Hua Hin Rental contracts
July 4, 2008 by poom
Filed under Property Guide
Rental contracts
When does VAT apply ?
It is a common practice in Thailand for landlords to propose sevaral contracts when they engage a new tenant. Apart from the rental contract for the space, contracts may be proposed for the rental of any furnishings and for services relating to the use of the property e.g. the common area services in the case of a building. The reason behind the split is taxation, often driven primarily by the 12.5% house and land tax that applies to the rental of buildings forcommercial purposes. VAT and leases VAT may also be a prime reason to split the contracts, as the rental of space is one of the businesses under the Revenue Code that is specifically exempted from VAT. Landlords therefore do not have to add 7% VAT to space rentals. The rental of furniture and the provision of property related services on the other hand fall outside the exemption.
