unit
Assumptions: sale price THB 10,000,000, appraised value THB 7,000,000, mortgage amount THB 7,000,000, transfer fee split equally, and this unit does not qualify for the fee reduction because its price exceeds THB 7 million.
| Item | Base | Rate | THB | Borne by |
|---|---|---|---|---|
| SBT | Selling price | 3.3% | 330,000 | Developer |
| Transfer fee, developer's share | Appraised value | 1% | 70,000 | Developer |
| Sundry charges | Forecast | 1,000 | Developer | |
| Developer pays as an expense | 4.01% | 401,000 | ||
| WHT | Selling price | 1% | 100,000 | Developer (CIT credit) |
| Transfer fee, buyer's share | Appraised value | 1% | 70,000 | Buyer |
| Mortgage registration fee | Mortgage amount | 1% | 70,000 | Buyer |
| Buyer pays | 1.40% | 140,000 |
Example of a unit that may qualify for the measure: A Thai buyer, price THB 5,000,000, appraised value THB 3,500,000, mortgage amount THB 4,000,000. The transfer fee falls from THB 70,000 to THB 350, and the mortgage registration fee from THB 40,000 to THB 400. The seller's SBT and WHT are still calculated as normal.
Cash flow on transfer day
- Before registration: The buyer prepares the outstanding balance, while the developer prepares cash for SBT, its share of the transfer fee, and the documents.
- During registration: Taxes and fees are paid at the land office.
- After registration: The buyer receives the title document and the developer receives the net proceeds.
Example: For a THB 10 million unit, the balance received on transfer day is 65%, or THB 6,500,000. Deduct SBT of THB 330,000, transfer fee of THB 70,000, sundry charges of THB 1,000 and WHT of THB 100,000, leaving net proceeds of THB 5,999,000.
Conclusion
Developers should include SBT, the transfer fee and WHT in the transfer-day cash flow forecast, and separate WHT, which is a tax credit, from costs. Explaining each charge to buyers from the outset helps reduce disputes. Tax rates and measures may change, so check with the relevant authorities and advisers for each transaction.