Property firms, foreigners 'dodging buildings tax'

[PeteC]

Property firms, foreigners 'dodging buildings tax'

Published: 5/04/2012 at 02:05 AM
Newspaper section: News

http://www.bangkokpost.com/news/local/2 ... ldings-tax

PRACHUAP KHIRI KHAN : Authorities in Thap Sakae district have asked the Revenue Department to help investigate what they suspect to be cases of tax fraud concerning real estate transactions with foreigners.

Thawatchai Daengcham, chairman of tambon Huay Yang administration organisation, yesterday said the local body was losing large amounts of revenue as a result of dishonest real estate developers who enter into transactions with foreigners.

He said several firms had managed to underdeclare land taxes to the local authority by declaring real estate purchases as 30-year leases.

Some companies paid land and building taxes of just 750 baht for luxury beach houses despite the market value being between 7-10 million baht.

Mr Thawatchai said the Tambon Administration Organisation uncovered irregularities involving a real estate firm's purchase of a land plot worth 300,000 baht in the district.

The company applied to the TAO for house registration numbers for eight houses on the plot.

However, the land purchase contract signed on Jan 23 this year stipulated there was no structure on the plot and all land tax was paid.

The TAO had no record of a tax payment being made, he said.

Phakdi Siwapornchai, the provincial revenue official, said yesterday the case was worrying.

He said he will examine real state transactions in Huay Yang and Hua Hin where the real estate industry had experienced robust growth, for any signs of irregularities such as attempted tax dodges.

[johnnyk]

A land plot worth 300,000 THB can't be very big.

[PeteC]

This is another one of those stories where there seems to be a hidden jab and punch at foreigners yet again.

"......yesterday said the local body was losing large amounts of revenue as a result of dishonest real estate developers who enter into transactions with foreigners....."

What does that mean: 1) the developers are foreign, 2) the buyers, 3) both? Who is dodging the taxes, the foreign buyers? I don't think so. They're told what they have to pay and when and details such as initial land taxes IMO is the purview of the developer.

It wouldn't be a surprise to me at all to find out that the developers they are referring to are Thai companies, and indeed the customers (buyers) are also in most cases rich Thais trying to get away with something as usual. Pete

[advocate]

It is common practice amongst the Thais to falsify the price of land when selling so as to avoid paying the full tax.

Not worth it to the buyer, esp a falang, bc when you sell you will have to declare full value on the property to repatriate the full amount to your home country and will have a much larger capital gain to pay taxes on.

[buksida]

Thawatchai Daengcham, chairman of tambon Huay Yang administration organisation, yesterday said the local body was losing large amounts of revenue as a result of dishonest real estate developers who enter into transactions with foreigners.

There is a massive Scandinavian development in Huay Yang with hundreds of houses, the local bigwigs probably missed out on their slice of the action and are now chasing it and blaming those pesky foreigners as usual.

[STEVE G]

It is common practice amongst the Thais to falsify the price of land when selling so as to avoid paying the full tax.

Yes, every Thai who has ever attempted to sell me land has told me about this including in areas where there are no foreigners at all. I wonder if Thawatchai Daengcham owns any land and if he declared it at full price.

[Super Joe]

Property firms, foreigners 'dodging buildings tax'

He said several firms had managed to underdeclare land taxes to the local authority by declaring real estate purchases as 30-year leases. Some companies paid land and building taxes of just 750 baht for luxury beach houses despite the market value being between 7-10 million baht.

However, the land purchase contract signed on Jan 23 this year stipulated there was no structure on the plot and all land tax was paid. The TAO had no record of a tax payment being made, he said.

I believe this is about 'Building and Land Tax', aka 'House and Land Tax', aka 'Buildings Tax'... the tax government's have been talking about replacing for years now.

It's currently 12.5% p.a. on any rental/lease income you receive for the use of your house and/or land. When a developer/property company/developer's wife etc issues a 30-year lease on their land, they are not viewed as selling the land plot freehold for say 1m Baht, but are effectively agreeing to receive 33,333 Baht/year rental over the next 30 years, ie: 1m Baht. So they then pay 12.5% of 33,333 Baht each year, rather than tax in one go on 1m income in the tax year.

I didn't think there was a particular issue with it being done this way (leaving aside any under-declaring), but what their is obviously an issue with is evading it each year... "However, the land purchase contract signed on Jan 23 this year stipulated there was no structure on the plot and all land tax was paid. The TAO had no record of a tax payment being made, he said."


SJ