Pattaya today newspaper » Legal Corner

Checking your 2011 balance sheet

pattayatoday — Fri, 27 Jan 2012 05:52:19 +0000

What lies beneath?

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

WERACHON LAW OFFICE : 315/304, Moo 12 Theppasit Road (Soi 12) Nongprue,Banglamung, Pattaya City Chonburi 20260
Kingdom of Thailand Tel: (038) 304 084, (038) 251 533, Fax: (038) 304 027 Mobile: 081 423 4255, 089 889 6483, Website: www.thaisolicitor.com, e-mail: thai@werachonlawyers.com

It can be proved that the property market in Pattaya is affected more by outside factors than the enforcement of the Thai laws. The real estate sector is still focused more on residential property than on speculation. You may ask yourself if you can find any other places which can be Eden for hedonist men. The main problem is from many used car salesmen who become consultants in Pattaya. They can only use their forked tongues to make easy money.

To set up a company to buy property is not complicated. Therefore many unlicensed persons find it easy to make money from the gullible foreigners. These unlicensed professionals are foreigners who can speak English with the beautiful native accent by just saying, “No problem my friend, everyone does like this in Pattaya”.

Some unlicensed consultants want their own law firm to steer gullible foreigners to transfer money into their fake client or escrow accounts. In Europe or America, the law is quite strict with such accounts. Many foreigners were steered to buy a fake business or beer bar by transferring money into the fake client account. After losing money, these gullible foreigners fear fighting for justice because they believe these crooks are powerful in Pattaya. “Having a good lawyer and dare no one” should be the motto you may share with our former wealthy prime minister who retained a team of lawyers to fight with the military junta.

If you need a lawyer, you should deal directly with a Thai lawyer who is licensed as a “Tanai Kwam” not only “Legal Advisor”. You may check their professional license issued by the Lawyers Council of Thailand which should be openly hung on the wall.

A qualified accountant must hold a license issued by the Federation of Accounting Professions of Thailand. A qualified accountant may work under the same roof with a licensed lawyer but not with a certified public accountant (CPA) who has to work independently. It is similar to the relationships between a solicitor and a barrister in the UK who must work independently.

Most foreigners who set up a company to buy real property know only they have to pay for their accounts every year. Do they know what lies beneath their accounts?

Annual financial statements (balance sheets and tax returns)

The end of May is the deadline for filing balance sheets and tax reports of all companies having a normal January-December accounting period. Failing to file within 150 days is punishable by fines of up to 50,000 baht for each director and company to a total of 100,000 baht. Imprisonment can be imposed if you still ignore after the lenient fine punishment has been imposed. For the good faith violator, the minimum penalty fines can be about 12,000 baht for the police and 2,000 baht for the tax collector. But the tax you will have to pay is a separate issue.

Before paying for the annual financial statements which are balance sheets and tax returns, you should have a profound discussion with your licensed lawyer and qualified accountant about the accounting and tax structure of your company. You may search for more information about taxation for dormant companies in our reading room www.thaisolicitor.com.

The English language of Thai professionals in Pattaya may not be so excellent but somehow fair enough for your understanding in all technical aspects. Most of them will prepare a trial balance in English in order that you may review the structure of assets and liabilities to verify tax implications.

If you set up a company to buy the real property which includes land and house, the assets in your balance sheet should be recorded as follows:-

Current Assets

● Cash & Bank Deposit

● Accrued Interest Receivable

Fixed Assets

● Account Receivable & Loan from Director

● Land & Building

Total Fixed Assets

Total Assets

The real property is called “immovable property” under the Civil and Commercial Code of Thailand which means “land” (geographical part) and “building” (building structure). The ownership of the land is recorded in the Land Title Deed (Cha Nod) and the ownership of the building house is recorded in the House Register Book (Tabien Baan).

If you buy the land and house, you should check if the seller has registered with the land office for transfer of both land and building house to you. Some unethical developers avoid the transfer tax by only declaring the land not the building house in order that the transfer tax will be based only on the land.

Some buyers may receive only the land not the building house once they buy the property. It is advisable to use the term “land & building house” in stead of “property” once you deal with a seller or broker.

Once you prepare the balance sheet, you should ensure that the house is also recorded in the balance sheet.

What tax lies beneath?

If you buy only an empty plot of land and build a house, all payments you make to your contractor will be subject to the 3% withholding tax for construction service fees. If you fail to deduct this 3% withholding tax, you will be responsible for the tax with surcharge and fine. Under the Revenue Code of Thailand, the company making a payment for service fee must deduct the 3% withholding tax.

The problem can be that some buyers buy the property from the developer who avoids the transfer tax by registering with the Land Office only for the transfer of the land not the building. The developer may use the name of your company to apply for a building permit. Your company will automatically become the owner of the building. The question is: How do you get this house?

If it is understood that you bought the house from the developer but you fail to register the transfer of ownership of the house with the land office, you can be seen as being involved in a conspiracy with the developer to evade taxes, which is punishable under Thai law.

The developer may say that you hired him to build the house for you. In this case, the payment you make to the developer will be subject to the 3% withholding tax which is your responsibility. If you fail to deduct 3% from the payment you make to the developer, you are responsible for the withholding tax with the Revenue Department.

What lies beneath is the 3% withholding tax with the scenario which may shock you more than a thriller from Hollywood.

advocate 4 justice

pattayatoday — Thu, 05 Jan 2012 08:47:25 +0000

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

“A hard talk with a hard core lawyer who stands up against the unscrupulous border police involved with the conspiracy of extortion and kidnappings”

Is there any place in our planet where the light of justice will never shine? The answer to this question will be definitely different as per the individual perception. Most people enjoy a carefree mentality by saying “It is not my problem”.

We have the stories of two lawyers who could not remain silent to any injustice in this world. Why did they think in a lateral way? Why do they not just wake up everyday and start working like they do in the other days? How do they change the world to be a better place for all of us?

“I don’t believe that there is a vacuum of justice in this world” said the maverick lawyer who fought for detainees in the U.S. concentration camp at Guantanamo bay. It was the reason why he sued the U.S. government to abolish this illegal detention without the due process of law.

Some people died and became the inspiration for other people fighting against the injustice. For Kwanchai Chotiphan, he is just a Thai lawyer who wakes up everyday to work for his family. His legal profession as an “advocate 4 justice” has been started since he received his law degree from the hands of his Majesty the King in 1981. He always tells his friends that the heritage for his two children is education and morality. You can be a good happy lawyer under the doctrine of “Sufficiency Economy” of his Majesty who shows us to find out the “happiness” with the magic word “enough”.

He started telling us the story “I was asked by a lady on February 9, 2007 to help her sister who was famed by the narcotic suppression police”

“My sister is innocent” the lady cried once she told Kwanchai about her unfortunate sister. Kwanchai did not really believe in what she said as most criminals always plead their innocence until proving guilty. However, he agreed to visit the arrested lady who was detained at the Detention Center of the Anti Narcotics Police Office.

Narcotic drug cases are under the special policy for the law enforcement which creates problems from the arbitrary implementation of the “Fast Tract Modus Operandi” which sometimes becomes “Non Judicial”. Many people died once the government declared the draconian war against drug. The misconception from the controversial say of our former prime minister that a lawyer is the one who helps the wrongdoer becomes paradoxical once he afterwards retained a team of lawyers to fight against the junta. Nobody should be prosecuted without advocacy in the due process of law.

“I did not really want to do this case” Kwanchai told us his feeling like many lawyers who did not want to get involved with the sensitive case.

His feeling was dramatically changed once he saw his client in the Detention Center. “I could not imagine that human being would be in such a condition like her. It was really pitiful. She was two-month pregnant”

With the investigation he made with her, she was famed by the border police who came to Bangkok to arrest and extort her for money. She was tortured and forced to plead guilty for the drug they put in her bag. Once she denied giving them money, she was prosecuted with the serious case in the Criminal Court.

“In the USA and many other European countries, the police will have to conduct the whole justice process in compliance with the laws. If there is any irregularity in any stage of the process, the case will be illegal and invalidated whereby the police will have to drop the case” said Kwanchai who was also the counselor of the House of Senators. However, in Thailand, the law enforcement officers can enjoy more tolerance of the laws than other countries.

It was the strategy of OJ Simpson’s team of lawyers who tried to discredit the team of police officers who abused their client.

Kwanchai used the same strategy to prove that the team of border police abused her by the hope that the justice must be done in favor of his client.

If his client is acquitted, Kwanchai will turn himself to become the King of Torts to sue the National Police Office for compensation under the new law that the state will have to remedy the victim of unfair treatment of the criminal case. There is good news that the National Police Office responds very satisfactorily to all unfortunate victims.

If you want to read more about this story, please search the name “Kwanchai Chotipahn” in www.google.co.th. You will be aware that his name becomes the key word for “advocate4justice” who is still alive in the greedy world of consumerism.

“Let justice be done though the heaven fall”

Power in Thailand

pattayatoday — Mon, 26 Dec 2011 06:00:00 +0000

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

Foreigners contemplating to settle down in Thailand should first learn about Thai laws by just having a glass of beer and read this article. Justice is what we expect which can be found in a law. Some people may become suspicious that law is not always equated to justice in this land of smiles. We may not say that Thailand is a law-abiding country up to the degree many of you expect. However, it is undeniable that Thai people still enjoy the harmony in their lives. Can people say Thailand is a lawless society? What is the country that is the most law-abiding and utopist society?

Thai people are very famous for their tolerance but notorious for their indiscipline with the mentality of “Mai Pen Rai”. What is behind their harmony?
Thai people are always proud of our Constitutional Monarchy, which unifies all of us for many centuries. The first westernized constitution was given by the King Rama VII in 1932. However, if we deem that “Magna Carta” of King John of England in 13th century was the first modern constitution, we may be also proud to say that “the Great Stone of King Ramkhamhaeng” can be also deemed our first constitution. Dating back to 13th century King Ramkhamhaeng of Sukhothai engraved the Great Stone to guarantee the rights of people in the nation. This great stone guarantee the rights of people to have free trade without tax. Now this stone is kept in the national Museum in Bangkok. In Sukhothai period Thai people traded with Chinese and Persian before the European came in 14th century.
The judicial institution based on the principle that the king was the “Fountain of Justice”. In this regard, King Ramakhamhaeng hung the bell in front of the royal palace in order that people could ring to file the petition with the King for their grievance. This tradition continues until now that all people including all Thai and foreigners may forward the petition to His Majesty the King for any grievance they have. In the Criminal Procedure Code of Thailand specifies the right of people serving the grave punishment may file the petition to His Majesty the King for Royal Pardon. Under the law, all capital punishment must be forwarded to his Majesty the King.
The King plays the important role as the leader in the hearts and souls of people the nations. All religions are equally treated under the royal patronage. The King graciously exercises his power through the three institutions, which are: -
1) Executive power through the government
2) Judicial power through the Courts of Justice, Administrative Courts and Constitutional Courts
3) Legislative power through the parliament the upper and lower houses

The legal mechanisms to protect your fundamental rights and freedom under the Constitution
The Thai constitution 1997 is deemed as the most modern constitution in the world. This constitution introduces the modern mechanisms to guarantee the fundamental rights and liberty of people. The non judicial independent institutions are set up, i.e., human right committee and ombudsman. Unfortunately, this constitution was abolished by the military junta. However, the present constitution 2008 still adopts this mechanism.
Thai modern laws have methodic influence from the continental system hybridized with Thai legal concept developed for many centuries. All Thai laws are written down in codifications, act, royal decrees or ministerial regulations. There are seven codes, i.e., Civil and Commercial Code, Civil Procedure Code, Penal Code, Penal Procedure Code, Revenue Code, Military Code and Land Code.
The local councils (Or.Bor.Jor) also have power to legislate laws and regulations for local administration.
The main law for the country is the Thai constitution, which is prevalent over all laws of the national. That is to say, no law or treatment can be contrary to the constitution. To guarantee this principle, we have the Constitutional Court empowered to adjudicate and nullify all laws or treatments which are deemed in violation or contradiction to the Constitution. The Administrative Courts are empowered to nullify all executive orders which are in violation of the laws. The landmark case of the Administrative Court nullifying the resolution passed the cabinet in relation to the controversial archeological site is the good example.
The prominent example of the influence of the Constitution was the order of the then government in 1999 to guarantee the equality of people under the Constitution regardless of the gender. Before 1999, all Thai women married foreigners could not have the ownership on the land while Thai men married foreigners still enjoyed the ownership of land. The then government had the executive order for the Land Department to abolish that restriction. Now Thai women married foreigners may freely own land under the condition that they have to declare that the money they buy the land is her money alone not her husband. The land will be automatically become the private property of only a wife. A husband will have no right and say in case of divorce or separation.
We can legally say that foreigners may enjoy all rights under Thai law unless there is a clear restriction imposed by the law, e.g., foreigner cannot own the land because there is a restriction under the Land Code. But foreigners can the ownership of the land by succession because there is no restriction.
There are always questions if foreigners are fairly treated under Thai laws. Legally speaking, every country has laws imposing restrictions to foreigners. We have to consider without bias if the legislation in question is necessary for that country. If we put rating of country in this world of the most legal tolerance, we are confident that Thailand is not the worst one!

Tax Planning for Home Buyers in Pattaya

pattayatoday — Wed, 07 Dec 2011 06:52:00 +0000

Fine line between tax avoidance and tax evasion

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

“Money is a misery” seems to be the truth for our former beloved leader whose spouse was served a verdict for three years imprisonment by the Criminal Code for tax evasion by creating the fraudulent transaction under Section 39 of the Revenue Code of Thailand.

All lawyers learn only how to draw a fine line between tax avoidance, which is legitimate, and tax evasion, which is illegitimate and punishable. It can be a slim fine line between black and grey or limbo and inferno. Nowadays we have to add another concept of ethical tax planning for all tax professionals. Even some tax planning is legitimate because it involves only tax avoidance but it can be unethical.

Tax avoidance is a legitimate means to avoid excessive tax liabilities. Some people may try to ascertain the most appropriate business structure while some try to find loopholes of tax laws. Al Capone was put in jail for tax evasion, while our former prime minister was toppled by the military junta for unethical tax planning.

Tax evasion under Section 39 of the Revenue Code involves a fraudulent act of making a false statement or production of fake evidence or an artificial transaction to circumvent tax laws, e.g., using fake invoices to maximize deductible expenses like a big accounting firm in the US recently closed for accounting scandal.

We have a story of a man who was caught for tax evasion by falsifying many invoices to claim deductible expenses. The judge said, “We find no previous criminal record in your file. If you repent and decide to plead guilty, we may grant you probation by imposing either only a fine of 50,000 baht or social service work for 100 hours. Do you have any questions?”

“Yes, your honor,” the man replied with tear of joy. “I would like to know if the penalty fine I’ll pay can be deducted from my personal income tax”.

The legitimate tax avoidance is to find out the most appropriate tax rate by flying over all relevant tax laws before setting up a business structure or transaction. For example, you may set up a company with a registered capital of one million baht even you will use this company to buy property with a value more than ten millions baht. The reason is if your company has the registered capital of only one million baht, your company will be deemed as “SME” (Small & Medium Enterprise) with the preferable income tax rate of 15% in stead of 30% from net profits. This is a clear example of tax avoidance to ascertain the most appropriate business structure. Some unlicensed consultants wrongly advise their clients to register the high registered capital for their service fees. Not only the exorbitant fees you have to pay, but you also expose yourself to excessive tax liabilities.

Even a company with registered capital of only one million baht can buy property valued at 10 million baht because nine million baht will be recorded as a loan from a director as debt equity.

There is a saying, “There is no business without tax”. Good tax planning will ensure the most appropriate business structure and transaction which will not create any excessive tax liabilities. You have to fly over all tax laws to find the area which will be “Tax Wise”. Some areas are grey while some areas are black. You may pay less tax but it can be a problematic in the future. You have to check if the tax planning will put you in legal jeopardy instead of tax preference. Some contractors separate their construction contracts into a construction contract and supply of materials contract. They want to avoid a withholding tax of 3% for the construction contract because the supply of materials contract is exempted from a withholding tax.

The taxman may randomly inspect the inventory stock of materials. It can be tax evasion if they find no materials in the stock.

If a foreigner wants to buy a house for his retreat, he may set up a Thai company to buy this house. If this foreigner has no plan to do business, he may set up a dormant company with business objectives of import-export or consulting. The registered capital can be only one million baht.

The tax structure of this company will be as follows:-

1) Corporate income tax of 15% from the net profits for SME with registered capital of one million baht

2) Withholding tax of 3% for payments for services, 5% for rental fees and 2% for advertising fees

3) Withholding taxes for remittance of money aboard with a tax rate according to a Treaty of Double Taxation

The dormant company is not required to register either the 7% VAT or the 3.3% specific business tax (SBT) on gross income.

The company will be required to register VAT if its income is more than 1.8 million baht per year.

The company will be required to register SBT if it engages in the real estate business. We have come across many foreigners who were wrongly advised by unlicensed professionals to register the business objectives of “buying, selling and renting of property” for the company they set up to buy property. These business activities are regarded as the real estate business. The real estate business is subject to the “SBT” of 3.3% from gross income. In addition, you will have to register the land trading under Section 101 of the Land Code.

Nobody can determine the exact amount of tax that foreigners setting up companies to buy property should pay. Some taxmen use the criteria that if a foreigner who is a director lives in the house owned by the company, he must pay rental fees to the company. Such fees will be deemed taxable income which is subject to corporate income tax–15% of net profit for SME. The net profit is calculated from gross income deducted by deductible expenses which are actual expenses and depreciation of 5% for 20 years. For a small detached house, the tax from the rental fee should be about 4,000-5,000 baht per year.

However, if the company sells the property with profits, these profits will be subject to capital gains taxes.

Some foreigners face a real dilemma by declaring a lower price of property for transfer of ownership or conveyance at the land office. However, once they record the value of property in their accounts, they will have to use the declared price based on the receipts of taxes paid. It can be a monster of your own creation. The Anti-Money Laundering Office (AMLO) may question them about the money lost in space. It is advisable to seek advice from a licensed professional who will not jeopardize you by offering the wrong advice. Avoid using an offshore company in a tax heaven country like the British Virgin Island or Isle of Man which may create suspicion in the eyes of the authorities.

Most of you are decent and ethical even if you are not rich. You come to Pattaya to pursue happiness not to share the same fate as those prosecuted for tax evasion or unethical tax planning. If you just pay the appropriate amount of tax you will be happier than those scoundrels. However, nobody can tell you the appropriate amount of tax without double standard between ample rich and ample poor.

Most expats in Pattaya suffer not only from double standard but also from double pricing which is double jeopardy for our justice system. Our interim government, especially our prime minister, is very keen on reconciliation. We are quite confident foreigners in Pattaya will be well treated who can live in the sufficiency economy under the doctrine of his majesty the King.

Most of you can be happy with one rai of land (1,600 square meters) in Pattaya than living in an expensive apartment in London. “o country for old men”should not be the situation you may worry for your long stay in Pattaya if you know the simple magic sentence “enough is enough”.

“Bread, Justice & Laws”

pattayatoday — Thu, 24 Nov 2011 04:00:23 +0000

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

In the past, nobody can deny many foreigners in Pattaya are agnostic of law and justice. Most of them were sailors and drunken men who were protected by god. In this decade, many foreigners especially “baby boomers” are more serious to settle down in Pattaya. They can have the same quality of bread like in their countries. “Bread” is for your body, while “Justice” is for your soul. Can they find the same quality of “Justice” in Pattaya? We find out that now many foreigners become hungry for the “Quality Bread of Justice”. Many immigrant workers even in some developed countries are denied to have the “Quality Justice”. Nobody can find the right answer for the definition of “Global Justice” which is also available in Pattaya. The universal concept of “Justice” involves the fair, moral and impartial treatment of all persons.

Jane Welsh Carlyle said “When one has been threatened with a great injustice, one accepts a smaller as a favor”.

Many foreigners in Pattaya have misconception of being guests for good. Some are misled to believe they cannot expect even a small favor of justice.

To ascertain the universal definition of “Justice”, we have to use a metaphysical approach by purifying our minds. Many agnostic foreigners reading this article may tempt us by the cynical answer that “Justice” exists only in the “Kingdom of Heaven”.

Jesus answered this question by his metaphor:-

“For the Kingdom of Heaven, it is like a landowner who went out early in the morning to hire his laborers for his vineyard. Now when he had agreed with the laborers for a denarius a day, he sent them into his vineyard. After he went on about the third hour, he saw other standing idle in the marketplace. He said to them “You should go into the vineyard, and whatever is right, I shall give you”.

Again he went out about the sixth and the ninth hour and did likewise.

About the eleventh hour, he went out and found others standing idle, and said to them “Why have you been standing here idle all day?”. They said to him “Because no one hired us”. He said to them, “You should go into the vineyard, and whatever is right, you will receive”.

So when evening had come, the owner of the vineyard said to his steward “Call them the laborers and give hem their wages, beginning with the last to the first”.

When those came who were hired about the eleventh hour, they each received a denarius. But when the first, they supposed that they would receive more, and they likewise received each a denarius. When they received it, they complained against the landowner.

“These last men have worked only one hour, but you made them equal to us who have borne the burden and the heat of the day”. The landowner answered one of them by saying “Friend, I am doing you no wrong. Did you agree with me for a denarius?”

“Take what is yours and go your way. I wish to give this last man the same as to you, Is it not lawful for me to do what I wish with my own thing?” Or is your eyes evil because I am good”

“So the last will be the first, and the first last, for many are called but few chosen”

With this great metaphor, we are enlightened that the “Justice” in the Kingdom of heaven is in the state of mind. To be fair or not fair should not be the subjective question based upon your geed and desire. If you are dominated by the “Vice of Venality”, you may judge everything around you by money. It is the reason why every country should protect their people by the “Agrarian Law”.

“Law” is the means of “Justice” to prevent a double standard. However, in some cases, “Justice” is not equated with laws such as the Fugitive Slave Law of 1850 in the USA. “Good law can protect your right”, said Steve Burk, a retired US lawyer who becomes a long time resident and owner of “Café New Orleans” in Pattaya. After our conversation with him, we found out that he has never been agnostic of law and justice. “Law without lawyer is comparable to a gun without bullet”, he used a metaphoric approach to give us the clear explanation. He will be pleased to provide you with a clear explanation about “Equal Protection” under the Thai Constitution in comparison with 14^th Amendment of the US Constitution.

To consider if the law is just or unjust, we have to see both sides of the coin, e.g., the restriction for foreign ownership under the Land Code of Thailand. Many foreigners may say “If we have money, why we cannot by land in this country?, while your prime minister can buy a property or football team in the UK”

Who an answer the question, “Can Chinese investors from the China main land by share in UNOCAL?”

“What will happen to the country if all farmers sold their lands and burn their monies in a consumerism society?”

Who will be the right person who proposes the idea to the Thai government to abolish the restriction for foreign ownership under the Land Code? It will become definitely the national agenda requiring the national referendum.

Many foreigners may have the mentality of “just enjoying the status quo”. If you are the baby boomer generation buying property for your retreat, you may still enjoy the tolerant implementation of law. There are many legal mechanisms to maintain your peace of mind either the 30-year lease or loan or mortgage with last will and testament.

For some foreigners who strongly believe that “Hell hath no fury than a woman scorn”, they may still set up a Thai company with the business objectives not involved with trading of land or real estate business, and the land should not be more than one rai.

As the legal and judicial state, the Kingdom of Thailand will not enact any legislations which will be retroactive. In the worth situation, you will definitely get a fair compensation which should be enough to buy a horse.

“Don’t be miserable in this land of smiles!” To be or not to be the “Kingdom of Heaven”, is the state of mind. However, you should be happier here than the “United Kingdom of Heaven” where you ever belonged.

What is the profit of a man gaining the whole world and losing his soul!

“The famous Greek philosopher Plato, who lived about 3,000 years ago, taught his it more strictly. He would pose a philosophical to them, then ask them further questions about heir answers, must like a lawyer in cross examination.

In his first Dialogue, the one best known to people who know little about philosophy, he asked exactly your question. “What is justice?” Then for about 30 pages, he keeps listening and asking questions. Then for about 30 pages, he keeps listening and asking questions of several followers and pupils, when they try to reach an answer together. Eventually, by logical correction and elimination, they reach the conclusion that justice–that is, a just society–is one in which every man is given what he deserves. This seems like an empty answer bur it’s pretty wise. Justice requires good judgment in the enacting of laws, and in ‘delivering’ the fair application of laws. “If either activity is flawed, justice is flawed”.

Servitude of easement

pattayatoday — Mon, 07 Nov 2011 04:26:49 +0000

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

ALL people are hungry for justice which is not enough for everyone. Law is not equated to justice. Will we have to abide by the law without any objection? If you have the conception that all laws in your country are fair, you should not raise any question about the draconian tax laws in your country. Please weigh if Thailand or your country is the lesser of two evils before deciding to barter your kingdom of heaven in Pattaya just for the cheap horse.

Pattaya becomes the asylum for us from the flood in other parts of the world. Many people from other parts of the country relocate to Pattaya.

"No trespassing"

The chaos can take place everywhere in this planet which can be either in New York or Europe. Pattaya is always the asylum for everyone. We can be either pessimistic or optimistic to see that there is only half of water in a glass. It totally depends on your perception. There is a good news that many airline companies are interested to have their permanent office in U-Tapao for their international frights.

In Pattaya where many neighbors declare their legal battle to each other even for the vision of a sea view or access to the sea breeze. All foreigners should be educated about their rights and obligations before investing their hard earn money for their settlement in this land. Nobody can enjoy right without obligation. The metaphoric approach of Jesus to explain about the fairness and justice in the vineyard can be contempoprary to the presnt situation in Thailand.

Everyone must exercise his or her rights in good faith. Section 5.- of the Civil and Commercial Code of Thailand provides that every person must, in the exercise of his rights and in the performance of his obliglations of the whereby the owner of property may, act in good faith.

To live in peace and harmony with neighbors, the owner of land may be subjected to the obligation or servitude of easement which is a right that a person or persons, not the owner, have in the property of another. The owner must respect such right and will. The easement we are going to talk is a right-of-way or the right to us the driveway or stairway.

The access easement allows one or more persons to travel across another’s land to get to a nearby location , such as a road.

The “Servitude of Easement” or “Para Jumyom” is defined in Section 1387.- of the Civil and Commercial Code of Thailand that an immovable property (land and building) may be subjected to a servitude of easement by virtue of which the owner of such property is bound, for the benefit of another immovable property, to suffer certain acts affecting or to refrain from exercising certain rights inherent in his ownership.

You should have your independent lawyer to check the title deed (chanod) of the piece of land you will buy to verify if the land is accessible to a public road. If you buy small plot of land from the owner who are not the licensed developer, you will have to ask the developer to register the servitude of easement (Para Jumyom) with the Land Office. With the registration, the owner of the land which the road is located cannot block the access or interupt you.

The above scenario is the situation whereby you and the developer can find the amicable solution. But in case that you buy the land and find out after that your land has no access or “Ta Bod” which means the blind land and nobody want to give you the access, you may seek for the injunction of the Pattaya Court of Justice to order the owner of the land nearby to open the access for your driveway. The judicial power in Thailand is quite independent and free from chauvinism. There are many foreigners wining the case against Thai nationals. If you go to the court with your clean hands, you will be always protected by the law regardless your race and nationality.

The door of justice will open only for the one who knocks.

“Good Will” of your Thai wife shall never die

pattayatoday — Mon, 24 Oct 2011 03:46:11 +0000

Foreign husband can a beneficiary of his Thai wife to inherit a piece of land

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

A THAI WIFE can make a last will and testament to bequeath her estate even the piece of land and house to her foreign husband. The last will and testament will preclude all her other heirs or her Thai family to share the estate with her foreign husband. The ownership of land can be put in the name of her foreign husband as the executor of estate. The right of inheritance for a foreign husband is not restricted by the laws of the Kingdom of Thailand.

In case Thai wife dies without preparation of her last will (intestacy), her foreign husband will have to share the estate with her other heirs which can be children or your step-children and her parents. Some Thai women married to foreigners may have nearly a dozen children from her previous husband(s).

If she is childless, the husband will have to share the estate with her parents or even brothers or sisters if she has no parent. The will can solve this problem.

Common Law Wife and Husband or Life Partners

Thai law does not acknowledge either cohabitation without registration of the marriage or common law wife and husband. In this case, each of them will not be entitled to devolution of estates as legal heir. However, the will can absolutely solve their problem, and other wise the circumstance of life partnership must be proved if it is not so obvious.

A life partnership is the case of a common law wife and husband living together and ostensibly treat each other as wife and husband. They jointly work and earn their living together. The properties earned during their cohabitation can be shared on partnership basis. However, there are a lot of facts, which must be ascertained by the Court.

Funeral Arrangement

Some Thai common law wives cannot arrange for the funeral of their common law foreign husbands. Most embassies will keep the corpse of their nationals in the police hospital, in order to find their relatives in their native countries. It is very tragic that the common or de facto wife in Thailand cannot do anything. To avoid this tragic situation, you may mention in the will that your common law wife can arrange for the funeral.

Taxation

In the UK, it is said that death is the most convenient time to tax the rich. Fortunately, Thailand has no tax for succession or inheritance which is called “Death Tax”. If the deceased has not any income in the year of death, it is not required to file a personal income tax return (Phor.Ngor.Dor. 91) of the deceased. The executor of estate will be a person responsible for filing in case of necessity. There is no requirement to block the estate by the government except special circumstance.

Verbalized Will

A will may be verbalized in case the testator is going to die causing him not able to make the will by other ways. There must be at least two witnesses who are required to report promptly to the District Chief to notify the date and details of the will. The Chief District will note down and ask the witnesses to sign.

The Executor of Estate

The testator may appoint the executor of estate, which can be the heir or any third parties. The executor of estate will compile the estate to allocate to the legatees.

Trustee

The concept of trustee is not acceptable by Thai laws. However, to safeguard the interest of minor heirs, you may set forth a condition to prohibit the sale or disposal of real estate until your heirs become major at the ages of 20 years old, or even appoint a controller of estate, which can be either individual or corporate to look after until your minor heir becomes major.

Probate of Will

In Thailand, there is no out-of-court system to probate the will instead of going to the judicial process. However, in our experience, we have always found some banks agree to pay to the beneficiary having a clear and precise will and is legally reliable by local notarization.

The Court Process to recognize the will, which is clear, precise and legally reliable, will be one-stop.

The petition to probate the will is a non-contentious process unless there is a contest by the third party. If there is no contestation, the Court will verify the authenticity and form of the will especially witnesses who will have to testify in Court for the mental and voluntary status of the testator. In case the testator and beneficiary are both foreigner, the identity must be checked by their passport.

Contestation of the Will

The will may be contested by the statutory/biological heirs who are disappointed by the will. The contestation must be made within one year from the date of awareness. In case of contestation, the probate process will become contentious whereby the litigants will have to prove the facts they assert. The contestation is always on the mental and voluntary status. It is advisable to make the will with the medical practitioner and psychiatrist or shrink who will make the affidavit with the video or photos showing that the testator was of sound mind without fraud or duress.

The qualified notary public should be also the witness for the execution of the will.

The Court will have a judgment in your favor or dismiss the petition. If the judgment is in your favor, you may show to the bank or land office to hand over money or transfer the land and house to you. If you are foreigner, you have to seek a permission from the Minister of Interior to hold the land not more than one rai (please see the details in the Land Code).

Jurisdiction of the Will

The testator should seek the proper advice from the local solicitor about the jurisdiction of the will. Each country has her unique laws and requirement. The legal booby traps under Thai law should be carefully verified.

Language of the Will

The will can be made in any language. If it is made in Thai and another language, the Thai version will be prevailing.

The English language with the Thai translation is widely acceptable by Thai courts.

Please note that a will is a juristic act, which will be effective after the death of the testator who will have no chance to be aware if it is good or bad. It is advisable to study and discuss further details in any specific issues with the competent legal counsel to obtain the first hand information.

The war of roses to claim back the property

pattayatoday — Wed, 05 Oct 2011 04:28:13 +0000

“Hell hath no fury more than a woman scorned”

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

It is undeniable that the booming economy and well being of Pattaya is attributed to many foreigners who blindly buy properties for their Thai girl friends. Who will care about their destiny? Life is true only in a fairly tale which you can see a young charming prince and his fair lady live together happily ever and after in a castle.

In Pattaya, “Truth” is always stranger than “Fiction”. Most foreigners expect only the closed answer from their lawyer “No problem sir! Your life in Pattaya will be like a rose in the English hill”.

“Rosy life” is what many foreigners expect. These dreaming foreigners invest all their hard earned money to make their dreams come true.

This article is for some foreigners whose dream becomes a nightmare. We have some clients who felt in love with a bimbo. “No money, no honey” He was asked by his girl friend to prove his sincerity by buying property for her.

“Send money my bank, I take care house, no problem” is what the bimbo may ask her man by her simplified broken English which is always workable. The closed answer of her man will be “Yes, Honey, I’ll take care you same same you take care me”.

The whole processes are done by a consultant who always laughs every time once the bimbo called her man “Kwai” which is a beautiful nickname for many foreigners in Pattaya.

“You’re farang. The land cannot be put in your name” is what foreign buyers are always told by a consultant.

We have a real story of a retired Swiss man who divorced from his intolerant Swiss wife and started his new life by buying a house to live with his new Thai girl friend. He went back to Switzerland to sell his properties and sent all his monies to his Thai girl friend His girl friend arranged for the whole process to put the house under her name. The Swiss man went back to Pattaya to live in the house he bought for her.

Most of readers may have already known the end of this story once the hell hath no fury more than his girl friend scorned “Get out my house with your golf bag!”

Can this broken heart man sue his Thai girl friend to return his property?

The answer can be either “Yes” or “No” depending upon the fact he can prove with the Court of Justice. The main fact is that “he bought that property from his money but put the ownership of the land in the name of his girl friend as a “Nominee”.

Under Section 96 of the Land Code, any Thai national acting as a nominee to own a piece of land on behalf of a foreigner will be legally forced to sell the land within one year. The Thai nominee can be punishable under Section 267 of the Penal Code of Thailand for making a false statement in a public document with the maximum imprisonment of three years. For more detailed story, you may search in the article “The Nominee” in our reading room of www.thaisolicitor.com.

There was a case in Pattaya Court of Justice whereby a foreigner sued his scorning Thai lady who owned the land on his behalf. The judgment was made on 28^th February,2007 in favor of that foreigner to dissolve the ownership of the land held by the Thai lady. The governor of Chonburi province issued the letter dated 11^th October,2007, to instruct the registrar of the Pattaya Land Office to force the Thai lady to sell the land. The letter clearly instructed the registrar to take a legal action against the Thai lady for violation of Section 267 of the Penal Code of Thailand. If you want to read the complete version of the case, please contact us by e-mail.

The foreigner who sues the Thai nominee will be entitled to the money from the sale of land.

In the judicial system, “Justice” is based upon the “Fact”. The judge is just a human not omniscient like “God”. You will have to seek the “Fact” by yourself and you will find the “Truth” which shall set you free.

His girl friend may argue that he gave the property to her for the passionate gift without expecting anything in return. What you expect from her is only “love”. It is not a fraud or ingratitude if she showed to him afterwards that she has never loved him from a day one.

It is not similar to the case that you put the ownership of land in the name of the person having no passionate relationship with you whom you can easily prove that person is the “Nominee”, for example, driver or maid who just only lent you a name and has never kept the land title document (Cha Nod).

Another way the Thai lady may argue is that she had the “co-ownership” of the land with you. In this case, you may go Dutch with her to share 50% of money from selling the land. The Land Code of Thailand prohibits foreigners only from the ownership of land or freehold right, not the right to share the money or proceeds from the sale of land. You may search for the English version of the Land Code on Foreign Ownership in our reading room www.thaisolicitor.com.

If you prefer to buy the property by putting the ownership in the name of your Thai lady in stead of company, it is advisable to follow the following guidance:-

1) You should send the money from your bank account in your country to your bank account in Thailand and withdraw to make payment by a cashier’s cheque. You should keep the bank statement and money transfer slips to show the transactions that all money comes from your pocket.

2) You should deal with a real Thai lawyer or “Tanai Kwam” who is independent and can serve you as only one master to protect the best your interest without any “Conflicts of Interest” or “Conspiracy of Silence”. The independent lawyer should not sit under the same roof with the broker or seller and should be able to directly communicate with you in English.

3) You should sign the contract to buy the property by yourself. Never believe if anybody says that a foreigner cannot sign a contract to buy a land.

4) You should register a mortgage with the Land Office that your Thai girl friend borrows money from you.

5) You should keep the original “Land Tile Deed” (Cha Nod) and “House Register Book” (Tabien Baan) with you in a good safe.

6) You should prepare the last will and testament for her to sign to bequeath the land and house to you once she dies before you which will not always happen.

The happiness still requires many factors. Please seek by yourself and you shall find.

“Gender” & “Sex” under Thai laws

pattayatoday — Wed, 21 Sep 2011 04:39:22 +0000

Rose in any other name just smells sweet

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

Our latest constitution has been passed by the referendum since 19th August, 2007. What is new in our constitution? To be not or to be “secular” will not be the question in this issue. What we will discuss is a “Gender Injustice” under Thai laws. We always say that law is not always equated to justice. Law which is equated to justice must be fair and inclusive to maintain the unity within the world of diversity. The ignorance of mankind about gender and sex seems to be the main factor provoking the homophobic sentiment. To be homosexual is genetic or epidemic should be the question. You may find information in many web-pages providing you with the clear explanation about the difference between “Gender” and “Sex”.
Thailand has already 17 constitutions which were all abolished by the military juntas who intervened into our politics with the pretext to restore our democracy. In other countries the constitutions can be amended but not abolished. In the USA, there are more than 20 amendments and the most famous one is the 14th amendment which abolished the “racial apartheid”. The next amendment should be the abolishment of the gender discrimination which still exists in many states in the USA not the rights to carry the gun like Clint Eastwood in the film “Dirty Harry”.
The undemocratic means of militarization of this junta which was supported by many people in the beginning is coming to the end. Can the end justify the undemocratic means of militarization? We have to see if the country can go back to the real democracy.
The concept which never changes in our constitution is the equal protection. Every constitution adopts the doctrine of human equality in the Universal Declaration of Human Rights:-
“All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination”
The draft of our new constitution enshrines this doctrine in Section 4.- that all persons have the human dignity and can enjoy protection by the laws from any prejudice against the dignity. The literal substance of this section can be understood that the state will enact the laws imposing the punishment for homophobic persons who violate this human right. There was the news about a lady boy who was not permitted to enter a pub in a famous hotel in Bangkok. With a pressure from the international community, the executives of the hotel came out to say sorry with the press. Is it enough to let these homophobic people go and sin no more? Did they really repent for their homophobic behavior or just thought about their business?
We were contacted by a British who decides to spend a retirement in Pattaya. This British is 63 years old with a “Male Gender” in a passport. The problem is this British has a partner who is only 32 years old with also a “Male Gender” in a passport. They registered the “Official Partnership Civil Ceremony” in the UK.
The civil union of this couple is legalized under the English laws. Can they declare this legal status in Thailand? Can the partner who is 32 years old apply for the dependent visa with the partner who applies for the retirement visa?
The answer from the Immigration Office will be definitely “No” with the reason that the homosexual civil union is against the “Good Moral”.
Can anybody give the definition of the “Good Moral”?
Section 1448.- of the Civil and Commercial Code of Thailand provides “A marriage can take place only when a man and a woman have attained their seventeenth year of age. However, the court may, on reasonable grounds, permit them to marry before attaining such age”
The court of justice always follows the literal context in Section 1448.- that only a man and a woman can register their marriage. This is the reason why the civil union in other countries is not recognized.
For the ownership of properties the homosexual couple jointly earns, the principle of “life partnership” is applied by the court and the properties will be equally shared. To prove the co-ownership is a matter of fact which is not always easy in some circumstances. They cannot claim other rights as a spouse especially for inheritance. However, they can solve this problem by making a will.
The qualification for visa application as a spouse or civil partner should be reviewed by the National Immigration Bureau. They should have a legal team to study about the conjugal laws in other countries, e.g., Danish Registered Partnership Act in Denmark, Civil Sodality Pact in France, Act on Life Partnership in Germany and Civil Union in the USA and UK. It can be a good image for Thailand to prove that we are open society as we say that we can live in a narrow place but not with a narrow minded people.
If any readers can give us the proper definition of the word “Good Moral”, we may convey your good definition to the Administrative Court to abolish this gender discrimination.
Anybody wanting to join the test case against the “Gender Injustice”, please contact us.

Standard clauses you should bargain with the condominium developers

pattayatoday — Tue, 06 Sep 2011 07:00:31 +0000

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

A contract is a binding agreement between two or more parties that usually results in some type of performance.
In Thailand, all persons have the freedom to enter into any types of contract they deem fair if the conditions in the contact are not against laws or good morals or public order.
The situation in Thailand that many developers always take advantage from the buyers who have not any knowledge of the law becomes the national agenda for the government to protect these gullible buyers. About 50% of the disputes in Court are from the default of the condominium developers.
The Consumers Protection Act (Volume 2) 1998 specifies that the business of developing and selling condominiums is controlled by the law whereby all developers are legally required to use the standard contract clauses drafted by the Consumers Protection Office.
Due to the limited space of our pages, we cannot quote all clauses in the standard contract. We can select only some clauses about the default which should be put in your contract.

Clause 7. Penalty fines and interest for default and termination of the Contract
7.1 In case the “Buyer” is default to make the payment specified in Clause 4, the “Seller” may claim the interest for default at the rate of ……. % per year (not more than 15% per year) from the outstanding amount. However, the total amount must not exceed ten per cent (10 %) of the price of the condominium unit according to this Contract.
7.2 In case the “Buyer” is default to make the payment which is agreed to pay before the transfer of ownership, the “Seller” shall have the right terminate this Contract in accordance with the following circumstances:-
7.2.1 Default to make the aforesaid payment in case one upfront payment is agreed.
7.2.2 Default to make three (3) consecutive installment payments in case from 24 installment payments are agreed.
7.2.3 Default to make the payment for 12.5% of the total price in case less than 24 installment payments is agreed.
Before the termination of this Contract, the “Seller” must inform the “Buyer” in writing to pay the outstanding amount within the period of time not less than 30 days from the date on which the “Buyer” has received the letter and the “Buyer” still ignores to comply with the aforesaid letter.
7.3 In case the “Seller” cannot transfer the ownership of the condominium unit to the “Buyer” within the period of time specified in Clause 4, the “Buyer” may proceed as follows:-
7.3.1 The “Buyer” shall have the right to terminate this Contract whereby the “Seller” agrees to returnthe full amount of money already paid by the “Buyer” with the interest of ….. % per year (same rate with the rate of the penalty fine imposed by the “Seller” in case the “Buyer” is default according Clause 7.1) and the “Buyer” will not lose the right to take legal action for other damages.
7.3.2 In case the “Buyer” never exercises the right to terminate this Contract according to Clause 7.3.1, the “Buyer” may charge the daily penalty fines for the rate of ….% (not less than 0.01% of the price of the condominium as agreed in the Contract but the total amount cannot exceed 10%). If the “Buyer” has already exercised the right to charge the penalty fines up to the extent of 10% of the price of the condominium unit and the “Buyer” deems that the “Seller” cannot continually comply with the Contract, the “Buyer” may exercise the right to terminate this Contract.
7.3.3 In case the “Seller” cannot carry on the condominium project due to force majeure, the “Seller” agrees to return the full amount of money the “Buyer” has already paid with the interest of ….% per year (by applying to the maximum interest rate of the fixed savings deposit account of Krung Thai Bank Public Company Limited from the receiving date of the money from the “Buyer”). However, the “Buyer” shall not lose the right to claim other damages. If the “Seller” has returned money to the “Buyer”, the amount of money returned accordingly can be deducted from the interest to be paid.