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Crisis on traditional sources of energy and a new scenario for renewable energies in Latin America and South East Asia

24 Mar Crisis on traditional sources of energy and a new scenario for renewable energies in Latin America and South East Asia

Since the early controlled handle of fire by Homo Erectus more than 400,000 years ago, the history of humanity has been a tenacious struggle between men and women seeking to regulate and generate source of energy. Dating back to the dawn of humanity, methods of producing natural resources have collided. In the past, this has been evident with the early control of fire and the property of fossil (carbon and petroleum to name two) and nuclear fuels. Presently, we can understand the discussion of renewable resources as a contentious topic in the geopolitical dialogues that exist today. Aside from the debate surrounding renewable energies, the topic also presents itself as an area of interest for both public and private sectors throughout the world.

This leads us to posit the question: what is the current reality of renewable energy resources today? Moreover, how can we understand the dichotomy between old and new methods of harvesting these materials as the industry continues to evolve as we move further into the 21st century?

At the moment, we are living in a period of transformation, as societies, governments, and industries begin to switch from the use of traditional resources like petroleum to the implementation of renewable materials like wind and solar power in energy projects. Despite recent large oil discoveries spanning from Coober Pedy (Australia), Vaca Muerta (Argentina) to the Gulf of Mexico, in addition to the African countries of Mozambique, Angola, and Nigeria, the fact remains that the Oil and Gas industry has experienced a number of obstacles in the past five years. While it is certain that the revenue generated from the oil industry remains highly profitable, it is evident that the industry is struggling. This is notable when we look at the case of the multinational Tullow Energy Oil Company, which in 2013 suffered, more or less, twenty dry holes resulting from wells drilled for gas that yielded none.

With regard to the topic of nuclear energy, the environmental disasters of Chernobyl in 1986 and Fukushima in 2011 gave rise to a new social awareness throughout the world. With the dissemination of graphic images, memories and accounts from these disasters throughout the world, civil society has begun to think more clearly about the potential risks and dangers of nuclear power. Energy experts such as Mycle Schneider have pointed out that: “the nuclear industry was arguably on life support before Fukushima. When the history of this industry is written, Fukushima is likely to introduce its final chapter.” In addition to Schneider’s argument, it is also important to consider that acts of terrorism and natural disasters such as Tsunamis can also increase the vulnerability and shortfalls of nuclear energy, as nuclear power stations can be easy targets for terrorists seeking to create widespread damage, as well as the unpredictable nature of environmental catastrophes.

Based on my professional experience in the legal consultancy sector throughout Europe, South America and Southeast Asia (where I currently practice law in Bangkok), I have identified a strong trend of authorities in the Oil and Gas industry that are shifting their attention and investments to the promise of the renewable energy sector. Having worked for geologists, petroleum engineers and drilling engineers in Malaysia and Singapore, I have noticed the attraction among these industry executives toward solar and wind energy projects. Believing that these sectors provide exciting new opportunities and potential, investors remain eager to explore this expanding market, predominately throughout Southeast Asia, with an emphasis on Thailand and the Philippines.

While this article may lead us to understand that the Oil and Gas industry is currently undergoing a period of transition, it is crucial to emphasize that this will be a slow transformation. Due to the energy industry’s progress in embracing natural resources, we can speculate that Asia and Latin America are likely to become the two largest markets for renewable energies within the next two years. As Latin America continues to grow its middle term, Asia is also expected to continue experiencing rapid economic and industrial development.  As a result of this predicted growth, experts estimate that world energy consumption will increase 56% by 2040, led by China and India.

Although the two industrial giants of India and China tend to dominate Asia’s projected economic development, we must also remember that South East Asia is also experiencing one of the area’s highest levels of economic augmentation. In countries such as Singapore, Indonesia, the Philippines, Thailand, and Vietnam, investment often reaches that of $128,000 million USD, a significantly higher figure when compared to the $120,000 million USD that China attracts.

Concerning Latin America, the renewable energy sector continues to boom, as the region generates 7% of the world’s electricity, with 65% of this coming from renewable sources. In the last seven years, the potential to generate green energy has grown 270%. Clear examples of this “green revolution” can be seen with projects such as the $100 million solar energy project in Chile’s Atacama desert, the $124 million investment in San Juan, Argentina by the Schmid Group, in addition to the new renewable energy regulations and affable policies in Costa Rica, Mexico, Chile and Uruguay. On top of these groundbreaking projects, the Inter-American Development Bank (IDB) published a comprehensive report on renewable energies in Latin America that affirmed that these sources would be enough to supply more than twenty-two times the electric demand of the region in 2050.

Aside from the evident shifts toward renewable energies and policies in both Asia and Latin America, it is critical to acknowledge that these economies still tend to rely on revenues from oil, gas and coal. Nevertheless, while the United States Energy Information Administration (EIA) expects a growth of an estimated 1.9% annually, this may increase if military occupations (such as the cases of Libya and Iraq) continue to sweep petroleum-endowed countries, with the possibility of Syria and Venezuela as possible targets. Additionally, when we consider the case of Saudi Arabia’s foreign interference in Yemen’s internal matters in March 2015, we can hypothesize that entire regions are at risk of loosing political stability.

Furthermore, it is also of worth highlighting that, aside from the previously mentioned impact of natural resources on the energy market, the commitment to the environment and the awareness of the pollution produced throughout the developing world (an already sensitive issue in the main capitals of Latin America and Asia) can yield to a decrease of energy dependency on fossil fuels. While it is critical to implement a realistic, regional and legal framework under a strict protocol of sanctions surrounding the emerging natural energy industry, cases of non-compliance can bring us further from achieving what the ASEAN Plan of Action for Energy Cooperation set as guidelines from 2010 to 2015.

With globalization creating new possibilities for renewed energy markets, these markets are also constantly being restructured. Geographically, we can identify this by observing how photovoltaic power stations were built in California, and later Spain, which by 2008 became a staple product in the renewable energy industry. Today, China’s renewable energy market has overtaken that of Germany, while large-scale projects have already materialized in South East Asian locations such as Lopbori in Thailand or Palawan in the Philippines. This is to say that when we look at the relationship between geographic change and displacement, we also see a rapid evolution and reorganization of these renewable energy markets.

Regarding solar energy, Thailand continues as the leading beneficiary of foreign investments in Southeast Asia. The decrease of the price of solar panels (solar PV module costs declined by 83% between 2000 and 2013) have led Thai officials to better understand the negative impact that could result from making Thailand 70% dependent upon sources of imported natural gas. Moreover, Thailand’s commitment to rely upon 25% renewable energies by 2021 comes from a power-purchase agreement of twenty-five years and a feed in tariffs (FiT) system, similar to that of Malaysia, the Philippines and Indonesia. This agreement offers a fixed price for generating electricity and selling it to the grid for a specific duration of time. This, as well as Thailand’s potential to generate daily solar exposure at around 19-20 MJ/m2-day make it a hotspot for solar energy in both Southeast Asia and the World. And the plans go forward because by December 2015, Thailand will have more solar power capacity than all of Southeast Asia combined.

While climate change remains the biggest enemy of renewable energy projects in Latin America and Southeast Asia, the affinity of various MERCOSUR and ASEAN members to petroleum and coal poses an equal threat. As a result, it will be vital for MERCOSUR and ASEAN governments to identify the enormous potential in renewable energies and the contribution this sector can make to their local-regional economies, as well as the benefits for quality of life it will provide for their residents and forthcoming generations. The challenge remains on the table for the two largest emerging regions in the world.

Tax Incentive for New Start Up business in Thailand

14 Sep Tax Incentive for New Start Up business in Thailand

On 21st April 2016, Royal Decree (No. 602), by the Government’s resolution, was promulgated in order to support and promote the Small and Medium Enterprises (“SMEs”) which uses technology and innovation in the target activities for driving an economy, building a strength and increasing the competitive ability of Thailand.

Thus, a corporate income tax exemption on profit derived from target activities for the five accounting periods will be provided to the company or juristic partnership which established between 1st October 2015 and 31st December 2016 with the registered paid-up capital on the last day of the accounting period of not more than THB 5 million and its income for the sale of goods and service must not exceed THB 30 million, moreover, not less than 80% of its total income must derive from the sales of goods and/or service in “New Engine of Growth” business or from the connected business thereof.

To be eligible for this exemption, the operator must register to be “New Start Up” with Revenue Department within 31st December 2017.

What is New Engine of Growth business?

New Engine of Growth business is the industrial business which technological base will be used for producing and providing service and those business shall be certified by National Science and Technology Development Agency (“NSTDA”). The following are the industrial businesses which are entitled to obtain the tax incentives.

  1. Food and Agriculture
  2. Saving energy, Producing of alternative and clean energies
  3. Biotechnology Base
  4. Medical and Public Health
  5. Tourism, Service and Creative Economy
  6. Advanced Materials
  7. Textile, Garment and Decorations
  8. Automotive and Parts
  9. Electronic, Computer, Software and Information Service
  10. Research, Development and Innovation or New Industrial

Below is the example of “technologies” which are based for producing and providing service in the target activities.

No. Technology Type of business which can be applied
1 3D Printing Technology/ Rapid Prototyoing

– Medical and Public Health

– Tourism, Service and Creative Economy

– Advanced Materials

– Automotive and Parts

– Research, Development and Innovation or New Industrial

2 Adsorption Technology

– Saving energy, Producing of alternative and clean energies

– Automotive and Parts

3 Advanced Bioprocessing Technology

– Food and Agriculture

– Saving energy, Producing of alternative and clean energies

– Biotechnology Base

– Medical and Public Health

4 Advanced Catalyst Technology

– Saving energy, Producing of alternative and clean energies

– Advanced Materials

5 Advanced Materials Forming Process

– Advanced Materials

– Electronic, Computer, Software and Information Service

– Automotive and Parts

6 Artificial Intelligence Technology

– Tourism, Service and Creative Economy

– Electronic, Computer, Software and Information Service

7 Automation Technology

– Medical and Public Health

– Automotive and Parts

– Food and Agriculture

– Electronic, Computer, Software and Information Service

8 Big Data Analytics Technology

– Biotechnology Base

– Electronic, Computer, Software and Information Service

9 Bio-Analytical

– Medical and Public Health

– Biotechnology Base

10 Biodegradable Materials Technology

– Advanced Materials

– Medical and Public Health

11 Bioinformatics

– Food and Agriculture

– Biotechnology Base

12 Biomaterial Production Technology

– Medical and Public Health

– Biotechnology Base

13 Cell Culture and Tissue Engineering Technology

– Medical and Public Health

– Biotechnology Base

14 Cleaner Technology

– Saving energy, Producing of alternative and clean energies

15 Composite Materials Technology

– Advanced Materials

– Automotive and Parts

16 Decentralized Sequential Transaction Database

– Tourism, Service and Creative Economy

– Electronic, Computer, Software and Information Service

17 Digital Engineering and Manufacturing Technology – Advanced Materials

– Automotive and Parts

– Research, Development and Innovation or New Industrial

18 Drug Delivery System

– Medical and Public Health

– Food and Agriculture

19 Electric Vehicle Technology

– Automotive and Parts

– Saving energy, Producing of alternative and clean energies

20 Embedded Technology

– Electronic, Computer, Software and Information Service

21 Energy Storage

– Saving energy, Producing of alternative and clean energies

22 Functional Materials Technology

– Textile, Garment and Decorations

– Automotive and Parts

– Electronic, Computer, Software and Information Service

– Food and Agriculture

23 Gene and Molecular Technology

– Food and Agriculture

– Medical and Public Health

– Biotechnology Base

24 Genetic Engineering Technology

– Food and Agriculture

– Biotechnology Base

25 Human Computer Interaction Technology/ Brian Computer Interface

– Electronic, Computer, Software and Information Service

– Medical and Public Health

– Tourism, Service and Creative Economy

26 Internet of things Technology

– Food and Agriculture

– Saving energy, Producing of alternative and clean energies

27 Material Characterization Technology

– Medical and Public Health

– Food and Agriculture

– Research, Development and Innovation or New Industrial

28 Membrane Technology

– Saving energy, Producing of alternative and clean energies

– Medical and Public Health

– Food and Agriculture

29 Metrology, Standardization, Testing Quality Assurance (MSTQ) related Technology

– Research, Development and Innovation or New Industrial

30 Nano-Characterization and Testing

– Medical and Public Health

– Food and Agriculture

– Research, Development and Innovation or New Industrial

– Electronic, Computer, Software and Information Service

31 Nano-encapsulation

– Medical and Public Health

– Food and Agriculture

32 Nanofiber Technology

– Textile, Garment and Decorations

– Advanced Materials

33 Nanomaterials Syntheses – Saving energy, Producing of alternative and clean energies

– Medical and Public Health

– Food and Agriculture

34 Nanostructure Fabrication (Top down, Bottom up)

– Advanced Materials

– Electronic, Computer, Software and Information Service

– Saving energy, Producing of alternative and clean energies

– Research, Development and Innovation or New Industrial

35 Natural Language Processing Technology

– Electronic, Computer, Software and Information Service

36 Omics Technology

– Medical and Public Health

– Food and Agriculture

– Biotechnology Base

37 Photonics & Optical Technology

– Electronic, Computer, Software and Information Service

38 Pre-Clinical & Clinical Testing Technology

– Medical and Public Health

– Research, Development and Innovation or New Industrial

39 Photovoltic Technology

– Saving energy, Producing of alternative and clean energies

40 Printed Electronics and Organic Electronics

– Medical and Public Health

– Food and Agriculture

– Electronic, Computer, Software and Information Service

– Textile, Garment and Decorations

41 Robotics Technology

– Medical and Public Health

– Food and Agriculture

– Electronic, Computer, Software and Information Service

– Automotive and Parts

42 Sensor Technology

– Medical and Public Health

– Food and Agriculture

– Electronic, Computer, Software and Information Service

– Automotive and Parts

– Saving energy, Producing of alternative and clean energies

43 Smart Grid

– Electronic, Computer, Software and Information Service

– Automotive and Parts

– Saving energy, Producing of alternative and clean energies

44 Software Testing Technology

– Electronic, Computer, Software and Information Service

– Tourism, Service and Creative Economy

45 Surface Coating/ Surface Engineering Technology

– Food and Agriculture

– Electronic, Computer, Software and Information Service

– Automotive and Parts

– Textile, Garment and Decorations

46 Thermal Solar Technology

– Saving energy, Producing of alternative and clean energies

47 Virtual & Augmented Reality Technology

– Electronic, Computer, Software and Information Service

– Tourism, Service and Creative Economy

48 Waste Treatment Technology

– Saving energy, Producing of alternative and clean energies

49 Werable Technology

– Medical and Public Health

– Electronic, Computer, Software and Information Service

50 Wind Energy Technology

– Saving energy, Producing of alternative and clean energies

 

Please contact Juslaws & Consult at bangkok@juslaws.com for further information and details.

Offshore Companies

05 Aug Offshore Companies

1) Definition of an Offshore Company

To understand the definition of an offshore company, we should first understand what a “company” is and what is meant by “offshore”. We can then better focus on comprehending an offshore company in detail and how it relates to the financial industry.

We can define a company as any legal entity engaging in legal business activities, such as a proprietorship, partnership, or corporation (either public or private). Companies have various rights under the law. Offshore is a term that means outside of your own jurisdiction. Being across water is not necessary to provide individuals with the benefits of security that come with managing money in this manner. Generally, offshore companies are situated in countries with low or non-existent tax.

An offshore company is a legal entity established in a tax haven or offshore financial center being protected by specific legislation which guarantees a status of full tax exemption, except for a small yearly license fee, and generally a high level of privacy. It is an entity specifically designed to be used by non-residents only.

 

2) Legal restrictions to set up an Offshore Company

The legal restrictions that offshore companies are subjected to generally prevent them having a fixed establishment in the country in which they were incorporated. For this reason, they are mostly used for activities which are not tied to a specific geographic location. They are also often used as holding companies or as asset protection or investment vehicles for their owners, mainly because of their simplicity of administration, as in the vast majority of jurisdictions it is not required to file annual reports or accounts.

An offshore company may be a company which is incorporated outside the jurisdiction of its primary operations regardless of whether that is an offshore financial center or a non-resident company. It is also any company, resident or non-resident, incorporated in an offshore financial center. For any of these companies, Offshore Company law may apply. Most offshore companies are incorporated to take advantage of: tax planning purpose, confidentiality, cost, legal protection. Most of legitimate uses are: international trading, asset protection, captive insurance, yacht registration, and legal tax avoidance, protection of intellectual property, succession planning or confidentiality.

 

3) Benefits of an Offshore company

By utilizing an offshore company, it may be possible to secure a number of advantages. There are different criteria to determine how and where a jurisdiction is acceptable for the incorporation of a legal entity, which are summarized briefly in the following:

1.      Favorable Fiscal Regime: An offshore jurisdiction should not have a repressive tax collecting authority and its main contributor to the income of the country should not be the collection of income tax or companies’ profits taxes. The following taxes are not subject to imposition in most Tax Havens:

–      Income tax on foreign income source

–      Capital Gains tax

–      Capital Tax

–      Tax on interest banking income

2.      Strict Anonymity Policies: it is widely considered that at an acceptable offshore jurisdiction the disclosure of the financial or corporate secrets of the company that is incorporated, should result in the wrongdoer being punished or fined.

3.      Stable Government Policies: An offshore company should be in a stable place of business. It should be completely democratic and its rules on corporations must be stable. Also, there should be established protectionist policy relating to foreign investors.

4.      Modern Communication Structure: A country that intends to attract offshore business or operations should have an attractive internet, financial and governmental communication structure. This is to ensure that a person abroad should have full access to their operations.

5.      Easy to Incorporate: The corporations or foundations found in an offshore jurisdiction should conform in less than four business days.

 

II – MAIN OFFSHORE JURIDICTIONS

There exist many jurisdictions that are deemed suitable to carry out offshore business, nevertheless, based on our criterion, we will mention only the ones we consider the most important and the most widely used.

1. Panama: The Panama Corporation is governed by the Panama Corporation Statute Law 32 of the 1927 Commercial Code.

Panama enjoys favorable tax laws, operating a territorial tax system under which residents and non-residents are taxed based on income sourced in Panama. The taxable income includes all income derived from business activities in Panama, and there are less expenses incurred wholly and exclusively in the production of assessable income or the conservation of its source. Regarding the company structures, the liability of the shareholders of a Panama Corporation is limited up to the unpaid amount of the shares they hold. The minimum number of shareholders of a Panama Corporation is 2 and the maximum is unlimited. There is no restriction on the residence of the shareholders of a Panama Corporation. Panama Corporation’ shareholders can be individuals and/or legal persons.

 

2. Seychelles: The International Business Companies Act, 1994, governs the operations of offshore companies.

Seychelles International Business Company (IBC) is the most popular and versatile type of offshore corporation available in Seychelles. Similar to other classic offshore companies, Seychelles IBC is designed to engage in international business. Being an IBC, it is subject to minimum red-tape. While being obliged to keep internal records and registries in good order, a Seychelles IBC does not nave to submit any financial reports to public file. There is also no mandatory audit requirement. A Seychelles IBC, by the definition of the law, is not subject to any tax or duty on income or profits. A shareholder of a Seychelles IBC is also not subject to any tax on his income derived from the IBC. In order to qualify as an IBC, a Seychelles company must satisfy the following criteria:

  1. It may not carry on business in Seychelles.
  2. It may not own real estate in Seychelles.
  3. It may not conduct banking, insurance and registered agent business without a special license.

 

3. Cayman Islands: Cayman Islands Exempted Companies are governed by the Cayman Islands Companies Law

The Caymans offer a number of tax-free incentives and little financial regulation and oversight. The Cayman Islands do not levy corporation tax, capital gains tax or any other direct tax on companies. The most common type of Cayman Company used for offshore activities is the Exempted Company. The service(s) it provides is to be carried on outside of the Islands. It cannot trade in the Islands with any firm, corporation or person unless furthering its business offshore.

 

4. British Virgin Island: British Virgin Islands Business Company (BVI BC) is governed by the BVI Business Companies Act 1984 (as amended).

A British Virgin Islands Business Company is exempt from the BVI income tax, the same exemption applies to all dividends, interest, rents, royalties, compensations and other amounts paid by a company, and all capital gains realized with respect to any shares, debt obligations or other securities of the company. No estate, inheritance, succession or gift tax is payable with respect to any shares, debt obligations or other securities of a BVI BC. All transactions and instruments relating to transfers of any type of property of assets, shares, debt obligations or securities to or by a BVI BC are exempt from the stamp duty, with a sole exception for land-ownership transactions in the British Virgin Islands, in which case stamp duty remains payable.

 

5. Hong Kong: The Hong Kong Private and public Limited Liability Company is governed by the Hong Kong New Companies Ordinance which came into effect on 3 March 2014.

Setting up an offshore company in Hong Kong is an excellent way to house a company’s global corporate profits while minimizing taxes. If there is no trade conducted within Hong Kong, companies will be legally tax exempt if their activities are outside of Hong Kong. Generally, only Hong Kong Source income is subject to Hong Kong profits tax. Incorporation requires only 1 director and 1 shareholder and both can be of any nationality.

 

6. Singapore: The Singapore Private, Private exempted and Public Limited Liability Company are governed by the Singapore Companies Act.

Holding companies in Singapore are typically registered as private limited companies. Individuals and business entities seeking to establish a holding company as a private limited company must meet the following basic requirements:

–  At least one shareholder and one director that is a Singaporean resident.

–  A company secretary who is a Singaporean Resident

–  The minimum paid-up capital (share capital) for the registration of a Singaporean company is S$1.

–  A physical local address must be provided as the registered address of the company. The address may not be a Post Office Box, and must be approved by the Urban Redevelopment Authority. Residential properties can only be used under the Home Office Scheme.

A company is considered to be tax resident in Singapore if its management and control is exercised in Singapore. Singapore tax resident companies are taxed on all income generated or remitted in Singapore whereas non-Singapore tax resident companies are taxed only on income generated or accrued in Singapore.

 

7. Bahamas: The Bahamas International Business Company (BIBC) is governed by the International Business Act 2000 and the International Business Companies (Amendment) Act 2004.

The Bahamas are one of the most popular of the Caribbean tax havens. Bahamas International Business Company is the most popular versatile type of offshore corporation available in Bahamas. BIBC can conduct business with Bahamians and may also own Bahamian real estate, but local exchange controls and stamp duty will apply in these cases. The Bahamas does not levy corporation tax. Indeed, A Bahamas International Business Company is exempt from the Bahamas income tax, the same exemption applies to all dividends, interest, rents, royalties, compensations and other amounts paid by a company, and all capital gains realized with respect to any shares, debt obligations or other securities of the company.

 

8. Isle of Man: The Isle of Man Limited Company is governed by the Companies Act 2006.

Offshore companies in the Isle of Man could be holding investment, e.g. portfolios, commercial property and other companies ‘shares; a Holding intellectual property since the Isle of Man is a signatory to the Paris Convention on Patents and Trademarks. Isle of Man tax resident companies are taxed on their worldwide income whereas non-Isle of Man tax resident companies are taxed only on income generated in the Isle of Man. Tax Advantages of the Isle of Man are as follows:

  • 0% corporate income tax dependent on certain circumstances
  • Dividends made to non-residents are taxed at 0%
  • No capital gains tax
  • No stamp duty
  • No inheritance tax
  • Double tax relief is available for foreign tax paid

 

9. Bermuda: The Bermuda Exempted Company is governed by the Companies Act 1981, as amended 2006.

The Bermuda Exempted Company (BEC) is the most popular type of offshore corporation available in Bermuda. A Bermuda Exempted Company is prohibited from:

  • Trading within Bermuda.
  • Owning real estate in Bermuda.
  • Undertaking the business of banking, insurance, assurance, reinsurance, fund management, collective investment schemes, rendering investment advice or any other activity.

Bermuda does not levy any taxes on profits, income or dividends, nor is there any capital gains tax, estate duty or wealth tax. In addition, under the Exempt Undertakings Act of 1976, an Exempted Company in Bermuda can obtain protection from any newly enacted taxes on income or capital gains until 2035.

 

10. Switzerland: Corporation (AG), limited liability company (GmbH) and branch of foreign company are governed by the Swiss Code of Obligations.

Officially Switzerland is not an offshore jurisdiction, but due to its taxation system it obtains the features of the offshore zone and becomes very attractive for the offshore companies’ formation. Switzerland has agreements with more than 100 other states for the double taxation avoidance. Tax system in Switzerland is different for every canton, so it is possible to register a company at the canton which offers the lowest taxation. At the moment Schwyz and Zug are the most attractive cantons for the offshore company formation.

Switzerland tax resident companies are taxed on their worldwide income (except profits from foreign branches and foreign immovable property) whereas non-Switzerland tax resident companies are taxed only on income generated in Switzerland.

Property Purchase Pitfalls

Purchasing Property In Thailand
It is recommended that you discuss your options and the process of purchasing in Thailand as a foreigner as it is essential to know the legalities involved in such an acquisition of property by foreigners before making any decisions on your purchase whether this is a condominium, land, house or a villa anywhere in Thailand.  Foreigners may own condominiums freehold and outright 100% therefore making this option the least complicated and the best option for a foreigner wishing to purchase property in Thailand.  Thailand condominiums always have a foreign quota of 49% which means that only 49% of the total space of a condominium can be owned by foreigners on a freehold title. The other 51% refer to Thai Nationals. Before purchasing a condominium in Thailand, it is advised to ensure that the foreign quota has not exceeded.

Title Deed Search
A title deed to outline the property in which is purchased is usually not provided up front. For this reason, it is suggested that before making any such deposits or purchases, a title deed copy is obtained from the seller in which the original is contained at the relevant land department and a title deed search should be performed so as to avoid any negligent misrepresentations in the future with regards to the property that you wish to purchase.  This will determine the true legal owner of the land and determine as well whether there are any registered encumbrances on the actual property such as a mortgage or a lease.   This investigation will also investigate whether there you are permitted to build upon the land by determining what kind of title deed the property possesses. It can also be determined with a detailed due diligence the environmental zoning areas, residential and planning codes.

Reserving Your Property
Once a title search has been performed and you are happy to proceed with your purchase, it is usually requested by the developer or the seller that you make a first initial deposit or a reservation fee in order to reserve the property to provide for consideration.   The seller will then reserve the property for you until the actual due date for the sales contract for the remaining payment. Note that the remaining payment should not be made until the actual transfer at the land department. Please bear in mind that if you decide to not go through with the contract, that in usual cases the reservation deposit will be forfeited. It must also be noted however, that sometimes a reservation fee is requested prior to such obtainment of title deed.

Sales and Purchase Agreement
When you have provided the reservation deposits, the contracts should be provided to you by the developer or the Seller. Usually if this is a developer, they will have a copy in English and in Thai. Regardless, once you have received a copy of the contract, it is recommended that before signing such a contract, that you review this with a Lawyer or Solicitor. A review of the Sales and purchase agreement will involve identifying your rights as a buyer in order to protect your interest in the event that the Seller defaults in the completion of a property development, or in the event that there was a breach of contract. This will also determine the various taxes payable and the whether the payment method is appropriate.

Pitfalls in Purchasing Property in Thailand: Unfinished Projects-
this occurs in the event that there are condominiums, villas, houses, townhouses and any kind of residual or even business real estate are meant to be completed within a stipulated time as specified in a contract. If this occurs buyers will have recourse by Civil law as breach of contract and be able to demand that the project be finished within due course and/or the monies paid by the individual buyers be returned with full interest within a specified time period. To avoid this kind of situation, it is important to check the development company background of the project in order to determine whether the company has a good reputation and their prior projects timeline and execution.

Ownership Disputes-
this arises as a result of property disputes of ownership as there may be forgery of documentation when purchasing property or in a nominal structure. Although this is not a common occurrence, there are times when title deeds have been forged or signatures have been forged in order to sell a property and retrieve money that is not rightfully theirs to begin with. The buyers are then at a loss with not only a loss of money but nothing to gain from anything being paid. With this, sufficient evidence would be transfer slips, prior written and/or signed agreements, and identification and/or names of the fraudulent party or parties. It is always important to remember that no matter in what situation to always have track record of payments being made although the development or company may seem legitimate and well known.

Encroachment-
this occurs when an owner of one property has built over their boundaries and have encroached onto another’s land. This is also a common occurrence however mostly out in rural areas in Thailand as most of the area is agricultural land. There are times when houses are built upon these agricultural lands without the knowing of the exact boundaries, hence having to encroach upon another’s land or property. This also includes disputes that arise in the event of a high rise building blocking the view of another high rise building. This usually occurs in areas of beachfront property. There is no such avoiding of such acts, however, there is always recourse to such acts upon your property

Easements-
easements are described as a right of way such as a passage or a pavement in which may be the property of another however, is needed to be utilized in order to get to another property as a right of way. In this event, there are some occasions where some parties act upon an action of trespass, whereas it may not be as it is essential to pass through their property to get to another. There is not such avoiding of an easement upon your land or upon another’s, however, there is always a recourse in which a Court of law will have to interfere in this instance in order to grant a right of easement. Whether purchasing a condominium, villa or a house, it is suggested that prior to making such a purchase, once you have found something of interest, to contact a lawyer or solicitor before proceeding. At Jus Laws & Consult we offer specialized services with our knowledgeable lawyers on local and International law to assist with foreign acquisition of property. Contact us today at our office either in Bangkok or in Phuket for free basic consultation!

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