Investing in Southeast Asian markets requires thorough research and due diligence as regulations are less transparent and clear compared to developed countries.
Buying real estate in Singapore compared to Vietnam is often a significantly easier undertaking.
Some investors overlook the importance of understanding taxes apply before acquiring property, something that can greatly reduce your expected ROI. Thailand is not an exception.
In this article, I explain what commercial property taxes you have to pay in Thailand as a foreign investor.
What commercial property taxes exist in Thailand?
Thailand has low property taxes compared to neighboring countries. This is one of the prime reasons why it was ranked second in our yearly Asia Property Index, only behind the Philippines.
Here, we rank countries depending on how attractive these are for foreign buyers.
Now, back to the question at hand. There are real estate taxes that sellers are sometimes not aware of, not only when selling property, but also when buying.
It’s of great importance that you calculate your potential ROI by knowing the property taxes before acquiring real estate.
Below you can find the taxes that are charged when buying and selling commercial property in Thailand.
The stamp duty is paid to transfer ownership documents between the buyer and seller and is charged at the time of the purchase.
In countries and regions like Singapore and Hong Kong, stamp duties are significantly high and can reach up to 30%.
The stamp duties are the highest if you’re a foreign buyer (non-PR holder) and have acquired real estate before.
In Thailand, that’s not the case where the stamp duty is set to 0.5% and multiplied by the assessed value of the property.
However, if you buy real estate as a company, which is generally the case for commercial property, you pay a business tax instead of the stamp duty.
As such, the stamp duty is often not paid by foreign commercial real estate investors.
The stamp duty is 0.5% for both the sale of freehold land and property and the sale of buildings. The fee is born by the seller.
As mentioned, if you buy commercial real estate as a company, the stamp duty is waived and you pay a business tax instead. The tax is set to 3.3% and multiplied by the registered or assessed value, whichever is higher.
The same as for the stamp duty, the business tax is paid by the seller of the property.
A withholding tax is charged to both individual foreign buyers and companies and increases from 5% to 37% for individuals. The rate is multiplied by the assessed value.
Worth mentioning is also that the authorities multiply the taxable amount by a deduction factor that stretches from 0.08% to 0.5%.
Simply put, the longer you hold the property, the higher the deduction rate, which results in a lower tax burden.
Even if foreigners are generally required to buy real estate through companies, might they be locally incorporated or through Joint-Ventures, you’re subject to a significantly lower withholding tax of only 1%.
The rate is multiplied by the assessed value or the registered sales value, whichever is higher.
A municipal tax of 10% is multiplied by the business tax amount explained above.
A transfer fee of 2% is multiplied by the assessed value or the sales value, whichever is higher. The fee is often split between the buyer and the seller, which can be offset in the purchasing price.
The transfer fee is 2% for the sale of freehold land, property, and buildings.
Capital Gains Tax
Companies have to pay a capital gains tax of 30%, the same as the general business income tax. Individuals pay a profit tax which is the same as the personal income tax, but don’t pay any capital gains tax.
Below you can find commonly asked questions and our replies. If you have any other questions or concerns, feel free to write a comment below.
What’s the rental income tax in Thailand?
The rental income tax is 10% to 30% of the income or actual expense.
What is the Land and Building Tax Act?
The first land and building tax was introduced in Thailand in 2020 and include the following changes from the previous legislation:
The tax base has been changed from the value of the buildings, land, and condominium units, appraised by the Thai government. Previously, the tax base was calculated based on the yearly lease amount by district officials
The tax was previously charted with a flat rate of 12.5%. The rate now varies according to the usage of the property
Tax is now collected from residential units as well. These were not subject to property tax in the past.