Part 3: Taxes and fees

Chapter 6 Taxes on real estate sales

This chapter separates the taxes and fees payable at the land office. SBT of 3.3% is calculated on the selling price or the appraised value, whichever is higher. Declaring a price below the actual price does not bring the base below the appraised value, and it exposes the parties to tax risk and scrutiny of the transaction. The standard transfer fee is 2%, calculated on the appraised value. Stamp duty of 0.5% is not payable once the transaction has been subject to SBT.

For leasehold, the general lease registration fee is 1% and stamp duty is 0.1% of the rent over the whole term, which equals THB 110,000 per THB 10 million of rent. The full edition also assumes SBT of 3.3% and WHT of 1%, giving a final cost of 4.4%. However, this assumption should be used only as a scenario until checked against the actual contract, because a lease is in principle not a sale under Section 91/2(6).

The parties may agree who bears the cost, but this must be stated clearly in the contract. Fees are occasionally reduced by temporary measures. Currently, reductions of the transfer fee and mortgage registration fee to 0.01% each are reported to run until 30 June 2027 for qualifying transactions, such as those where the buyer is a Thai-national individual and the price does not exceed THB 7 million. Always check the full announcement first.

Chapter 7 Withholding tax (WHT)

WHT on real estate sales is paid together with the registration at the land office. A corporate seller has 1% deducted from the selling price or the appraised value, whichever is higher. This is recorded as prepaid tax or a tax credit, not as an expense, and every piece of evidence should be kept in a register linked to the per-unit accounting entries.

Individual sellers use a different calculation: a standard expense deduction based on the number of years held, averaged over those years, with tax then calculated at progressive rates. The handbook therefore treats this separately from developer sales and recommends confirming the calculation with the Land Department every time.

The financial issue is cash timing. The 1% WHT is paid out on transfer day and then offset against CIT when PND 51 or PND 50 is filed, as entitled. For example, total transfers of THB 100 million mean WHT of THB 1 million. If the company has sufficient CIT, this credit reduces the tax payable. But if CIT is low or there are losses, the money may remain tied up until it can be refunded, and this must be included in the cash plan.

At year-end, check that the WHT evidence is complete and that the amounts agree with the accounts, calculate CIT at 20% on taxable profit, and then deduct the credits. If any evidence is lost, act promptly to request replacement documents from the issuing body.

Chapter 8 Exceptions: when VAT applies

Real estate businesses are not entirely outside VAT. This chapter separates revenue from selling real estate from revenue that is goods or services, such as hotels, serviced apartments with services, furniture sold separately, building management fees, rental pool management fees and other services. These revenues are generally subject to 7% VAT once the operator meets the threshold, and are filed through PP 30.

Selling a unit with furniture should be reviewed for both accounting and tax. If the furniture is genuinely separable goods, the price and documents should be consistent. Items should not be split out merely to choose the tax treatment, and the effect on input VAT should also be checked.

For mixed-use projects, the handbook suggests considering separating the sales business from the service business, so that tax, documents and risks are clearer. A service business that is VAT-registered can credit input VAT subject to conditions, while input VAT relating to non-VAT revenue cannot be credited and should be included in cost. For a mixed business, input VAT must be separated or apportioned using the correct method.

Once entities are separated, transactions between them must be at market prices, supported by contracts and by transfer pricing documentation under the legal thresholds. The accounting team should check tax invoices before paying, because incorrect documents can cost the business its right to the credit.

Chapter 9 Tax optimisation and group structure

This chapter looks at group structure from before the project starts. A holding company helps to separate risk, centralise investment and open up options for selling the business. Dividends between Thai companies may be partly or fully exempt depending on the shareholding percentage and holding period, but the conditions under Section 65 bis must be checked before they are used in any calculation.

Separating companies must have real substance, such as their own accounts, bank accounts, staff, contracts, licences and activities. Paper companies, or pricing used to shift profit to a company that enjoys privileges, are points that tend to be challenged. Service fees and intercompany loans should therefore have an explainable pricing method.

On BOI, the handbook recommends assessing only businesses that may qualify, particularly hotels or certain service businesses, and checking the business type, conditions and privileges against the current announcement. Do not assume that real estate sales receive privileges, and BOI and non-BOI businesses must be accounted for separately.

The end of the chapter covers preparation for a REIT or IPO, which must start several years ahead: a simple shareholding structure, audited financial statements for prior years, a clean tax record, governance, explainable related-party transactions, complete title documents and permits, and a sufficiently stable revenue history. Restructuring late in the process usually costs more and carries higher risk.