There is little doubt over the past year the Banyan Tree vis a vie their controlling interest in Thai listed Laguna Resorts and Hotels are looking abroad for greener pastures.
An orderly divestment of key assets namely the Laguna Beach Resort and Dusit Thani Laguna Phuket have been made, and publically the group has said they want to lower their financial exposure in a market ridden with political risk.
Key Banyan Tree executie K.P. Ho has been quoted by Dow Jones Newswires that the group is looking to build upscale houses in China's secondary destinations.
With seven resorts open and more than 20 in the pipeline the group is now keen to shift into property offering as well, with Ho naming Chengdu as a likely example.
Here in Phuket it is no secret that the developer has hit challenging times with a large surplus of completed units that remain unsold throughout the integrate resort.
So for now a shift to China and the soon to launch Laguna Hue in Vietnam increasingly will diversify and expand the groups ambitions
Thailand's Office of Natural Resources and Environmental Policy and Planning are in the process of revising the nation's environmental impact analysis approval process.
Reports in the media have citied the key drivers to be the spate of policy issues on high profile industrial estates such as Map Ta Phuket and local community groups effected by development projects.
Greater public participation in the process is expected. Public hearing for large-scale projects are expected to be an upshot of the new initiative.
News that the Thai cabinet has approved a tax deduction up to THB500,000 for first-time homeowners is expected to ramp up domestic demand.
Under the government sponsored program new properties up to THB5 million will be eligible with a sliding income tax deduction capped at 20% of the property over five years.
Additionally a tax deduction on home mortgage payments will apply up to ten percent.
The program is expected to roll out shortly and have an initial term of one year.
Thai listed developers have been scooping up inland Phuket land parcels this year.
Expect the domestic property sector to be the short to medium term property play in coming year.
Absolute World have commenced construction to the oceanfront development The Beach in Koh Samui.
Set to operate as a private residence club (PRC) the project is located in Thong Krut.
Design is by the international firm yoo.
With a combination of suites and penthouse units the concept of shared ownership is expect to gain market momentum faster than straight unit sales.
Visiting the island recently I spoke to the sales director at Beach Republic which is one of Samui's most successful property offerings. He said that fractional ownership had continued to retain momentum at a time when full ownership transactions at other developments continued to be challenged.
Private residence clubs are not a new product in the global context but in Asia it's still in its infancy. Hotel groups such as Banyan Tree have successfully launched destination clubs which are similar to PRC's with a good amount of success.
Over the past year we have been receiving a steady stream of inquiries from readers, agents and property owners about just what is the legal rental tax liability for owners who use an offshore holding company.
We spoke to the firm Phuket office of Duensing and Kippen who are tax and legal advisors who have given the following explanation –
"The use of off-shore entities, such as a company incorporated in the British Virgin Islands ("BVI") to own real estate is not uncommon in Thailand. One reason often cited by investors using such entities organized under foreign law for such purpose is that they believe it will result in significant tax savings. Whereas this may be true with regard to any tax applicable to the "sale" of the real estate by way of sale of the off-shore entity itself, it may not be true with regard to other potential tax liabilities. This article will analyze the tax consequences of an off-shore entity renting out real estate it owns in Thailand.
In general, juristic persons "carrying on business in Thailand" are subject to corporate income tax ("CIT") at the basic rate of 30%. CIT is applicable whether these entitles are incorporated under Thai law or some other foreign law. Entities organized under Thai law are subject to CIT on their worldwide income. However, entities organized under a foreign law are only subject to CIT if such income results from "carrying on business in Thailand".
If an entity incorporated under foreign law that is not "carrying on business in Thailand", but receives payment of assessable income from or within Thailand, such payment is subject to a withholding tax ("WHT") at a rate 10% or 15% depending on the type of payment, for example as follows:
INCOME DERIVED FROM: WHT RATE:
Service 15%
Interest 15%
Royalties 15%
Dividends 10%
Rent 15%
Liberal professions 15%
Where the recipient of assessable income is an off-shore party, the Revenue Code of Thailand ("RC") places the liability for filing the applicable WHT return and submitting the tax payment itself on the payer of the assessable income; in our rental income example, the lessee of the real estate owned by the off-shore entity.
Thus, tax liability for such rental income depends on whether or not the off-shore entity is deemed to be "carrying on business in Thailand". The RC does not define "carrying on business in Thailand". Section 66, paragraph 2 of the RC states that juristic companies or partnerships organized under foreign laws and carrying on business in Thailand are subject to the same tax as those organized under Thai law, but only with respect to income arising from or in consequence of the business carried on in Thailand. In addition, Section 76bis of the RC states:
"For a company or juristic partnership incorporated under foreign laws which has an employee, an agent or a go-between for carrying on business in Thailand and as a result receives income or profits in Thailand, such company or juristic partnership shall be deemed to be carrying on business in Thailand and the person who acts as an employee, an agent or a go-between for the business, whether he is an individual or a juristic person, shall be deemed to be representative of the company or juristic partnership incorporated under foreign laws and shall have the duty and liability to file a tax return and tax payment in accordance with the provisions of this Part, with respect to only the abovementioned income or profits."
The practical implication of Section 76bis is obvious. If the real estate owned by a foreign entity is leased out through an on-shore agent, rental pool, etc., such agent or rental pool company could be deemed to be an "employee, an agent or a go-between" of such foreign entity. The result would be that the foreign entity would then be treated like a Thai entity with regard to the income derived from its real estate located in Thailand and its rental income would be subject to the same tax regime. Furthermore, the on-shore liability to file the tax return and pay the applicable tax on behalf of the off-shore entity would be on the said agent or rental-pool company.
It should be noted, however, that there are exceptions to the above. Depending on the jurisdiction in which such off-shore entity is registered such entity, and thereby any purported on-shore agent of the off-shore entity, may be able to invoke the provisions of a Double Taxation Agreement ("DTA") between the jurisdiction in which the off-shore entity was incorporated and Thailand, thus limiting the potential and scope of exposure to full Thai CIT on such rental income. Unfortunately, however, investors using off-shore entities from jurisdictions that do not have a DTA with Thailand such as the BVI, will not be entitled to invoke the protection. Both their off-shore entity and its on-shore agent have a significantly heightened exposure to full Thai CIT liability on rental income earned in Thailand."
As usual please seek professional advice on matters pertaining to legal and tax and make informed decisions.
Here is a tip for budding property developers who can't quite scrape up the cash or even leave their homes to put together a property offering in paradise.
Yes, in comes China entrepreneur Ailin Graef and her virtual avatar Anshe Chung.
With 80 employees and revenue over a million dollars the site <link>http://www.anshechung.com*Click To View</link>
is a offering virtual land plots in the mythical AzureIslands.
Online real estate has proven to be a big hit with a massive audience and certainly shows how an entrepreneurs' passion for gaming turned into big bucks – even if the land is somewhere in cyberspace.
After a brash media and online frenzy over the recent announcement an indoor ski slope on the destination resort island of Koh Samui I decided to meet the man behind the development.
Speaking to Finn Hyttel about the Club Koh Samui project which is located in Chaweng on the hillside near to the Impiana resort I learned the total project site was planned for 282 rai. Bangkok based master planner and design firm The Beaumont Group was undertaking the project.
Phase 1 did not include the indoor ski slope but a portion of the property with 32 rai would contain 201 hospitality led residential resort apartments and 23 pool villas.
Later phases called integrated tourist attractions would include a high speed gondola, amusement and entertainment center and if indoor ski slope.
So for now, the project remains in bite size chunks and those wanting to ski will need to find the nearest international airport.
Nominations Open For South East Asia Property Awards
Leading real estate and lifestyle publisher Ensign Media are rolling out nominations for the 2011 South East Asia Property Awards.
The event will be held in Singapore on November 30th, with the international media partner Channel NewsAsia.
Categories open for nominations are:
DEVELOPER
Best Developer (South East Asia)
Best Developer (Indonesia)
Best Developer (Malaysia)
Best Developer (Philippines)
Best Developer (Singapore)
Best Developer (Thailand)
Best Developer (Vietnam)
Best Developer (Cambodia)
DEVELOPMENT
Best Villa Development (South East Asia)
Best Condo Development (South East Asia)
Best Villa Development (Indonesia)
Best Villa Development (Malaysia)
Best Villa Development (Philippines)
Best Housing Development (Singapore)
Best Villa Development (Thailand)
Best Villa Development (Vietnam)
Best Development (Cambodia)
Best Condo Development (Indonesia)
Best Condo Development (Malaysia)
Best Condo Development (Philippines)
Best Condo Development (Singapore)
Best Condo Development (Thailand)
Best Condo Development (Vietnam)
Green Development Award
Best Shared Ownership Development (South East Asia)
ARCHITECTURE / INTERIOR DESIGN
Best Architectural Design
Best Interior Design
PUBLISHER'S CHOICE
Real Estate Personality of the Year
For more details <link>http://www.southeastasiapropertyawards.com*CLICK</link>
The real estate arm of Laguna Phuket has appointed Lyndon Philips as Director of Sales for Banyan Tree Residences and Laguna Property.
Phillips is well known in the island having worked at Royal Phuket Marina and Engel and Voelkers -Thailand.
He will report to Dan Simmons who is Group VP for Banyan Tree, Angsana and Laguna Property.
