Crackdown on foreigners using Thai nominees: DSI raid offices of law firm in Bangkok, Phuket and Samui

[luk AJ]

All our investments here are safely in my wife's name, who is 100% Thai. Well as safe as can be, with the politics and all...
 

You are in the same boat, you think your solution is safe? If your wife cannot prove she earned the money and there are traces leading to you as the provider of the money, the violation is IMO the same as described in this topic.


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[CGW]

1 minute ago, luk AJ said:

You are in the same boat, you think your solution is safe? If your wife cannot prove she earned the money and there are traces leading to you as the provider of the money, the violation is IMO the same as described in this topic.

Think the world may end tomorrow, or the those dam Russians will invade along with the Aliens, gloom & doom ? 

Get real..................... ?

[SamuiRes]

3 hours ago, jvs said:

You are over reacting!!This comes around every once in awhile.If they would really go after every company set up buying houses for foreigners it would be really really big!!!

There is absolutely no way the would take your property away from you.They would give you a certain time in which you would have to sell or put in some other name.I do not believe in these panic reactions.

Land Code Section 94.- Any land acquired by a foreigner  in violation of the law or without prior permission must be disposed of by that foreigner within a period prescribed by the Director General which must be at least 180 days but not more than one year. If the land cannot be disposed of within aforesaid period, the Director General shall be empowered to dispose of that land and the provisions concerning enforcement for disposal of land under Chapter III of the Land Code shall be applied mutatis mutandis.

[Get Real]

20 minutes ago, Destiny1990 said:

They supposed to work within the law as lawyers that's what clients should expect.

Oki doki! It must be very fluffy clouds in dreamland. You know we are talking about Thailand, right?

[quadperfect]

3 hours ago, Kinnock said:

This will be an interesting case.  DFDL are a major international law firm, and I see from their website they have advised on some recent business acquisitions in Thailand - so you'd hope that they knew enough to work within the law?

 

Of coarse the next headline will be dfdl found to have nothing out of the ordinary.

[stud858]

I'm confused,  and there is not enough information in the article.  

The Thai gov.  Set up the rules.  Foreigner can be 49% owner of real estate.  Foreigner can be 49% owner of company with Thai nominees.  Company can buy a house. 

 

Whats the law that's been broken? 

[Scotssing]

A raid on one firm of lawyers does not a crackdown make

Anyone who has bought using this method should know the risks. There have been periodic rumblings from various governments over many years  on closing  this loophole. Probably not time to panic yet

As always caveat emptor

[stud858]

I'm confused,  and there is not enough information in the article.  

The Thai gov.  Set up the rules.  Foreigner can be 49% owner of real estate.  Foreigner can be 49% owner of company with Thai nominees.  Company can buy a house. 

 

Whats the law that's been broken? 

[anon789561]

39 minutes ago, Destiny1990 said:

I think that is why people hire lawyers.

but the firm that got raided in the OP was a law firm.

[crazykopite]

I would imagine that the Government would have to employ at least a 1,000 well educated individuals to go through every single company in Thailand it would then have to go though the courts which could take years and years why they don’t allow foreign buyers to hold a small plot of land of no more than a rai has always baffled me no doubt there are those in very high places who own land and property around the world it’s a case of Do as I say not what I do . When I came to Thailand more than 12 years ago I came knowing that any money that I spent over here regardless wether it be on property , cars or boats was dead money because let’s face it any of us could be kicked out at any time and every year when I come to renew my extension of stay I tell myself that this will be my last one and I will move on to a more welcoming neigbouring country . Deep down I know I should have done it a few years ago when the present government came into power but a little bit of me thought that change was on its way . As my wife always says it’s the land of smiles because they like your money end of .

[luk AJ]

Think the world may end tomorrow, or the those dam Russians will invade along with the Aliens, gloom & doom [emoji20] 
Get real..................... [emoji32]

“This will never happen to me” syndrome. For the past 30+ years people bought homes through Thai companies, this would never cause any problem right? Maybe nothing will happen until you upset somebody and they seek revenge.


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[Pedrogaz]

Don't bring money to Thailand that you cannot afford to lose. If losing your house would cause you angst, then rent instead of buying.

[OldSiamHand]

1 hour ago, xylophone said:

Incorrect terminology perhaps but the following is specific.

 

Articles on foreign ownership in Thailand………..

 

 

The Telegraph article is from 2012, which may have been the last time the government was publicly addressing the possibility of amending the FBA, and which discussions have since ceased.  The law firm raid article makes no mention of a renewed government effort along those lines.

 

It is perfectly legal to form a company to own land - it better generate some revenues in connection with that ownership though. 

 

It is perfectly legal for a foreigner to own a home in Thailand.  Thai law is sophisticated enough to distinguish between physical structures and underlying land - it's the underlying land that is off-limits.

[new101]

What happens if land is purchased by using profits made by the company?

 

My company has recently purchased a small piece of land using the last 2 years profits of the company, I for all intense and purposes fully control the company however we have staff and have been running for over 5 years and are a genuine company, the Thai shareholders are family. Surely this can't be deemed to be illegal as well?

[Horace]

37 minutes ago, xylophone said:

A). This from the Land Department Minister (office of)...........

 

 "If it is appears that the company is having foreigner as shareholder or Director or if there is a reason to believe that it is nominating the Thais to hold shares for the foreigners, the officer is to investigate income of every Thai shareholders in the legal entity by looking into their work history of what kind of work they have done and what monthly salary they earned, all of these proved by evidence.

 

 If the purchased is funded by loan, then loan evidence must be provided. If after the investigation, it is led to believe that the application for land ownership is circumventing the law or any individual is purchasing land to the benefit of foreigners under the Land Act 74, paragraph 2, the officer is to investigate the case in detail and report to the Land Bureau to be waiting for further advise from the Minister".

 

Isn't this circular? 

 

It talks about a situation where it "appears" that foreigner is "nominating Thais", but it does not define what the term "nomination" means.  If you dissect the language, you will see its simply a tautology.  A nominee relationship is something that appears to be a nominee relationship.  Sort of like the famous quote about obscenity: "I can't define it, but I know it when I see it"

 

If simply doing something for the benefit of a foreigner makes a Thai a nominee of foreigners, this leads to ludicrous results.  More important, Thai law does not distinguish between registered and beneficial ownership, which means the word "benefit" here cannot be construed to mean a beneficial relationship".  Thai law doesn't distinguish between registered and beneficial relationship because it does not have a general concept of "trust".  

 

In fact, Thai law is hostile to the whole concept of trusts. Thai Civil and Commercial Code Section 1686 initially said trusts "shall have no effect whatsoever".  It was amended to allow trusts if created by statute, and then only one statue was enacted to provide for the creation of trusts, and that was for capital markets.  Otherwise, you can't have trusts, which means you can't have distinction between registered and beneficial ownership, which means the whole reference to "benefit" in the text you quote does not refer to a relationship where the foreigner is the beneficial owner (enjoys the benefits of ownership) while the Thai is the registered owner.  Doesn't work under Thai law.

 

And then looks what happens if if it appears there is a nominee relationship: its a reported to the Land Bureau to be "waiting for further advise from the Minister".  No mention of what the Minister is supposed to do once he or she receives this report. And, more important, it does not clearly state some test the Minister is supposed to use to determine if there is, in fact, a nominee relationship.  

 

This is also the whole problem with the FBA's definition of a "nominee".  It basically says a nominee relationship is a nominee relationship. 

 

And this sound sound like an internal guideline rather than a law.  I don't see any reference to anything in the Land Act on this, but I do see the prohibition on foreign ownership.  This sounds like a guideline officers are supposed to use to determine if there is a nominee relationship.  But it doesn't say what is a nominee relationship.

 

[stud858]

There won't be a problem if both sides agree they should follow the written law.  

Once judgements are made just on feeling and that if ever a person is charged of criminal offence for owning a house ,  then look out. 

 

What next,  being prosecuted for staying in the country with a perfectly valid visa. 

 

On a side note,  you've got more worry about the 51% Thai nominees who are the ones really in control. 

 

Don't worry. The sky is not falling just yet

[AsiaHand]

1 hour ago, Destiny1990 said:

They supposed to work within the law as lawyers that's what clients should expect.

Here ? HA !

[catman20]

4 hours ago, Happy enough said:

so this thai law firm was advising foreigners to break the law so they got raided, rightly so

now when the DSI  go through their records and investigate all the purchases, well i bet there's some farangs who used this firm who will be shitting themselves right now.

in fact anyone who has used these methods to swerve the laws should be very concerned about their 'investments' right now.

 

I'd rather take my chances with the law than some Thai bird. I've owned land and houses this way for the last 18 years this blows up every few years and then subsides.

[Horace]

1 hour ago, Gulfsailor said:

"In recent years, the MOI has adopted a strict enforcement policy and issued a series of regulations to limit the use of Thai land-holding companies by foreign investors. Local land registry offices now require Thai shareholders to provide evidence of the funding source for capitalization of any Thai corporation with foreign shareholders (or foreign directors) engaged in land development. The local land registry office has the power to examine the shareholding of such companies to ensure that control over the company is actually being exercised by the Thai shareholders and requires evidence which proves that the source of funds is from the Thai shareholders if there is foreign shareholding (or if any directors are foreign citizens)."

This is a policy of Ministry of Interior.  Is there a law that says that Thai citizens must have control over a company that owns land?  What section of the Land Act says this?  

 

If there is such a section, when was it enacted?  If enacted after the prohibition on foreign ownership of land, its an expropriation of a right - namely the right of control. 

[anon789561]

2 minutes ago, catman20 said:

I'd rather take my chances with the law than some Thai bird. I've owned land and houses this way for the last 18 years this blows up every few years and then subsides.

each to their own. i don't even think the article or the raid has anything to do with home owners TBH. just thought i'd stoke the fire as knew what was coming

[rayw]

Well when I first moved here to Thailand way back in 2003 I was told by many respectable legal advisers and accountants, and indeed by a very helpful senior Thai immigration officer, that using a limited company with Thai nominee shareholders was the most popular, and recommended best way to go for a retired farang to own his home here with a minority share holding but still with juristic control of the company.  It was clearly indeed sound advice at the time and was a very popular way for retirees to buy their own home here, and indeed why not ?  The law changed some years later and they clamped down on nominee Thai shareholders, as to why I never understood what the problem was when just used for owning your own single retirement home with small amounts of land.

 

However I must say that the law is very crazy about farangs, especially those retirees who are good for the Thai economy, in understandably wanting to buy and own a small amount of land here (say up to a Rai or even half or quarter of a Rai is surely more than sufficient) for use as a personal retirement home.  Surely this would have no real impact on Thai's losing land to foreign owenrship as the amount of land involved, if restricted to a no more than needed land size and only one such residential plot per farang, would be so very miniscule and the benefits to the country would be very postive too.

 

So I ask the Thai Goivernment to consider allowing farangs, at least those on long stay retirement visa's who want to make their homes here,  to be able to buy up to a pre defined limited small amount of land on which to build ( or with already built) a residential house on for their personal use.  Just one such plot per farang and only for those on long stay visa's like retirement or even maybe long term work permit holders and of course Thai spouse visas holders too.  

 

This would encourage more retirees to move here to Thailand and stop all the crap, costly and time wasting of Thai authorities having to look for loopholes and then all the policing of trying to stop such harmless loopholes.  To me it seems a no brainer so maybe someone could explain why this has not been put in place already and why it should not be put in place now.  Good for retirees and others too and good for Thailand if carefully restricted and monitored.  More retirees here means more foreign exchange comes into the country, promotes jobs, helps businesses here prosper and absolutely no valid reason why this is not allowed to happen ASAP ?????????????????? 

 

Sure I can support and fully understand that strict controls and clamp downs on greedy farang property developers must be kept in place and strictly policed too.  

 

[CGW]

28 minutes ago, Pedrogaz said:

Don't bring money to Thailand that you cannot afford to lose. If losing your house would cause you angst, then rent instead of buying.

Never heard that before - Great advice!   

Here's a new one for you "How do you make a small fortune in Thailand? - Start off with a large one ? 

Funny eh! ?

[Wake Up]

4 hours ago, NickJ said:

Yeah, All the guys who could never afford a house here will be spewing how stupid it is for farangs to buy homes here. 

Seems they will be going after businesses that seek to circumvent labour issues.

A big Difference exists between a nation’s laws, leaders and public policy. Learn  this the first year of law school. Laws and leaders change often, public policy does not. The public policy of Thailand is thai people own 100 percent of all land in Thailand. Read thai history I agree with them 100 percent. 

 

Many people can afford to buy a house here as houses are comparably cheap.  The problem is you can’t buy land in Thailand if you are not Thai. You can think you are smart and set up a thai company but are you smart? IMO no you are not and you take your chances. Maybe nothing happens to you or maybe the Thai government decides to call it fraud based on their public policy.  Up to them not you. 

 

Contrary to your post most  people with money IMO if they earned it are smarter than those who don’t have any money so IMO stupid is listening to others and salesmen tell you that you can avoid Thailand’s public policy. All you have to do is be dumb enough to jump through these legal hoops and pay us to do that for you and you are the smart one.  It is not ignorance that turns smart into stupid. It is arrogance that turns smart into stupid every time. Salesman appeal to your arrogance and you think by setting up some straw Thai company you are smart and others are stupid. Until the day comes when you realize the truth.  

 

Hope it all works out for you but if it does not then learn from it and move on. 

[CGW]

8 minutes ago, catman20 said:

I'd rather take my chances with the law than some Thai bird. I've owned land and houses this way for the last 18 years this blows up every few years and then subsides.

Exactly, I have flipped four houses this way, moved up the property ladder & NEVER paid rent ? 

[sometimewoodworker]

4 hours ago, badjoke said:

bad news for home owners. Its only a matter time...

It's not bad news for home owners, just for people who have set up fake companies to illegally bypass land ownership laws.

[Horace]

24 minutes ago, crazykopite said:

would imagine that the Government would have to employ at least a 1,000 well educated individuals to go through every single company in Thailand it would then have to go though the courts which could take years and years why they don’t allow foreign buyers to hold a small plot of land of no more than a rai has always baffled me no doubt there are those in very high places who own land and property around the world it’s a case of Do as I say not what I do . When I came to Thailand more than 12 years ago I came knowing that any money that I spent over here regardless wether it be on property , cars or boats was dead money because let’s face it any of us could be kicked out at any time and every year when I come to renew my extension of stay I tell myself that this will be my last one and I will move on to a more welcoming neigbouring country . Deep down I know I should have done it a few years ago when the present government came into power but a little bit of me thought that change was on its way . As my wife always says it’s the land of smiles because they like your money end of .

Good point.  I would probably triple that number.

 

Saying the law on nominee ownership is ambiguous is being generous.  Its circular.  

 

And if they change the law to eliminate a right foreigners currently enjoy (e.g., control and profit), that is an expropriation.  In other words, if you criminalize a structure that is currently legal, you are taking rights from an investor, and that is an expropriation.  This is a can of worms that the Thai government should not want to open.

 

The more comments I see here, the more I think that there is something unique to the matter involving.  I can't see a wholesale change of the law and policies.  It would be a disaster for Thailand.

[brucec64]

All our investments here are safely in my wife's name, who is 100% Thai. Well as safe as can be, with the politics and all...
 

Famous last words - all my investments are safely in my Thai wife's name. Good luck with that!

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[CGW]

5 minutes ago, Horace said:

The more comments I see here, the more I think that there is something unique to the matter involving.  I can't see a wholesale change of the law and policies.  It would be a disaster for Thailand.

The original article has never been published in English or made it to a mainstream publication from what I can see, so can't help but think there is a song & dance over nothing? ? 

[OldSiamHand]

2 minutes ago, CGW said:

The original article has never been published in English or made it to a mainstream publication from what I can see, so can't help but think there is a song & dance over nothing? ? 

I agree.  It was published yesterday in a couple of Thai papers and the current article looks like a poor translation.

 

If I were to guess, I'd say a deal involving this firm went sour and resulted in the wrong Thai being pissed off, or perhaps a disgruntled former employee of the firm.  No policy shift against companies with foreign ownership.

[stud858]

The government gets a fair chunk of money by allowing this law to stay.  Transfer tax. And uniquely,  company tax.  

A group of police were just sniffing about four some extra cash.  The laws won't change imo 

 

If the laws are changed they would lose the company taxes. And maybe some foreigners.