Koh Samui Property and Land Taxes
Not always, when you plan on buying a property on Koh Samui you are prior informed of the taxes and fees asked by the Government. If you don’t research the available taxes and fees by your own then after a couple of months or more after the purchase is completed, you may get a very unpleasant surprise in the form of a pricey tax bill.
There are four potential taxes or fees that must be paid when you are buying or selling a property on Koh Samui. The duration of the seller’s ownership, the seller and the details of the transaction influence the type of tax that will be applied to the purchase. Another important thing you should know is that the majority of these fees are calculated according to the government’s "tax assessment value” of the property. Usually, the value is smaller than the value available on the market.
The transfer fee depends on the appraised value of the property. In general, this value is paid equally by both the seller and the buyer, but this agreement needs to be accepted by both parties.
Lease Registration Fee
This is calculated by using the total rent value that will be paid over the entire lease term. Usually, this amount is split between the lessee and the lessor, but both parties must agree to this.
Specific Business Tax
This type of tax is applicable to individuals and companies that have owned a property for 5 years or less. It is calculated based on the contracted price or the official appraised value, depending on which one is higher.
An individual may not be asked to pay Specific Business Tax if he has used that property as his main residence and has written its name in the household registration certificate for one year or more.
If Specific Business Tax isn’t applicable then Stamp Duty must be paid. Its value depends on the contracted price or on the official appraised value.
Withholding Tax (WHT)
If the seller is an individual then the Withholding Tax is calculated depending on the individual’s marginal tax rate after deducting a standard deduction that is influenced by the number of years of ownership. The only exception is that the first 100,000 baht has a 5% tax applicable instead of falling under the tax-free threshold. But if the seller is a company then the Withholding Tax results from calculating 1% of the contracted price or the official appraised value, whichever is higher.
After you have bought a property on Koh Samui, there are 2 different types of tax that can be applied on a property in Thailand:
The Land Tax is charged annually for land ownership and usually the amount is so small that the Government does not bother to collect it annually. In general, it is collected once every several years to cumulate a larger amount.
Structures Usage Tax
The Structure Usage Tax is applicable only to those properties that are used for commercial purposes. There is a 12.5% rate that is applied to the assessed gross value or the actual value of the property. The thing is that this value is considerably lower than the commercial market rental value.
If you are buying a house on Koh Samui through a company then you should take into consideration the fact that corporate taxes are higher than individual taxes. Plus, you must consider the costs of setting up the company as a part of the investment in that house.
Regarding the funds used for buying the property, if you want to buy a property on Koh Samui with Thai Baht then you need to make sure that the money is transferred to Thailand in a foreign currency. It is recommended to make the conversion to Thai Baht in Thailand. For inward transfers exceeding $20,000, the receiving Thai bank will issue a Foreign Exchange Transaction Form that will certify the transaction. This document will be needed if and when you will want to repatriate your money without incurring tax penalties.Payments of overseas loans in foreign currency or the repatriation of investment funds can be remitted freely only after providing the appropriate evidence. The Foreign Exchange Transaction Form is one of these supporting evidence and in the case of a foreign currency loan you will also need to show the loan contract. Any money remittance that isn’t accompanied by proper documentation can be considered income and will be liable for the tax.