Land and Building Tax

Taxation of Property Used for Commercial Purposes

Owners of property used for commercial purposes must pay taxes on the income they receive:

Personal Income Tax or Corporate Income Tax
Land and Building Tax

Personal income tax must be paid to the tax authority by the end of March of the year following the reporting year, on a progressive scale.

Land and building tax is paid to the local administration by the end of February of the following year. This article focuses on that tax.

Land and Building Tax Rate

The tax rate is 12.5% per year of:

the actual annual rental income, or
the assessed rental value of the property

(whichever is higher is used for tax purposes)

This means that if rental income is declared too low, the local authority may:

reassess it
and calculate tax based on the estimated rental value

Tax Calculation

The tax is calculated based on the total annual rental income, without any deductions for expenses (such as maintenance costs).

However:

the land and building tax paid can be treated as an expense when calculating personal or corporate income tax.

Who Pays the Tax

The property owner is responsible for reporting and paying the tax
However, a lease agreement may stipulate that the tenant pays the tax in addition to rent

Owners of condominium units (whether:

freehold, or
long-term leasehold)

are responsible for paying land and building tax if they rent out the unit.

In practice, especially in long-term leases (over 3 years), the tax is often paid by:

the tenant (lessee/buyer under leasehold)

When the Tax Is Payable

If the owner personally resides in the property:

no land and building tax is due

However:

second and subsequent properties are automatically treated as commercial
and are not exempt

Property Owned Through a Company

If land and a house are owned through a company, and a foreigner resides there:

the property is not considered residential for personal use
the company must pay tax
regardless of whether it generates income

Local authorities may conduct random inspections.
If tax is not paid:

the company must pay for all years of use
plus penalties

A company is exempt only if the property is used as an office.

Key Principle

Any property may be classified as commercial if it is:

not used as the owner’s residence, or
not used as the company’s office

Specifics for Foreign Owners

The only way for a foreigner to reduce tax costs when acquiring land and a house through a company is:

In this case:

the foreigner lives in their own house
and leases the land from the company

⚠️ Important:

Ownership or transfer of a house without land is only possible if
ownership of the house was legally separated from the land at the time of construction

Payment Procedure and Liability

Tax declaration and payment must be made independently by the owner
Local authorities do not always notify owners about tax obligations

However:

random inspections may occur

If a company fails to pay:

authorities will determine the rental value themselves
calculate tax for all unpaid years
and impose penalties

👉 Voluntary compliance is more выгодно than enforced collection, as inspections may also extend to other issues (e.g., Thai shareholders).

Penalties for Non-Payment

Failure to file a declaration:
- fine of 200 THB
Late payment penalties:
- 2.5% (delay up to 1 month)
- up to 5% (up to 2 months)
- 7.5% (up to 3 months)
- 10% (over 3 months)

After 4 months of delay:

authorities may seize and sell the property to recover the debt