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A Taste Of Thai & A Bite In China

By Laurence E. Lipsher - Email Editor

Date : January 7, 2010

Dear Valued Reader,

There are things I’d love to write about Thailand:its basically unchanging tax system, its economicstimulus — or lack thereof — or its government. ButI’m not going to. I really like the place and want tocome back to Thailand. Alas, there are laws in placehere that preclude one from telling things as they trulyare.

If you are interested, though, there is a book aboutThailand I would like to suggest to you: The King NeverSmiles by Paul M. Handley, published in 2006 by YaleUniversity Press. However, if you are going to Thailand,please do not take the book there with you — itwill land you in jail if you’re caught!

However, I will discuss Thai taxes. There is an enormousincome disparity in Thailand, and if the functionof tax is to reduce this disparity, the tax base must beexpanded. There’s no inheritance tax, capital gains tax,or interest tax. Surely, implementation of these wouldbe a start toward economic equality. It will not happen.Here’s a summary of what has transpired taxwise,what’s in effect, and what is expected to happen goinginto 2010.

Immovable Property

The business tax rate on the sale of immovableproperty (real estate) has been reduced to 0.1 percentthrough March 28, 2010, when it will revert to the 3percent rate. This has encouraged far more building ofresidential and commercial real estate than there is goingto be a demand for in the foreseeable future.

And yet, even with the abundance of constructionin the ‘‘international’’ sections of Bangkok, where thesupply of available residential urban dwellings is stillgrowing exponentially while the demand is questionableat best, something good has come out of the incentivesfrom the real estate business tax reduction:low-cost housing. Thailand’s Board of Investment offeredincentives in 2009 to developers building low-costhousing. This cuts costs by an estimated 5 percent,which was substantial enough that many of the biggestreal estate developers downsized their normal developmentas both the overhead railway (the BTS Sky Train)and the Bangkok subway (the MRT) expand to thesuburbs. With better accessibility to work, the Thailower-middle class can afford urban dwellings.

The stipulation that qualifies developers for this incentiveis that no dwelling may sell for more than THB1 million (just under $30,000). These are 25-30 squaremeterdwellings. I wonder, though, if buyers are makingmultiple purchases of adjacent units to expand thesize of their dwelling, and if developers, while qualifyingfor the incentives by keeping the price at THB 1million, are also doing ‘‘interior improvement work’’ incombining multiple adjoining units.

Tax Holiday

The Board of Investment has confirmed that board registeredcompanies with projects eligible for the five-yeartax holiday may have multiple projects with annuallosses, with the losses eligible for being carriedover beyond the five-year holiday.

Cashing out - Getting Money out of China

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By Laurence E. Lipsher

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