To boost property sales, Thai gov’t approves extension of real estate tax incentives

In an effort to increase property sales, the government officials in Thailand have successfully passed a law extending the reduction of specific business tax (SBT) on the transfer of real estate until 28 March 2010.

Based on the new law, which was already published on the Royal Gazette, SBT will remain at the reduced rate of 0.11 percent, down from the normal 3.3 percent.

It can be recalled that the incentive was originally introduced in March 2008 in an effort to boost new property sales, but was due to expire on March 28 this year that is why it is extended until next year.

The extension has a retroactive effect to March 29; buyers who transferred property after that date, and were charged at 3.3 percent, now have the opportunity to seek a refund from the revenue department.

Accordingly, SBT is payable if the seller sells the property within five years of the purchase registration date. The transfer is not subject to business tax if the seller is an individual and has possessed the property for more than five years before the transfer.

Companies however are subject to SBT irrespective of the period of ownership.

Usually developers are responsible for SBT on the transfer of new units, but for resale units there is no fixed rule as to which party pays, which part of the transfer taxes, and this can vary from purchaser pays all to seller pays all.