Stamp Duty in Thailand: what it is, who it applies to, and how to pay it

What is the stamp duty in Thailand?

Stamp duty is a tax imposed on certain legal documents executed in Thailand or brought into the country. The tax serves as a proof of legal validity for these documents and is crucial for ensuring that they can be used as admissible evidence in legal proceedings. Stamp duty rates vary based on the nature of the instrument and the value of the transaction, with rates detailed in the Stamp Duty Schedule appended to the Revenue Code.

Who is liable for stamp duty in Thailand?

The person liable to pay stamp duty is typically the one executing the instrument or, in certain cases, the holder or beneficiary of the instrument. For documents executed abroad but brought into Thailand, the first holder of the instrument within the country is responsible for affixing the appropriate stamps. Failure to do so within 30 days can result in penalties.

For example, in a transfer of shares, the individual transferring the shares is generally responsible for paying the stamp duty. In other transactions, such as property leases, the lessor may be liable. The applicable rates and parties liable for payment are clearly outlined in the Revenue Code’s Stamp Duty Schedule.

Instruments subject to stamp duty

A broad range of legal instruments are subject to stamp duty Thailand, including but not limited to:

• Contracts and agreements, such as employment contracts and lease agreements;
• Deeds related to property and mortgages;
• Shares and securities transactions;
• Powers of attorney;
• Promissory notes;
• Insurance policies.

The complete list of documents subject to stamp duty in Thailand can be found in the schedule appended to Chapter VI of Title II of the Revenue Code. This Stamp Duty Schedule outlines the various types of legal documents and instruments that are subject to stamp duty, along with the applicable rates for each.

To access the full list, you can consult the Revenue Code through the Thai Revenue Department’s website or contact a law firm in Thailand that can provide detailed information on the specific documents and associated stamp duty rates.

What are the applicable rates?

The Stamp Duty Schedule attached to Chapter VI of Title II of the Revenue Code provides detailed rates for different instruments. These rates vary depending on the type of document and the nature of the transaction. For example:

• Leases of land or buildings: For every 1,000 Baht or fraction thereof of the total rental amount, the stamp duty is 1 Baht.
• Transfers of shares or debentures: Stamp duty is calculated at 1 Baht for every 1,000 Baht of the paid-up value of shares or the nominal value of the debenture.
• Loan agreements: For loan or overdraft agreements, the duty is 1 Baht for every 2,000 Baht of the loan amount.
• Hire-purchase agreements: These agreements are subject to 1 Baht for every 1,000 Baht of the total purchase value.

Other documents, like powers of attorney, attract a flat stamp duty of 20 Baht, regardless of the transaction value. The schedule ensures that each instrument is taxed proportionally to its financial importance, making compliance essential for legal validity.

How to pay stamp duty in Thailand

• The methods

As of 2019, four methods of paying stamp duty in Thailand are available:

1. Adhesive Stamps: These can be affixed to the document, and the person liable must cancel the stamp to prevent reuse.
2. Impressed Stamps: The document can be stamped at a Revenue Office where the stamp is imprinted directly onto the paper.
3. Payment at Revenue Offices: Payment can be made in cash or by cashier’s cheque at an Area Revenue Office.
4. E-Stamp Duty: Introduced in 2019, this method allows for online payments for certain instruments executed electronically. For example, e-instruments like powers of attorney, loan agreements, and voting proxies must be processed via the e-Stamp Duty system. Payment can be made by submitting Form Or.Sor.9 through the Revenue Department’s online portal.

To pay e-Stamp Duty, taxpayers must file Form Or.Sor.9 via the Revenue Department’s online platform. Payment must be made before or within 15 days of executing the instrument. Once the payment is processed, a QR code and unique receipt will be generated, serving as proof of payment.

Taxpayers can download and print the receipt for future reference or attach it to the relevant instrument. It is important to note that late payments cannot currently be processed through the e-Stamp Duty system; in such cases, the taxpayer must visit an Area Revenue Office.

It is crucial to note that for specific instruments, such as loan agreements exceeding 1,000,000 THB, only certain payment methods (like cash or cashier’s cheque at a Revenue Office) are allowed. Using the wrong method may result in the duty being considered unpaid.

• How much does stamp duty cost?

The cost of stamp duty Thailand depends on the document type and the transaction value. Here is a breakdown of some common rates:

• 1 Baht per 1,000 Baht of the value for leases and share transfers.
• 0.1% of the value for loan agreements.
• 3 Baht per instrument for promissory notes.

For many transactions, the duty is relatively low. However, failure to pay the correct amount of stamp duty can lead to significant penalties, discussed in the next section.

Legal provisions and penalties for non-compliance in paying stamp duty in Thailand

Failure to pay stamp duty on time or in full can lead to severe consequences under the Revenue Code.

If a document is not duly stamped, the liable party may be required to pay a surcharge of up to six times the original duty. Additionally, unstamped instruments may not be admissible as evidence in court, severely limiting their enforceability in legal disputes.

Penalties vary depending on how late the stamp duty payment is. If paid within 90 days of the due date, a twofold surcharge applies. After 90 days, the surcharge increases to five times the original duty. In cases where stamp duty is entirely unpaid, a sixfold surcharge can be imposed.

For documents executed outside of Thailand but brought into the country, the first holder is responsible for affixing the stamps. If this is not done within 30 days, the document is deemed non-compliant, leading to similar penalties.

Conclusion

The stamp duty Thailand system is a critical component of the country’s tax structure, affecting a wide range of legal documents and transactions. Governed by the Revenue Code and enforced by the Revenue Department, paying the correct stamp duty is essential for the legal validity of documents. With various payment methods available, including the recent introduction of e-Stamp Duty, compliance has become easier, but it remains crucial to understand the specific requirements for each document type.

Non-compliance can lead to hefty penalties, including fines up to six times the original stamp duty, and can render documents inadmissible in court. To avoid such consequences, individuals and businesses must ensure they follow the appropriate procedures for paying stamp duty and adhere to the specific payment methods outlined in the Revenue Code.Thus, understanding the nuances of stamp duty Thailand is vital for anyone dealing with legal instruments in the country, ensuring both compliance and legal enforceability.