The Specific Business Tax (SBT) is one of Thailand’s most significant property transfer taxes for sellers, yet it remains widely misunderstood. This comprehensive guide decodes the 3.3% SBT requirement, explains critical exemptions that can save you hundreds of thousands of baht, and walks through practical calculations that apply to your specific situation. Whether you’re selling within five years or planning a long-term property investment, understanding SBT – alongside related taxes like stamp duty and withholding tax – is essential for accurate financial planning.
What is Thailand’s Specific Business Tax (SBT)?
Specific Business Tax (SBT) is an indirect tax introduced in 1992 as a replacement for traditional business tax. It applies to certain businesses whose value-added is difficult to define under Thailand’s standard Value-Added Tax (VAT) system. One critical category subject to SBT is the sale of immovable property conducted in a commercial or profitable manner.
The Purpose: Thailand’s government levies SBT on property transactions it deems speculative or business-oriented (typically property owned less than five years) to discourage short-term real estate speculation while encouraging long-term property investment. This policy distinction directly impacts how much you pay when selling property.
The Rate: The standard SBT rate is 3% of the property’s value, plus a 10% local tax surcharge on that amount, totaling 3.3%.
This tax is calculated on whichever is higher: the actual sale price or the government’s appraised value (assessed by the Revenue Department). This mechanism prevents sellers from artificially suppressing reported sale prices to evade tax obligations.
Key SBT Elements: Who Pays, When, and How Much
The Core Numbers
| Element | Details |
|---|---|
| Tax Rate | 3.3% (3% SBT + 10% local surcharge) |
| Calculation Base | Sale price OR appraised value (whichever is higher) |
| Responsibility | Typically the seller |
| Payment Location | Land Office (Department of Lands) |
| Tax Type | Indirect tax (not personal income tax) |
| Timing | Upon ownership transfer registration |
Who Pays SBT
According to Thai Revenue Code, sellers bear responsibility for SBT payments. However, Thai law does not prohibit contractual agreements where the buyer assumes responsibility. In practice, negotiations can shift this burden, though it remains the seller’s legal obligation.
For Companies: Corporate property sellers always pay SBT when applicable. This tax applies regardless of company type.
For Individuals: Personal sellers pay SBT unless they qualify for one of the critical exemptions discussed below.
The Critical 5-Year Rule: Your Path to SBT Exemption
The most important factor determining SBT liability is property ownership duration. This single element can mean the difference between paying 3.3% or just 0.5% in property-related taxes.
The Exemption Threshold
If you have owned the property for more than 5 years, you are automatically exempt from SBT. Instead of paying 3.3% SBT, you pay only 0.5% stamp duty – a reduction of 2.8 percentage points.
For a property appraised at 10 million baht:
- Short-term (≤5 years): 330,000 baht in SBT
- Long-term (>5 years): 50,000 baht in stamp duty
- Your savings: 280,000 baht
This substantial difference is why many real estate professionals counsel clients to hold properties beyond the five-year threshold if possible.
Important Nuance: The “More Than 5 Years” Calculation
The Thai tax system measures ownership from the date you acquire the property rights (usually the transfer registration date) until the new sale registration date. A property owned for exactly five years does not qualify for the exemption – you must exceed five years.
Planning Tip: If you’re approaching the five-year mark on a property sale, delaying the transfer by even a few months can save you substantial sums.
Complete List of SBT Exemptions for Individual Sellers
While the five-year rule is the primary exemption, Thai law provides several additional circumstances where SBT does not apply, even for property held under five years.
SBT Exemptions (Individual Sellers Only)
- Primary Residence Exemption
- Applies when your name appears in the house registration book (Tabien Baan)
- Must have been registered for at least one year before the sale
- Property must be used as your principal place of residence
- Applies regardless of ownership duration
- Requires official documentation at time of transfer
- Inheritance Transfers
- Property transferred to a legal heir is SBT-exempt
- Property transferred according to a will is SBT-exempt
- Inheritance status must be verified through legal documentation
- No time limits apply
- Transfer to Legal Children
- Direct transfer to biological or legally adopted children is exempt
- Note: Some sources specify biological children only; verify current rules with your tax advisor
- Requires legal proof of parent-child relationship
- Transfer to Government Agencies
- Properties transferred to Thai government bodies
- Transfers to local government organizations
- Documentation from receiving government entity required
- Transfer to Religious/Charitable Institutions
- Churches, temples, and mosques receive SBT exemption
- Charitable foundations and religious organizations
- Official institutional registration required
What SBT Exemptions Do NOT Apply To
The following situations do not exempt individual sellers from SBT:
- Transferring to extended family (aunts, uncles, cousins)
- Transferring to a spouse (unless it qualifies as a primary residence transfer)
- Transfers to trusts or foundations (unless they are religious/charitable)
- Sales to friends or business associates
Critical Documentation: For any exemption claim, you must provide supporting documentation at the Land Office during the transfer. Missing or incomplete documents may force you to pay the full 3.3% SBT, so ensure your paperwork is prepared in advance.
SBT vs. Stamp Duty: Understanding the Choice
One of the most misunderstood aspects of Thailand’s property tax system is the relationship between SBT and stamp duty. These are mutually exclusive taxes – you never pay both.
The Decision Tree
| Scenario | Applicable Tax | Rate |
|---|---|---|
| Property owned <5 years (no exemptions apply) | Specific Business Tax | 3.3% |
| Property owned 5+ years OR qualifies for exemption | Stamp Duty | 0.5% |
| Inheritance transfer | Stamp Duty | 0.5% |
| Primary residence sale (qualified) | Stamp Duty | 0.5% |
Why This Matters
The stamp duty rate of 0.5% represents government policy encouraging long-term property investment. By owning property beyond five years, you benefit from a tax reduction of 2.8 percentage points – a significant financial incentive for patient investors.
Example Comparison (10 million baht property):
- Short-term seller (2 years): Pays 330,000 baht SBT
- Long-term seller (6 years): Pays 50,000 baht stamp duty
- Tax advantage: 280,000 baht saved
How to Calculate SBT: Practical Examples
Understanding SBT calculation is straightforward once you know the base principle: 3.3% of the higher of (sale price or appraised value).
The Calculation Formula
SBT Amount = Property Value × 3.3%
Where “Property Value” = Maximum of (Actual Sale Price, Government Appraised Value)
Worked Example 1: Standard Property Sale
Scenario: Individual seller, condo owned for 3 years, selling for 6 million baht. Government appraisal: 5.5 million baht.
Step 1: Determine tax base
- Sale price: 6,000,000 baht
- Appraised value: 5,500,000 baht
- Tax base = 6,000,000 baht (higher amount)
Step 2: Calculate SBT
- SBT = 6,000,000 × 3.3% = 198,000 baht
Responsibility: Seller pays 198,000 baht at Land Office during transfer
Worked Example 2: Appraised Value Exceeds Sale Price
Scenario: Seller owned property for 2 years. Negotiated sale price: 8 million baht. Government appraisal: 8.5 million baht.
Step 1: Determine tax base
- Sale price: 8,000,000 baht
- Appraised value: 8,500,000 baht
- Tax base = 8,500,000 baht (higher amount)
Step 2: Calculate SBT
- SBT = 8,500,000 × 3.3% = 280,500 baht
Key Insight: The seller cannot reduce tax by negotiating a lower sale price. The government appraisal amount takes precedence, protecting tax revenue.
Worked Example 3: Long-Term Owner (Stamp Duty Instead of SBT)
Scenario: Individual seller owned property for 7 years. Sale price: 5 million baht. Appraised value: 4.8 million baht.
Step 1: Determine applicability
- Owned >5 years = SBT exemption qualifies
- Stamp duty applies instead (0.5%, not 3.3%)
Step 2: Calculate stamp duty
- Tax base = 5,000,000 baht (sale price, which is higher)
- Stamp duty = 5,000,000 × 0.5% = 25,000 baht
Comparison: If this same property were owned for 4 years instead, SBT would be 165,000 baht. Holding for 7 years saves 140,000 baht on this transaction alone.
SBT in Context: Related Taxes You Must Budget For
Selling property in Thailand involves several concurrent taxes beyond SBT. Understanding these – and how they interact – is crucial for accurate financial planning.
Complete Tax and Fee Breakdown
| Tax/Fee | Rate | Who Pays | When SBT Applies | When SBT Exempt |
|---|---|---|---|---|
| Transfer Fee | 2% | Buyer+Seller (typically 50/50) | Always | Always |
| SBT or Stamp Duty | 3.3% or 0.5% | Seller | SBT applies | Stamp duty applies |
| Withholding Tax | Progressive (individuals) / 1% (companies) | Seller | Always | Always |
| Land & Building Tax | 0.02%-1.2% (annual) | Owner | Annual tax | Annual tax |
Total Transaction Costs
The total cost of selling property in Thailand typically ranges from 2.5% to over 6.3% of the property’s appraised value, depending primarily on:
- How long you’ve owned the property
- Whether you qualify for exemptions
- Your status as an individual or company seller
- Withholding tax calculation (varies significantly)
Withholding Tax: The Additional Seller Cost
While SBT/stamp duty are straightforward percentage-based taxes, withholding tax is more complex because it’s calculated on a progressive basis for individual sellers.
For Individual Sellers: Withholding tax is calculated using:
- A deduction percentage based on years of ownership (50%-92%)
- The remaining taxable amount divided by years owned
- Progressive income tax rates (5%-35%) applied to that annual amount
- The resulting tax multiplied by years of ownership
For Company Sellers: A flat 1% of the higher of (sale price or appraised value)
Example: Individual seller, 5 million baht appraised value, owned 5 years
- Deductible amount: 65% of 5M = 3.25M baht
- Taxable amount: 35% of 5M = 1.75M baht
- Annual taxable income: 1.75M ÷ 5 years = 350,000 baht/year
- Tax at progressive rates (assume 15%): 52,500 baht/year
- Total withholding tax: 52,500 × 5 years = 262,500 baht
This withholding tax is in addition to the SBT or stamp duty, making it a substantial separate cost.
Common Misconceptions About SBT
Myth 1: “The 5-Year Rule Applies from Purchase Date”
Reality: The five-year threshold is measured from the transfer registration date at the Land Office, not the purchase agreement date. If you signed a purchase agreement but delayed registration by several months, the ownership period begins at registration.
Myth 2: “I Can Reduce SBT by Reporting a Lower Sale Price”
Reality: This is illegal and constitutes tax evasion. The government appraisal value takes precedence, and under-reporting triggers penalties, fines, and potential criminal charges. The appraised value mechanism exists specifically to prevent this practice.
Myth 3: “SBT Doesn’t Apply to Inheritance”
Reality: Inherited properties are exempt from SBT regardless of how long you subsequently own them before resale. However, if you inherited a property and later sell it, you must document the inheritance properly at the Land Office.
Myth 4: “Everyone Pays SBT When Selling”
Reality: As detailed above, numerous exemptions exist. Approximately 30-40% of property sales may qualify for exemptions based on primary residence status, inheritance, or the five-year rule.
Myth 5: “SBT is My Personal Income Tax Obligation”
Reality: SBT is a separate indirect tax on the property transaction itself, not personal income tax. The withholding tax (separate from SBT) serves as prepayment on income tax, but SBT and withholding tax are distinct obligations with different calculations.
Practical Steps: Determining Your SBT Obligation
Use this checklist to determine whether SBT applies to your property sale:
SBT Determination Checklist
1. How long have you owned the property?
- Less than 5 years → SBT may apply
- More than 5 years → SBT exempt (pay stamp duty instead)
2. If owned less than 5 years, do you qualify for an exemption?
Primary Residence Exemption:
- My name is in the house registration book (Tabien Baan)?
- Have I been registered for at least 1 year?
- Is this property my principal residence?
- If yes to all: Exempt
Inheritance Exemption:
- Was this property inherited from a relative?
- Do I have legal documentation proving inheritance?
- If yes to both: Exempt
Other Exemptions:
- Transferring to biological/legally adopted child?
- Transferring to government agency or religious institution?
- If yes to either: Exempt
3. Determine applicable tax:
- If exempt from SBT: Pay 0.5% stamp duty instead
- If SBT applies: Calculate 3.3% of (higher of sale price or appraised value)
4. Gather required documentation:
- Original title deed (Chanote)
- House registration book (if claiming primary residence exemption)
- Sale and purchase agreement
- Identification documents
- Inheritance documents (if applicable)
Financial Planning: The Long-Term Investment Advantage
Understanding SBT structure reveals a compelling financial incentive for long-term property investment in Thailand.
The 5-Year Break-Even Analysis
Consider a 10-million-baht property purchase:
| Holding Period | Transfer Tax | Other Costs | Total Tax Cost |
|---|---|---|---|
| 2 years | 330,000 (SBT) | ~300,000 (WHT) | ~630,000 |
| 4 years | 330,000 (SBT) | ~250,000 (WHT) | ~580,000 |
| 6 years | 50,000 (Stamp) | ~200,000 (WHT) | ~250,000 |
| 8+ years | 50,000 (Stamp) | ~150,000 (WHT) | ~200,000 |
The Takeaway: Holding property beyond five years can reduce transfer taxes by 60-70%, providing substantial savings that compensate for carrying costs, depreciation, or foregone investment returns elsewhere.
Strategic Planning Considerations
- Timing Asset Sales: If you must sell before five years, consider the tax impact in your negotiation strategy
- Inheritance Planning: Inherited properties avoid SBT, making them attractive for multi-generational wealth strategies
- Primary Residence Strategy: If you live in the property, documentation of this status can exempt you from SBT regardless of holding period
- Company vs. Individual Ownership: Company-owned properties may have different tax treatment under withholding tax calculations
Frequently Asked Questions
Q1: Can I avoid SBT by selling through a company instead of personally?
A: No. SBT applies to both individual and corporate sellers when property is held less than five years. The tax applies to the transaction itself, not the legal entity conducting it. However, withholding tax calculations differ (companies pay a flat 1%, individuals pay progressive rates).
Q2: What happens if I can’t find proper exemption documentation?
A: Without documentation, you cannot claim exemptions. If you claim a primary residence exemption but lack house registration documentation, the Land Office will require full SBT payment. Gather documentation well in advance of your target sale date.
Q3: What if the appraised value is much higher than my actual sale price?
A: You still pay SBT on the higher appraised value. This is intentional government policy preventing tax evasion through artificially low reported sale prices. You cannot negotiate around it.
Q4: Does SBT apply to condominium sales?
A: Yes, SBT applies to all immovable property sales (land, houses, and condominiums) conducted within five years of ownership, unless exemptions apply.
Q5: If I inherited property, do I ever need to pay SBT when I sell it?
A: No. Inherited property is permanently exempt from SBT, even if you inherited it recently and sell it immediately. This is one of the few unconditional exemptions.
Q6: Can my buyer pay my SBT as part of the negotiated sale price?
A: Legally, no – SBT is your liability. However, you could negotiate a higher sale price with the buyer and use those proceeds to cover SBT. The tax base calculation uses the appraised value regardless, so you cannot reduce SBT through price negotiation.
Q7: Is SBT deductible from my income tax?
A: No. SBT is a separate transaction tax, not a business expense. It is paid in addition to withholding tax and does not reduce your taxable income.
Working With Professionals: When to Seek Expert Guidance
While this guide covers SBT comprehensively, specific situations warrant professional consultation:
Consult a Thai tax professional if:
- Your property qualifies for multiple exemptions (determining which applies requires expert analysis)
- Your property’s appraised value significantly differs from the sale price
- You’re selling inherited property (documentation requirements vary)
- You own property through a company structure
- You’re a non-resident with complex tax residency status
- Your sale involves foreign exchange or international funds transfer
- You anticipate withholding tax disputes
Professional guidance typically costs 5,000-15,000 baht but can save hundreds of thousands through proper exemption documentation and strategic planning.
Conclusion
Thailand’s Specific Business Tax represents one of the major costs of property transactions for short-term sellers. However, understanding the three critical elements – the five-year exemption threshold, alternative exemption pathways, and accurate calculation methodology – empowers you to minimize your tax burden and make strategic ownership decisions.
The key to successful property transactions in Thailand is advance planning. By understanding whether SBT applies months before you sell, gathering exemption documentation proactively, and calculating your total transaction costs accurately, you eliminate surprises at the Land Office and negotiate from a position of knowledge.
For property sales within five years, careful review of available exemptions – particularly the primary residence exemption for those with house registration documentation – can save substantial sums. For investors holding property longer than five years, the tax savings alone (280,000+ baht on a 10-million-baht property) justify the longer commitment.
Whether you’re a foreign investor, Thai national, or property developer, mastering SBT fundamentals transforms one of Thailand’s most intimidating taxes into a manageable, predictable transaction cost.
Quick Reference: SBT at a Glance
| Item | Details |
|---|---|
| Rate | 3.3% of higher of (sale price or appraised value) |
| When it applies | Property sale within 5 years of ownership |
| Who pays | Typically the seller |
| Primary exemption | Ownership exceeds 5 years (pay 0.5% stamp duty instead) |
| Alternative exemptions | Primary residence, inheritance, transfer to government/charity |
| Calculation | Simple percentage multiplication (unlike withholding tax) |
| Payment location | Land Office (Department of Lands) |
| Financial impact | Can range from 0 baht (exempt) to 330,000+ baht on large properties |
| Time to calculate | <5 minutes once you know: ownership duration, sale price, appraised value |
Last Updated: December 2025. Thai tax law is subject to change. Verify current rates and regulations with the Revenue Department or qualified tax professional before finalizing property sales.