People not resident in Thailand who wish to own a home, which for all intents and purpose is a land and house package, can do with the help of a legal and tax professional. Most company registrations can be done through a law firm at prices starting from around Bt 50,000.- for setup and Bt. 7,000 for each million in registered capital.
Bear in mind though that under the strict interpretation of the law, a foreign individual – per se, is not entitled to own land, unless special approval has been granted by the Interior Ministry or other government body. (i.e. a privilege has been received from the Board of Investment of Thailand or the Industrial Estate Authority of Thailand – which will not apply for most residential property transactions considered here)
A popular way to complete a house and land acquisition is to form a Thai Limited Company, which owns the property you wish to buy. A brief introduction about the procedure to set up a Thai Limited Company is detailed below.
Three 3 basic procedures exist for setting up a Limited Thai Company:
Firstly the proposed name is required to be reserved for use as the Company's name with the Ministry of Commerce, in order to ensure that the proposed Company name is not identical or similar to the name of any other registered Company.
The name reservation application is required to be signed by any one of the promoters.
Once the Company's name has been approved by the registrar, during the validly period of 30 days, the promoters shall apply for the registration of the Memorandum of Association. At this stage at least 7 individuals are required as promoters, of which at least 4 must be Thai nationals.
The Memorandum of Association must contain the following information:
- Name and the location of the Company;
- The objectives of the Company;
- Registered Capital, number of securities and par value;
- Name, address, occupation, nationality, age, and signature of each promoter and the number of shares subscribed to by each of the shareholders.
There is no minimum capital requirement. However the fee for registering the memorandum is set at Bt 50 per registered capital of Bt 100,000 subject to a minimum fee of Bt 500.
Following the registration of the Memorandum of Association all shares must be subscribed to by shareholders and all promoters must hold at least 1 share. At least 25 % of the value of each share is required to by law to be paid up.
The promoters shall then hold a general meeting of all subscribers, which is called the "Statutory Meeting".
The promoters are required to send to every subscriber a notice of the Statutory Meeting together with a statutory report at least 7 days before prior to the meeting-taking place. The notice of the Statutory Meeting shall contain the agenda of all business to be transacted. Normally the business to be transacted at the Statutory Meeting is as follows:
- Adoption of the Articles of Association of the Company;
- Ratification of the promoter’s actions and expenses
- Consideration of the amount to be paid to the promoters;
- Appointment of the directors and authorized directors;
- Establishment of preferred Shares (if any);
- Consideration of the number of shares to be allotted as fully or partially paid up other than money and the initial paid up capital for the shares payable in money; and
- Appointment of Auditors and the determination of their consideration.
Following the Statutory Meeting, the directors shall run the business of the Company. The directors shall call for the payment for the shares to be made in money in the amount determined at the Statutory Meeting.
After the payment for the shares have been made, the authorized director(s) must apply for the registration of the Articles of Association of the Company. In practice the Articles of Association can be submitted 10 days after the date of registration of the Memorandum of Association. It will normally take at least 3 - 5 working days for the Registrar to consider the Articles of Association and the list of shareholders. (The promoters are required to hold at least one share each).
The completion of the incorporation of a Limited Company takes approximately 3 - 4 weeks.
The registration of Transfer of Ownership of the Land and the Villa:
Please be advised that under the law, all fees and duties and taxes in relation to the registration of transfer of ownership of the land and the house or villa are subject to be paid up front to the Land Department official on the registration date every time there is a registration (which includes resale transactions). The rates of the fee and duty and tax are based on the official appraisal price, or the purchase price in that it is higher then the official appraisal price. The details are below:
- Transfer fee: 2 % of the official appraisal price;
- Stamp Duty: 0.5 % of the official appraisal price or the sale prices whichever is greater.
- Withholding Tax: 1 % of the official appraisal price of the sale price, which ever is greater.