M&A Monthly Report : January 2018

Land and Buildings Tax update

The Land and Building Tax which will replace House and Land Tax, has passed the 1st consideration of the National Legislative Assembly (NLA).  The Tax Bill will have to go through 2 more considerations of the NLA before it will be sent back to the Cabinet.  Below chart is the update of rates that has been revised by the NLA.

Unit : Baht

Category of land use

Rates approved by the cabinet

NLA’s standing committee proposals

  • First home

Ceiling rate 0.5%

Ceiling rate 0.3%

≤ 50m

Exempted

≤ 20m

Exempted

> 50 – 100m

0.05%

> 20 – 50m

0.02%

≥ 100m

0.1%

> 50 – 75m

0.03%

  

> 75 – 100m

0.05%

  

≥ 100m

0.1%

  • Second home

≤ 50m

0.03%

≤ 50m

0.02%

> 50 – 100m

0.05%

> 50 – 75m

0.03%

≥ 100m

0.1%

> 75 – 100m

0.05%

  

≥ 100m

0.1%

  • Agricultural (owned by individuals)

Ceiling rate 0.2%

Ceiling rate 0.15%

≤ 50m

Exempted

≤ 50m

Exempted

> 50 – 100m

0.05%

> 50 – 75m

0.01%

≥ 100m

0.1%

> 75 – 100m

0.03%

  

> 100m – 500m

0.05%

  

> 500m – 1,000m

0.07%

  

≥ 1,000m

0.1%

  • Agricultural (owned by juristic entities)

Ceiling rate 0.2%

Ceiling rate 0.15%

≤ 50m

Exempted

≤ 75m

0.01%

> 50 – 100m

0.05%

> 75 – 100m

0.03%

≥ 100m

0.1%

> 100m – 500m

0.05%

  

> 500m – 1,000m

0.07%

  

≥ 1,000m

0.1%

  • Others

Ceiling rate 2%

Ceiling rate 1.2%

 

≤ 20m

0.3%

≤ 50m

0.3%

> 20 – 50m

0.5%

> 50 – 200m

0.4%

> 50 – 100m

0.7%

> 200m – 1,000m

0.5%

> 100 – 1,000m

0.9%

> 1,000m – 5,000m

0.6%

> 1,000 – 3,000m

1.2%

≥ 5,000m

0.7%

≥ 3,000m

1.5%

  
  • Undeveloped

Ceiling rate 2% (to increase by 0.5 percentage points every three years until it hits the cap at 5%)

Ceiling 1.2% (to increase by 0.3 percentage points every three years until it hits the cap at 3%)

1 – 3 years

1%

< 50m

0.3%

4 – 6 years

2%

> 50 – 200m

0.4%

≥ 7 years

3%

> 200- 1,000m

0.5%

  

> 1,000 – 5,000m

0.6%

  

≥ 5,000m

0.7%

 

Foreign Business Giving products in return for service

Q: A foreign company registered in Thailand has a cooperation project with several Thai government agencies in research and development of the cultivation of crops such as rice, sugar cane, cassava, and corn. To operate this project, the company has planned to establish a research and development (R&D) center consisting of crop research plot, farmers’ knowledge transfer plot, water source, buildings, storage, and parking on an area of approximately 200 rai.

This R&D center will focus on 1) R&D of the entire process of cultivation, in order to search for new knowledge on reducing costs as well as increasing yield and quality in cultivation, and 2) demonstrating and transferring the knowledge of cultivation to the farmers.

The agricultural products arising from this R&D center will be divided into 2 parts; the first part will be given as compensation to the farmers who take care of the research plot, and the second part will be given to the provincial agricultural extension office in order to pass it to the farmers or cooperatives who participated in any projects launched by such agricultural office.

The company would like to confirm whether it will need to obtain the Foreign Business License in providing such service or not.

A: In case 1) the company gives the agricultural products arising from research plot to the farmers as compensation for taking care of the research plot, or the company earns the revenue or the return from selling such agricultural products, this kind of operation shall be considered as doing “business” according to the definition stated in the Section 4 of the Foreign Business Act B.E. 2542 and shall be regarded as doing “business” under List 1(2) farming, crop-farming, or gardening, of the Annex to the Foreign Business Act, which the foreigners are not permitted to operate the businesses under this List.

In case 2) the company gives the agricultural products from research plot to the provincial agricultural extension office for the benefit of the government and the company does not earn any revenue or return whether directly or indirectly from such activity, this kind of operation shall not be considered as doing “business” according to the definition of ‘business’ stated in the Section 4 of the Foreign Business Act B.E. 2542, so the Foreign Business License will not be 

Operating the re export business

Q: A foreign company registered in Thailand would like to operate the business to export the consumer products such as cheese, butter, milk, etc. to foreign countries, as an operating process, the company will import the consumer products from overseas to repackage and, then, export abroad only. The company would like to confirm whether it will need to obtain the Foreign Business License in operating such business or not.

A: To operate the export business, it shall not be considered as doing business under the List Annexed to the Foreign Business Act B.E. 2542, so the Foreign Business License will not be required. However, with reference to the first paragraph of Section 14 of the Foreign Business Act, the foreign company who is operating the business that in not mentioned in the Annex List of such Act, must have the minimum registered capital of not less than 2 million Baht and it must be fully paid-up.