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Specific Business Tax

I. Activities subject to the SBT
  Certain business activities in Thailand are exempt from the VAT and subject instead to the SBT. The SBT is imposed at an effective rate of 3.3 percent, including a local tax of 0.3 percent. Unlike the VAT, the SBT is paid by the business engaged in the activity - not by its customers-although in some commercial transactions the SBT is passed on to the customer by contract. Also unlike the VAT, the SBT is a true tax on businesses. They receive no credits for SBT.

The following types of activities are subject to the SBT:

1. Commercial banking and businesses with regular activities or transactions similar to commercial banking (e.g. lending, currency exchange and the transfer of money abroad).
2. Activities of finance companies and credit financiers.
3. Sale of immovable properties.
4. Sale of life insurance policies
5. Sales of securities on the Stock Exchange of Thailand.
6. Operations of pawnshops.
7. Operations of pawnshops.

Because of the narrow scope of activities subject to the SBT, it is usually of interest only to companies primarily engaged in such activities. However, the SBT on the sale of immovable properties might apply to any company or individual in Thailand. Although some limited exceptions apply, most sales of immovable property by companies are subject to the SBT. Sales of immovable property by individuals likewise are often subject to the SBT, although the sale of one's principal residence and the sale by an individual of land that has been held for more than five years generally are exempt from the tax.

In an effort to assist a sluggish real estate market, in recent years the Thai government has allowed exemptions and substantial reductions of the SBT for many types of real estate transactions. Parties to a real estate transaction should always determine whether these temporary changes to the SBT apply to their transaction.

II. Mixed activities
  The SBT applies only to income arising from the specified activities. If a bank or other company generally subject to the SBT also engages in activities that are not directly related to the specified activities, the income from such activities generally will be subject to the VAT, not the SBT.
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