Taxes Grow Without Rain
The Phuket Gazette.
There is an old proverb that goes, 'taxes grow without rain'. Given both the current water supply shortage and impending tax increases, this adage looks to be a bit stranger than fiction.
Last year, Thailand's economic stimulus package for the property sector created a feeding frenzy of hurried transactions, though like the closure of famed nightspot Studio 54, 'the party now looks to end' on March 28th.
While developers have been salivating at the chances of a renewal of the package, the Cabinet recently announced that there will be no 'saved by the bell' scenario for the initiative. Specific business tax (SBT) will increase from 0.1 to 3.3 percent, transfer fees revert from 0.01 to 2 percent and mortgage fees will escalate from 0.01 to 1 percent.
Land department offices all over the country have been hurriedly trying to get in last minute transactions, while buyers looking to save have been purged from the sidelines and into the field of play.
The stimulus package has been effective, but many are now asking: What's next?
Here in Phuket, we are starting to see key mergers among the island's prominent legal firms to help property owners tackle the difficulties and complexities of tax planning.
We have seen one prominent legal firm emerge into the field of tax planning for both real estate developers and purchasers: The consolidation of McEvily & Collins into DFDL Mekong. This merger looks to be a firm strategy in developing a far-reaching business platform.
Both Matthew McEvily and Marcus Collins have been key players in Phuket's property market over a large portion of the past decade, representing far too many projects and transactions to list here.
With offices in Thailand, Vietnam, Laos, Cambodia and Myanmar, the move will expand the reach of DFDL. The firm will be likely to seek further consolidation with other legal firms who are highly leveraged in property.
The McEvily & Collins office in Kamala has now been rebranded as their Samui office, and the two tribes have merged in Bangkok into DFDL's headquarters. Both Marcus and Matthew remain key figures in the venture.
Heading up the tax practice market in Southeast Asia is Edwin Vanderbruggen, who has both experience both inside and outside of the region. As tax season is now being thrust upon us, the firm has been holding seminars targeting the property sector with a key emphasis on the impacts of the Foreign Business Act (FBA) and the intricacies of development taxes, including SBT and VAT.
Another Thai-based legal firm with strong roots in real estate is Limcharoen Hughes and Glanville, which has adopted a different strategy to focus on growth in Asia. Recently a new Bali office was opened, which is headed by Ingo Muller. Given the rise in Phuket's property sector, this should help open the door to more cross-trading opportunities within resort-grade residential and tourism investments.
Also in Phuket, leading man Desmond Hughes has continued to put his stamp on this island with his effective practice and has been proactively promoting Phuket for the last few years. At the same time, a strong vision is present following the partnership of Christian Glanville and Mark D'Alelio in Vietnam, which has edged new openings in Koh Samui.
Despite all these consolidations, a number of strong and smaller service providers continue to play an important role in developing the island, such as John Howard and Timothy Tailor with Tilleke and Gibbins, Siam Legal's Kert Stavorn and pioneer Sam Fauma, coupled with newcomer Michael Greth of International Law Office (ILO).
Other notable players here include recent upstart JWS, who's core tax practice has now been expanded into legal services and the Network Advisory Team (NAT) founded by highly respected Khun Sirirat Chotivechkarn, which has a strong presence throughout the Kingdom.
As we move into the Phuket of the future, the island's property horizon looks to see changes as we inch our way into a more developed market and see more sophistication in the industry. Professional service providers play a key role, and indeed one of the greatest appeals of Phuket continues to be the quality of local resources and the considerably large knowledge bank available to both established and upstarting businesses.
While we all look skyward for the hint of a cloud and dream of the incoming rainy season, taxes remain a constant in all of our lives, but the up and coming firms show promise in dealing with 'growth without rain'.