Thai Revenue Department (the "RD") just issued a new regulation on stamp duty, negating the prevailing deferral of payment for stamp duty on real property lease agreement and service contract.
Principally, stamp duty is imposed on various contracts and instruments, e.g. promissory notes, bills of exchange, powers of attorney, letters of credit, checks, loan contracts, lease contract, hire-of-work contracts. The rates of stamp duty vary upon the type of the instruments or transactions subject to duty.
So far, the 0.1% stamp duty imposed on a contract for lease of land, building, structure or raft of which registration is not required, and a contract for hire-of-work between non-governmental parties may be paid either in cash, by affixing adhesive stamps, or by using a paper with a stamp impressed by a competent official. The stamp duty on any instrument executed in Thailand is due within 15 days after the execution date, whereas the stamp duty on any instrument executed outside Thailand due within 30 days after arrival of the instrument in Thailand.
Despite the said timeframe for settlement of stamp duty, from our experience, only a few people settled the stamp duty within the specified period. Stamp duty on the most of contracts was usually settled by purchasing and affixing adhesive stamps only pending tax audit by the RD or upon presenting the contract to the court in the course of a lawsuit. Many contracts were attached to numerous A4 paper sheets on which duty stamps, each at THB 20, were affixed.
The RD just issued the Director-General Notification on Stamp Duty (No. 54) on 29/12/2014 requiring payment of stamp duty imposed on any of the following instruments to be made only in cash in lieu of stamp affixing:
(1) Any contract for lease of land, building, structure or raft under which rentals amount to THB 1 million or more
(2) Any hire-of-work agreement under which fees amount to THB 1 million or more
In the RD’s perspective, the contracts covered by this Notification appear to include any service agreement, though arguably whether it is deemed a hire-of-work contract or not, countersigned advertising media schedule, quotation or proposal of any type as well as any other type and form of documents representing offer and acceptance of the offer.
As a consequence, after the effectiveness of the notification—the date following the sixty-day period from the date of its publication on the Thai Government Gazette—upon execution in Thailand of any of the said contracts or instruments of which value reaches the required threshold, the holder of the original copy of the instrument will be required to pay in cash for the stamp duty at the competent Revenue Office, within 15 days of the date the contract or instrument is deemed executed, e.g. the date of countersigning by the counter party, the date of acceptance of quotation or proposal, etc. As for contracts or instruments executed abroad, the stamp duty would be payable in the same manner within 30 days after arrival of the contracts or instruments in Thailand.
We would highlight that the RD grants a 15-day grace period for payment of stamp duty, during when no surcharge will be imposed if the stamp duty has been paid. Therefore, any said stamp duty should be paid within 30 days of the date of the deemed execution in Thailand of the contract or instrument subject to the duty, or within 45 days of the date of arrival in Thailand of the contracts or instruments executed abroad.
Failure to pay stamp duty within the 30-day period will be subject to a surcharge as follows:
(a) If voluntarily paid within 90 days from the due date of the stamp duty, i.e. the 15th day following the execution of instrument or 30th day following the arrival of the instrument in Thailand, a surcharge twice the amount of the payable duty
(b) If voluntarily paid after the said 90-day period, a surcharge 5 times the amount of the payable duty
(c) If never paid and found by a revenue official, a surcharge 6 times the amount of the payable duty
By Phongsak Sirirakwongsa, Pakorn Tewkhunthong