“Using a Nominee Company to own Land”

To be or not to be guilty, that is the question!

“To be or not to be” is a basic question that nobody can ascertain the right answer for the status quo of foreigners in Pattaya. There must be a proper typological research to differentiate foreigners in Pattaya from other parts of the country. They are not the real investors in term of money. What they aspire for is just only a sustainable happiness in the tropical kingdom of heaven. Nobody talk about the Gross Domestic Product (GDP) but Gross Domestic Happiness (GDH) under the doctrine of “Sufficiency Economy” of His Majesty the King which is the real doctrine not propaganda.

“What is a profit of a man gaining the whole world and losing his soul”

Most of retired foreigners in Pattaya are baby-boomers who will never care about the “Boom” or “Doom”. If they want to make easy money in a real estate speculation, they may go to “Bulgaria” instead of Pattaya. They just laugh once they see some foreigners at their own generation running around the town to blow a trumpet about a fortune they make in Pattaya.

Nobody talk about the real infrastructure for foreign settlers. Do they know that a shortage of water is not a problem any more” The 60% downturn of the crime rate should be one of the main factors attracting foreign settlers to stay in Pattaya in stead of going to the disastrous Florida.

Conflation or Confusing Combination of Laws

There is a big misunderstanding created by the rumor mongers that the proposed amendments of the Alien Business Law 1999 will create deep impacts on property buyers in Pattaya. They conflate or confusingly combine the “Alien Business Law 1999” with the “Land Code 1954” to panic property buyers in Pattaya. These rumor mongers may have a good faith but are ignorant. However, they are not stupid because “ignorance” means a lack of knowledge. How can they have the profound knowledge of Thai laws without a law degree” It is miserable to have the misleading information.

No law can be retroactive

The amendments of the Alien Business Law 1999 cannot create any draconian measures which are retroactive. The punishment under this law will be applied to only a foreigner using a nominee company to operate a business activity. If your company is in a “dormant status” by registering the business activity of import or export which is in Annex III of the Alien Business Act 1999, the draconian punishment cannot be imposed upon you. If there is not any business movement, you will not be in violation of the Alien Business Act 1999. You may satisfy the government by declaring tax from the income your company receives from your rent in case you stay in the company.

To be or not to be a “Nominee Shareholder” is the question of fact which must be ascertained by the authorities. For the existing companies, it will definitely take time and manpower to check and investigate.

The Judgment Day

In the worse case scenario, what will happen to foreigners setting up a dormant company to acquire land” Will they be prosecuted with draconian punishment by imprisonment and confiscation of their properties before deportation.

Section 112.- of the Land Code 1954 imposes a penalty fine not more than Baht 50,000 to a company in violation of the restrictions under the Land Code 1954. The question is whether the Government can confiscate the land acquired in violation of the restrictions.

Section 94.- of  the Land Code 1954 specifies “Any land acquired by a foreigner in violation of the law or without prior permission must be disposed of by that foreigner within a period of time prescribed by the Director General of the Land Department which must be at least 180 days but not more than one year. If the land cannot be disposed of within the aforesaid period of time, the Director General will have the power to dispose of that land and the provisions concerning the enforcement for disposal of land under Chapter III of the Land Code shall be applied mutatis mutandis”

The proceeds or money from the disposal of the land acquired in violation of the restrictions under the Land Code 1954 will have to be returned to the foreigner who can prove that he sent money to buy this land. Please search for the “Land Code 1954 on Foreign Ownership” in www.thaisolicitor.com.

However, the above scenario is for the good faith foreigners who are not implicated with the “Conspiracy Theory” in any serious crime or money laundering. If you just buy a house for your retreat with a Thai partner, you should be deemed a good faith foreigner who will always deserve the tolerance of the law.

As we say in our last article about the nexus of factors affecting each other. The status quo of foreign settlers buying a real property should still remain in the equilibrium. We have never heard that the Government has a xenophobic sentiment that Pattaya is under the threat of “Alien Invasion”. The “Judgment Day” will create the catastrophe not only for foreigners but local native people who share the equilibrium of nexus between their destiny and the Foreign Direct Investment (FDI). A good lawyer can be a vanguard of justice.    If you come to Pattaya to search for the sustainable happiness not for speculation of the hot money and integrate to the local community, you will not be deemed “Alien”. The integration means that you should understand the ideology of “Nativism” which is indispensable to maintain the “unity and solidarity within the diversity” in our Kingdom. If you come to Thailand with a big container of hot money to buy out every thing around you without compassion to native people, you will not always welcome.

This article always reflects our regional perspective based upon the empirical knowledge from our practice. We may sometimes point the finger back at the problems in your native country with the good faith that you will be able to maintain the equilibrium of your mind in this land. Some people may become cynical with the junta back-up politics in Thailand. However, they have to ask themselves whether they prefer to go back to the impeccable political systems in their own countries. It is a real dilemma for some Brits to decide whether they will stay for good in Thailand with the junta back-up government or go back to the UK to stay under the protection of His Excellency Tony Bliar (someone made this spelling for us) or  his successor, Gordon Brown who is known as Mr. Taxman.

It”s not always shameful to be a local lawyer because the theory of law can be found in a law book which is unique while the implementation of laws can be found from the pragmatism which is different in each region.

Regional Knowledge Ascends to the National Seminar

After three years of our article to reflect the regional perspective in a local media, we are proud to be invited by the “Thai Real Estate Business School” (TREBS) to be a guest speaker in an Exclusive Seminar in English held on 15th February,2007, at Swissotel Le Concorde in Bangkok. The topic is “How can Foreigners legally occupy properties in Thailand””  The other speakers are Dr. Sophon Pornchokchai, Chairman of the Thai Appraisal Foundation, Mr. Suriyong Tungsuwan, Partner of  Baker & McKenzie, a law firm with offices around the world, Mr. Metha Janjamjaras, President of Property Plus Co.,Ltd., Mr. Sutisak Lahachawin, Deputy Director-General of Department of Business Development, Ministry of Commerce.

One of a speaker whose idea can influence property buyers in Pattaya is the Deputy Director-General of the Department of Business Development, Ministry of Commerce. We had a dialogue with him about his idea vis-“-vis the good faith foreigners in Pattaya and were confirmed that the foreign ownership of land was the separate issue from the foreign business law.

In every issue, we will provide you with a report of this seminar to keep you abreast of laws, regulations and policies which may create impacts on you. You may search for more information about Thai laws on foreign ownership in our reading room www.thaisolicitor.com