Thailand Contracts

The basic principles of contract law in western jurisdictions are mostly applicable in Thailand. Than main body of law that control the formation and interpretation of contract is the Thailand Civil & Commercial Code (TCCC). However, other laws and statutes may also control the formation and interpretation of a contract in Thailand.

Pursuant to TCCC, the fundamental requirements for forming a binding and concluded contract are an offer and acceptance. For a Thailand contracts to be enforceable, a contract must be formed by competent parties and parties must communicate their consent to a legal agreement.

What types of taxes must be paid when purchasing land or property in Thailand?

The transferring fee, withholding tax and the stamp duty or Specific Business Tax (SBT) must all be paid by either the buyer or seller when a property is purchased. Although Sale and Purchase agreements differ, the buyer is typically responsible for the transfer fee, while the seller pays the stamp duty or specific business tax and the withholding tax.

Transferring Fee: 2% of the registered value of the property; paid at the Land Office on the day of transfer of ownership

Stamp duty: .5% of the appraised value of the property or the purchasing price, whichever is higher

Specific Business Tax (SBT): 3.3% of the appraised or actual price of the property, whichever is higher; Imposed only if the property is transferred less than five years after its purchase (If the SBT is levied, stamp duty will not have to be paid.)

Types of Thailand contracts

The following are common Thailand contracts entered into by Thai and non-Thai nationals (foreigners):

• Sale and purchase of property
• Real estate
• Shareholder agreements
• Trust agreements
• Employment
• Hotel and property management
• Construction
• Loan
• Guarantees
• Joint ventures
• Licensing and distribution
• Leases
• Subcontract or services

Thailand contracts conflict to a foreign law

Conflict of laws issue may be written into Thailand contract. Thailand contract law provides 2 different areas where the jurisdiction of a contract becomes important:

1. Choice of law clause – the choice of law determines the law of which nation will apply
2. Choice of forum clause – the choice of forum clause specifies which country or jurisdiction a complaint that may arise from a contract may be filed and a legal case may be enforced in court.

Read more about:

 Real Estate

 Land Purchase

 Land Leases

 Company Land Purchase or Condo Purchase