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Special Business Tax When Reselling A Condominium Under Assessed Value


An interesting Supreme Court case in relation to taxation different between a company taxpayer and the revenue in relation to the calculation of the Special Business Tax in relation to the sale of a condominium by a company at a price that was under the Land Department appraisal value (also called assessed value) during the 1997 economic slump

The case was as follow:

The taxpayer a Company) sold a condominium for below its appraisal cost (but at market price) during the 1997 economic slump.

Now the revenue officer assessed the Specific Business Tax (SBT) on the appraisal cost using rules applicable for the registration of rights and juristic acts (the government fees 2% are always calculated on the government assessed value or appraisal value) whatsoever the transaction price.

The Supreme Court held that the revenue officer only had authority to designate the selling price of immovable property at appraisal cost for the registration of rights and juristic acts for personal income tax purposes, not for SBT purposes.

The Revenue Department failed to persuade the Court that the appraisal cost was the market price. Therefore, the price taken by the Company applied.

Thailand Taxes : A Difficult Year Ahead


The Revenue Department is the largest source of income for the Thai Government representing up to 80% of its revenues. Now as a result of the 2008 crisis the Revenue Department underperformed in 2009 (180 Billion Baht below target) while on the other hand the Government committed huge amounts of funds to support the economy increasing the public debt.

As a result of this unbalance the Revenue Department is looking for new solutions (i) to increase the tax base and to (ii) reduce tax fraud or avoidance.

Among the measures already announced to reduce tax fraud is

– The black listing and criminal pursuits of accounting companies that help their customers to increase their deductible expenses.

– The introduction of a VAT Withholding tax. Finally

– The creation of a nationwide network linking the Revenue Department to the Land Department, Local Administrations and Commerce Ministries.

Overall, businessmen and companies but also individuals may expect a difficult year ahead with a Tax Revenue Department that will become more omnipotent (as a result of the network linking) inquisitive and aggressive.

Note: This post is an excerpt of Rene Philippe Dubout next book: “How to Invest Safely Into Thailand” to be published in January 2010

About the Author:

The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.