Thai Land Act and owning properties via a majority Thai-owned company

The Thai Land Act restricts the rights of foreigners to own land in Thailand. Chapter 8 of the Land Act states that owning land in Thailand by a foreigner is only permitted under certain limitations, for example a promotion by the Thai Board of Investment. Thus, most foreigners are not permitted to own land. They may, however, sign a long-term lease or have other rights regarding a piece of land. 
In 2022, there were discussions on permitting holders of certain types of Long Term Residency Visa to own land. However, these proposals were all abandoned after political pushback. 
Given these requirements, foreigners sometimes use a company with a Thai shareholder to own land in Thailand. In this case, the Thai shareholder holds most of the shares in the company, thereby making it formally a Thai company and thus not subject to the special regulations on foreigners owning land in Thailand.

Legal or illegal?  

While it is not illegal for a jointly owned company to own land in Thailand, if the sole purpose of the Thai shareholder is to enable a foreigner to de-facto own land, such structures could be considered a circumvention of the Land Act and therefore illegal. The Thai Land Act in its penalty provisions clearly states that using such a nominee shareholder is illegal for the foreigner, for the nominee and for the company itself. 

Risks and consequences   

Now, in June of 2023, the Department of Special Investigation raided a company in Phuket for the suspicion of enabling foreigners to own land via a company. The reports indicate that significant numbers of foreigners were engaged in owning, transferring and renting land in Phuket, and that further investigations have been launched. Furthermore, the officers in charge reported that they will continue to work with the local authorities to prevent violations of the Thai laws. 
It remains to be seen how the case will develop in the future. However, these cases illustrate the risks of a cavalier approach to owning land in Thailand as a foreigner. Especially high net-worth individuals considering acquiring luxury properties in Thailand should not simply go ahead with acquiring properties in Thailand by using a Thai company as the risks are significant. 

 From The Newsletter


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