VAT vs SBT in Thailand Property Sales: Which Tax Applies to You in 2026

A seller in Phuket paid 3.3% of the assessed value on his condo sale. His neighbour, selling a comparable unit, paid 7%. The difference came down to a single tax that most foreign buyers only discover when they are already standing at the Land Department counter.

Every property transaction in Thailand triggers one of two taxes collected by the Land Department: VAT at 7% or Specific Business Tax (SBT) at 3.3%. They are never charged simultaneously. Which one applies depends on the seller's legal status and the length of ownership. For an investor, the spread between them can run into the millions of baht.

Here is a precise breakdown of how each tax works, when it applies, and what mistakes to avoid.

Quick Answer

• VAT (7%) applies to companies registered as VAT payers and to individuals who sell property on a commercial, recurring basis
• SBT (3.3%) applies to individuals who have owned the property for fewer than 5 years, calculated from the date of title registration in the Tabien Baan (house registration book)
• If an individual has owned the property for more than 5 years, or has been registered in the Tabien Baan for at least 1 year, SBT does not apply
• When SBT is not triggered, a Stamp Duty of 0.5% applies instead, calculated on whichever is higher - the appraised value or the contract price
• Both VAT and SBT are calculated on the Land Department appraised value or the contract price, whichever is higher
• The buyer does not pay VAT or SBT directly, but in practice the parties often negotiate how costs are split

Scenarios and Options

Scenario 1: Buying from a Developer (VAT-Registered Company)

When you purchase a condominium directly from a developer, the developer pays VAT at 7%. In practice, this cost is almost always built into the advertised sale price. The final figure you see in the contract is inclusive, so no additional VAT is added on top. The picture changes when you later resell on the secondary market.

Scenario 2: Resale by an Individual Within 5 Years

An investor purchased a Phuket condo in 2023 and decides to sell in 2026. Ownership is under 5 years and the seller has no Tabien Baan registration at the property. SBT at 3.3% applies. If the Land Department appraised value is 8,000,000 baht, the SBT liability is 264,000 baht. Stamp Duty is not charged when SBT applies.

Scenario 3: Resale by an Individual After 5 Years

The same property, but the owner waits until after the five-year threshold has passed. SBT no longer applies. Instead, Stamp Duty at 0.5% is charged - on an 8,000,000 baht appraisal that equals 40,000 baht. The saving compared to Scenario 2 is 224,000 baht. This is precisely why experienced Phuket investors frequently favour a hold period of five years or more.

Scenario 4: Sale Through a Thai Company

If the property is held by a Thai legal entity with annual revenue exceeding 1,800,000 baht, the company must register as a VAT payer and will pay 7% on the sale. This is more expensive than SBT, but a VAT-registered company can offset input VAT on renovation costs, furnishings, and other qualifying expenses. Whether the structure makes financial sense depends entirely on the specific figures involved.

Main Risks and Mistakes

1. Miscounting the five-year period. The clock starts on the date of title registration at the Land Department, not the date you signed the purchase contract. Confusing the two dates leads to an unexpected SBT bill.

2. Assuming Tabien Baan registration is easy for foreigners. Some advisors suggest registering in the house book to qualify for SBT exemption before the five-year mark. In practice, this is difficult for foreign nationals, and the registration must have been valid for at least one full year prior to the sale. Land Office staff verify this.

3. Overlooking withholding tax. In addition to VAT or SBT, a withholding tax is deducted at the point of transfer. For individuals, the rate is progressive from 5% to 35%. For companies, it is a flat 1%. This is a separate payment that is charged on top of SBT or Stamp Duty and must be factored into your net proceeds calculation.

4. Underestimating the corporate structure tax stack. A Thai company will pay VAT at 7%, then corporate income tax at 20% on profit, and dividend withholding tax when distributions are made to shareholders. Without proper structuring, the combined effective rate can exceed 30%.

5. Leaving tax allocation undefined in the contract. Thai law does not rigidly prescribe which party - buyer or seller - bears each specific tax. Common practice allocates the 2% transfer fee equally, with SBT and withholding tax falling on the seller. However, none of this is automatic. Everything must be specified in the purchase contract. Review the allocation clause before signing.

FAQ

Can a foreigner be registered as a VAT payer in Thailand? Yes, if the foreigner operates through a registered Thai legal entity with annual revenue above 1,800,000 baht. As an individual non-resident, VAT registration is extremely uncommon.

Does VAT apply when buying a secondary-market condo from a private individual? No. A private seller either pays SBT (ownership under 5 years) or Stamp Duty (ownership over 5 years). VAT does not apply to private individuals selling their own property.

How do I find the official appraised value of a property? The appraised value is published by the Land Department and is updated on a rolling cycle every four years. The most recent revaluation was completed in 2024. You can request the current figure directly from your local Land Office.

Is SBT truly 3.3% or is it 3% plus something extra? The base SBT rate is 3%. A municipal surcharge equal to 10% of that base (i.e., 0.3%) is added on top. The effective rate is therefore 3.3% in all transactions.

Can gifting the property to a relative before selling avoid SBT? Technically, a gift is not a sale and SBT does not apply to the transfer itself. However, a transfer fee still applies (0.01% for direct heirs, 2% for others), and withholding tax may arise. Crucially, the new owner's five-year clock restarts from zero on the date of the gift transfer.

Does the Thailand-Russia double tax agreement affect these taxes? Thailand and Russia have a Double Tax Agreement (DTAA) in force since 1999. Tax paid in Thailand on a sale can in principle be credited against Russian tax obligations. However, SBT and VAT are not income taxes - only withholding tax qualifies for treaty credit treatment.

Do the same rules apply when selling land rather than a condo? Yes. The same framework applies: SBT at 3.3% for ownership under 5 years, Stamp Duty at 0.5% for ownership over 5 years, and VAT at 7% for corporate sellers.

Is VAT already included in new-build prices? In the vast majority of cases, yes. Major developers quote prices inclusive of VAT. Smaller developers occasionally advertise prices excluding VAT, so always confirm before signing.

Understanding the difference between VAT and SBT is not an academic exercise. It translates directly into hundreds of thousands of baht saved or lost on a single transaction. Before signing any purchase or sale agreement, ask your lawyer for a full tax liability breakdown and ensure the allocation of each payment is clearly documented in the contract.

Ready to invest in Thailand? Our experts will help you find the perfect property.