Foreign property holding tricks probed in Phuket, Thailand
By Jon Fernquest
There
are a lot of tricks that foreigners and Thai lawyers have used for
decades to get around Thailand's land laws. They range from the rather innocent practice of a foreign husband taking out a 30 year lease on a piece of land that is owned by his Thai wife.
If their marriage goes sour and they decide to separate this arrangement forces an amicable settlement in which the husband gets part of the value of the house back.
On the other extreme are gigantic companies doing business in Thailand like Carrefour and Tesco-Lotus that use complicated holding company structures to get around the law (Read article).
Only a few months ago the land office of the Thai government announced that the common practice of foreign residents in Thailand (often retired) of buying land in the name of their wife was "nominee ownership" that breaks the law (Read article)
There was also rumours and a scare for a time about foreign companies making inroads into Thai agriculture and buying up Thai land from farmers (Read article).
Today there is announcement of an systematic detailed investigation into foreign landholding practices in Phuket.
Laws long unenforced may soon be enforced.....or maybe not. Only time will tell.
property holding -
owning
property
probed - investigated (check to discover what is happening)
innocent practice - not really guilty of breaking a law, not criminal
taking out a 30 year lease - renting land for 30 years
marriage goes sour - husband and wife do not love each other anymore and want to separate
amicable settlement - friendly agreement about who gets what
complicated - having so many parts conected in so many ways that it is difficult to understand and deal with
holding company - companies that own other companies (don't have businesses of their own)
nominee ownership - owning something indirectly through someone else, property is in their name
a nominee - a person who pretends to own something but who actually owns it for someone else
rumours - a story that passes from person to person so that a lot of people are talking about it (may or may not be true)
a scare - when large numbers of people suddenly are frigethened of something
X making inroads into Y - X has started affecting Y (having a negative effect, maybe destroying)
probed - investigated (check to discover what is happening)
innocent practice - not really guilty of breaking a law, not criminal
taking out a 30 year lease - renting land for 30 years
marriage goes sour - husband and wife do not love each other anymore and want to separate
amicable settlement - friendly agreement about who gets what
complicated - having so many parts conected in so many ways that it is difficult to understand and deal with
holding company - companies that own other companies (don't have businesses of their own)
nominee ownership - owning something indirectly through someone else, property is in their name
a nominee - a person who pretends to own something but who actually owns it for someone else
rumours - a story that passes from person to person so that a lot of people are talking about it (may or may not be true)
a scare - when large numbers of people suddenly are frigethened of something
X making inroads into Y - X has started affecting Y (having a negative effect, maybe destroying)
(Photo on right is of Patong beach in Phuket)
FOREIGN PROPERTY OWNERSHIP
Scrutiny of nominees about to get serious
26/10/2009Kanana Katharangsiporn
In-depth scrutiny of the shareholding structures of companies suspected of holding land plots and having exceeded the foreign shareholding limit will start next year, according to the Department of Business Development (DBD).
The focus would be on companies suspected of being nominees, said Samruay Daengduang, director of the department's Business Enforcement Bureau.
get serious - start
really doing something (when you only played around in the past)
scrutiny - examine carefully to find problems
in-depth scrutiny - carefully studying the details of something to find problems
shareholding - owning the stock shares of a company
shareholding structures of companies - the structure of who owns companies (for example: other companies, foreigners, individuals)
land plots - pieces of land
foreign shareholding limit - the highest percentage of a company that foreigners are allowed to own
Department of Business Development (DBD) - government agency in charge of registering businesses (See website and history)
suspected of being nominees - authorities believe they might be nominees
scrutiny - examine carefully to find problems
in-depth scrutiny - carefully studying the details of something to find problems
shareholding - owning the stock shares of a company
shareholding structures of companies - the structure of who owns companies (for example: other companies, foreigners, individuals)
land plots - pieces of land
foreign shareholding limit - the highest percentage of a company that foreigners are allowed to own
Department of Business Development (DBD) - government agency in charge of registering businesses (See website and history)
suspected of being nominees - authorities believe they might be nominees
"We should have a clear regulation on nominee checking. It should clarify for which purpose foreigners are holding the plot, such as for a residence or for business," he said.
The bureau would work with the Lands Department, the Department of Special Investigation (DSI), provincial governors and Commerce Ministry offices in 20 major provinces and tourist destinations.
clear regulation -
regulations easy to understand meaning (not complex with many possible
meanings)
nominee checking - checking if a nominee owns land for someone else
tourist destinations - places that tourists travel to and stay at during their vacations
nominee checking - checking if a nominee owns land for someone else
tourist destinations - places that tourists travel to and stay at during their vacations
Checks began on suspected nominee firms in 2008 but only at random in the first year to get an overview. This year the department has selected clearlysuspected targets and would start in-depth scrutiny next year, he said.
"We will ask the Lands Department for help in taking a look at the size of land plots that suspected firms hold. Then we will check their shareholding structure," said Mr Samruay.
According to the Phuket Lands Office, around 250 plots were in the scope of the Lands Department and the DBD for checking. Then both departments would select which are in the risky group.
clarify - make more
clear, make less complex, make easier to understand with only one
possible meaning
bureau - a government department that collects and distributes information
random sample - selecting a small group to measure the whole group (everyone has equal chance of being selected, no pattern in selection selection) (See Wikipedia)
at random - chosen in a random sample
overview - description of main features of something
clearly suspected targets - people they believe have clearly broken the law
plots - pieces of land
bureau - a government department that collects and distributes information
random sample - selecting a small group to measure the whole group (everyone has equal chance of being selected, no pattern in selection selection) (See Wikipedia)
at random - chosen in a random sample
overview - description of main features of something
clearly suspected targets - people they believe have clearly broken the law
plots - pieces of land
"If we do not have enough authority to act, we will co-ordinate with the DSI to help us," Mr Samruay said. "Since the DSI began checking into nominees in the past year, the number of cases of wrongdoing has been reduced."
Thanan Tanpaiboon, president of the Phuket Real Estate Association, said the government should have a policy and procedure to close legal loopholes as it was earning fewer benefits than it should.
authority to act -
have the power to act (make and enforce decision)
co-ordinate with - work together with to achieve goals
bypass a restriction - avoid the restriction, find a legal wat to go around the restriction
loopholes - find a legal way to avoid or go around a law
close legal loopholes - put an end to loopholes (so there is no longer a way to go around a law)
co-ordinate with - work together with to achieve goals
bypass a restriction - avoid the restriction, find a legal wat to go around the restriction
loopholes - find a legal way to avoid or go around a law
close legal loopholes - put an end to loopholes (so there is no longer a way to go around a law)
"Foreigners illegally holding land plots in Phuket have been a problem for over a decade," he said. Phuket is a major tourist destinations attracting 4-5 million arrivals each year, some of whom turn into property buyers.
Mr Thanan identified four property holding methods used by foreigners:
-
The foreigner has a Thai spouse
acting as a
nominee to hold a property. As the property will be personal property of
the spouse,
the foreigner who is the real owner rents the property for 30 years
from the Thai nominee. Most properties in this category are houses on
land plots smaller than one rai with prices of between one million and
10 million baht.
- The foreigner sets up a Thai firm in which he holds 49% or less and the Thai partner 51% or more. The Lands Department will check the Thai partner to verify sources of funds. The Thai partner will sign a document to transfer all shares to the foreigner without an actual transfer taking place. The foreigner then has authority as a director to make any transaction. Most properties in this category are land plots priced above 10 million baht and intended for development.
- The foreigner sets up a 100% Thai firm which will not be checked by the Lands Department. As soon as this company obtains the land transfer, there will be a transfer of some shares to the foreigner. Most property in this category involves large land plots for investment or development of residential, hotel or resort projects worth hundreds of millions of baht.
- The foreigner sets up a foreign firm in which he holds more than 49%, which is regarded as illegal, and will mortgage property with other foreign companies.
- The foreigner sets up a Thai firm in which he holds 49% or less and the Thai partner 51% or more. The Lands Department will check the Thai partner to verify sources of funds. The Thai partner will sign a document to transfer all shares to the foreigner without an actual transfer taking place. The foreigner then has authority as a director to make any transaction. Most properties in this category are land plots priced above 10 million baht and intended for development.
- The foreigner sets up a 100% Thai firm which will not be checked by the Lands Department. As soon as this company obtains the land transfer, there will be a transfer of some shares to the foreigner. Most property in this category involves large land plots for investment or development of residential, hotel or resort projects worth hundreds of millions of baht.
- The foreigner sets up a foreign firm in which he holds more than 49%, which is regarded as illegal, and will mortgage property with other foreign companies.
property holding methods - ways that property is owned
spouse - wife
verify - check and prove that something is true and correct
verify sources of funds - check where money in Thailand came from (for example: from outside of the country)
X acting as Y - X doing the work and carrying out responsibilities of Y
personal property - property owned by a person (not a company or organisation)
transfer - change ownership to another person
without an actual transfer taking place - ownership does not actually change (only looks like it changed, deceiving appearance)
X intended for Y - plans to use X for doing Y
transaction - the process of buying and selling something
authority to make transaction - authority for the company to buy and sell
has authority as a director to make any transaction -
land transfer - changing ownership of land
residential - for houses
mortgage property - borrowing money from a bank to purchase property
(Source: Bangkok Post, FOREIGN PROPERTY OWNERSHIP, Scrutiny of nominees about to get serious, 26/10/2009, Kanana Katharangsiporn, link)
