Specific Business Tax (SBT) in Thailand: What the Seller Pays on Resale Before 5 Years

What SBT Is and Why It Matters to the Buyer

The Specific Business Tax (SBT, Thai: 'thurakij chapho') is a tax levied on the transfer of real-estate ownership in Thailand when the transaction is treated, by its nature, as commercial. In practice, this almost always means one thing: the property is being sold less than five years after it was acquired. The government takes the view that a quick resale is not a change of residence but an extraction of profit, and taxes it accordingly.

Although SBT is formally the seller's liability, it is far from irrelevant to the buyer. First, the amount of the tax frequently becomes a bargaining point, as the parties often agree to split the costs payable at the Land Department. Second, if you are buying with a view to resale or a quick-exit rental strategy, SBT will be the decisive factor in your actual return.

The SBT Rate and How It Is Composed

The base rate of the Specific Business Tax is 3% of the transaction price. A municipal surcharge of 10% of the tax amount itself is added on top, so the all-in effective rate is 3.3%.

The critical point: the tax is calculated on whichever is the higher of two figures - the official assessed value set by the Land Department, or the actual contract price. There is no way to understate the base 'on paper' below the assessed value: the official will use their own figure.

The Five-Year Rule: When SBT Does Not Apply

The principal exemption concerns individuals. If the seller is a private person who has held the property for more than five years at the time of transfer, SBT is not charged. Ordinary stamp duty is paid instead (see below).

In addition to the holding period, the law provides several other grounds on which an individual is exempt from SBT:

• Primary residence registration. If the property was used as the seller's main place of residence and the seller's name appeared in the house registration book (thabien baan) for at least one year from the date of acquisition, the tax is not charged even on a sale before five years.
• Transfer to heirs. Transfer to a statutory heir or under a will.
• Transfer to a legitimate child (but not an adopted child).
• Gratuitous transfer to government agencies, and to temples, churches and mosques (subject to area limits).
• Property received by inheritance.

For legal entities (Thai companies), the five-year rule does not operate in the same way as for individuals: a company's sale of real estate is almost always subject to SBT, since it is treated as a commercial activity.

SBT and Stamp Duty: One Instead of the Other

A common source of confusion: stamp duty and SBT are not cumulative. The logic is mutually exclusive:

• If a transaction is subject to SBT (3.3%), stamp duty is not payable.
• If SBT does not apply (for example, because the holding period exceeds five years), stamp duty of 0.5% is payable.

In other words, a seller who has held the property for more than five years pays only 0.5% instead of 3.3%. That is the financial rationale behind the 'five-year rule'.

The Full Picture of Transaction Taxes

To assess the total burden on a transfer of ownership, it is useful to see all charges together.

Important: the 2% transfer fee is always payable, regardless of whether SBT or stamp duty applies. Withholding tax for individual sellers is calculated on a progressive scale taking into account the holding period, whereas on a company sale the purchasing legal entity withholds a flat 1% against the seller's corporate income tax.

Condominiums, Foreigners and Foreign Currency

SBT does not depend on the seller's nationality: a foreigner who owns a condominium unit on a freehold basis pays the tax under exactly the same rules as a Thai national. This is separate from the quota question: under the Condominium Act, foreigners may hold freehold title to no more than 49% of the total residential floor area of a building.

It is also worth bearing in mind the requirement to bring funds into the country. To purchase a condominium in a foreign name, the funds must arrive from abroad in a foreign currency and be converted into baht in Thailand; the bank then issues a Foreign Exchange Transaction certificate (FET, formerly Tor.Tor.3). The future seller will need this document to freely repatriate the proceeds upon resale. The FET has no direct bearing on the calculation of SBT, but without it the subsequent transaction and repatriation of funds will be considerably more complicated.

What to Check and What to Watch Out For

• The seller's holding period. Confirm the date on which title was registered in the current owner's name: less than five years almost certainly means SBT at 3.3%; more than five years means stamp duty at 0.5%.
• Whether the seller is an individual or a company. A sale by a Thai company is generally subject to SBT regardless of the holding period.
• House registration book entry. If the individual seller was registered as resident at the property for more than one year, exemption from SBT may be available even where the holding period is less than five years.
• The calculation base. Taxes are computed on whichever is the higher of the assessed value or the contract price; request the Land Department appraisal in advance.
• Allocation of costs. State clearly in the contract who pays each charge; '50/50 on taxes' without further specification leads to disputes at the registration counter.
• FET/Tor.Tor.3. When buying a condominium in a foreign name, keep the foreign-currency remittance certificate: it will be required on future sale and repatriation of funds.
• Check the 49% foreign-ownership quota for the specific building before paying a deposit.
• Calculate net returns. For an investment resale, build SBT into your yield model rather than the concessionary stamp duty rate, if you plan to exit before five years.