The convenient whole truth is about the new property taxes

WHERE is the tax heaven” It is in our mind if we are happy to pay some taxes for the country which becomes the kingdom of heaven for all of us. There is no country for old men who search for the real happiness without taxation. The song “Taxman” of the Beatles may show us the truth about the draconian taxation in the UK from your birth until death. There is no “Death Tax” in Thailand. The politicians in the UK will definitely be reluctant to implement the populist policy to waive tax. They always need money for the welfare state which is not the heaven for most of you. In the contrary, the Thai populist government just enacted the new law to reduce the tax rate for the real estate business.

The real happiness cannot be measured by any monetary means but our heart and mind. Most expatriate settlers in Pattaya prefer to pay some taxes in stead of hiring a team of tax lawyers to fight with the IRS. The new property taxes can be the good news for all of us that the government cares about the property markets which become bread and butter for most of us.

In Thailand, there is no tax imposed on ownership of property.There are some minor municipal taxes for garbage collection and wasted water treatment. The main taxes and government fees will be upon the conveyancing process for transfer of ownership which are

1) Income Tax (Withholding Tax) of 1% on the actual price of the real property declared with the Land Department for the seller which is a company or juristic person. If the seller is the individual, the progressive rate with the maximum of 37% will be applied.

2) Specific Business Tax (SBT) of 0.11% on the actual price of the real property declared with the Land Department which is applicable for the seller which is both company and individual. This tax is imposed if the real property is sold with five years after acquisition of ownership.

3) Transfer Fees of 0.01% on the official appraisal value (Raka Pramuen) of the real property which is fixed by the Land Department for the tax collection. This tax rate of 0.01% is applicable only to licensed real estate development projects (Moobaan Jadsan) and condominiums, otherwise the rate of 2% will be applied.

Who should pay the above taxes and government fees” Most of contractual parties in Pattaya agree to equally share 50% each. The buyer should not accept to pay all these taxes and government fees because it will not be fair. The Office of the Consumers Protection strongly advises that a buyer should share with seller only for 50% of the transfer fees.

Ignorance is no excuse
“Nobody can deny the knowledge of law” should be the most controversial say for many foreigners in Pattaya. The word “ignorance” never means “stupidity” but it is the state of lacking knowledge which always happens in the city by the deep blue sea whereby you will have to be wise as a serpent but harmless like a dove.
Many ignoramus use their heart not brain to buy property for their lovers. Who will open their blind eyes to see the reality”

“Seek and you shall find” should be the proper words of wisdom which can become miraculous to remind you that justice will not fall from the sky if you close your eyes to see the reality. People become gullible by two words “trust” and “greed”.

What will happen if you easily trust a person and become greedy for the benefit you are offered”

You may hear the news about the man who transferred 40 millions baht into the bank account of the man whom he just knew in Pattaya to buy a piece of land for the real estate project. You may imagine the end of this story. Many people have a miraculous tongue to make easy money. They never care if their obscene wealth will become the deadly sin which will lead them to the inferno.

If this man seek a good lawyer from the beginning of this story, the scenario would not end up like this.

“To be or not to be a good lawyer” is not the easy question. The good lawyer should be the person who may serve you without any conflicts of interest. “No man can serve two masters”, how one lawyer can serve both buyer and seller without loving one and hating the other. The good lawyer shall not allow his independence to be compromised.

Before making a final decision for the investment in any real estate project, you should instruct your lawyer to conduct a due diligence to check the records of the person you will deal with and the property or piece of land you will jointly buy for the project. A joint venture agreement should be signed with all details about the plan of the project and the company should be set up for the implementation of the joint venture plan. You should be the joint signatory in this company to ensure you participation in every step.

The payment of money to buy the piece of land should be made by a bank”s cheque payable to the owner and handed over to the owner or the representative of the owner simultaneously with the conveyancing process to transfer the ownership of the land to the joint venture company.

If you follow these steps, you will not be easily cheated like this man.

The other story is about the introduction of the new law about “Escrow Account System”. All licensed real estate developers will be required to keep the down payment in the escrow account which cannot be used as the working capital or to buy Mecedez for their concubine. If the developer cannot complete the project, all buyers will be fully refunded for all money deposits from this escrow account.
We always hear many real estate brokers showing that they have the escrow account and ask the gullible property buyers to transfer money into their escrow account.

The “Escrow Agent” who can undertake these services must be commercial banks or licensed professionals having long standing impeccable records. For the individual who undertake these services must be guaranteed by a bank or insurance company to ensure that the escrow will not easily move the office to other neighboring countries.

The property markets in Pattaya should resurrect with the good news that the decrease of transfer fees and business taxes for transfer of property are in force. It can be the gesture that the government cares about the real estate business. Good faith foreigners setting up a Thai company to buy land for residential purpose not more than one rai or 1,600 square meters should be treated with more tolerance.

The new election of the mayor of Pattaya should be the good news for the change we may believe. The local politics in Pattaya will be definitely changed in the eyes of the central government who always treat Pattaya as a small town in Banglamung District. Pattaya becomes more and more unique as the economical metropolis for many hinterland provinces in the North Eastern region.

The new mayor will be definitely dignified by the tough competition among the high profile candidates. The dignity of the new mayor will give him the power to have a say with the central government to understand the unique nature of Pattaya. The hierarchy and dignity of the mayor of Pattaya City should not be lower than the governor of Chonburi province.

Can the central government apply the nanny state policy to close all beer bars early and order all lonely men to go to bed”

The “public hearing” with all local entrepreneurs should be made for their representation in every policy which may affect Pattaya. There are many countries who propose themselves as the country for old men.