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Excerpts from Khaosod English By Wirot Poonsuwan, Attorney-at-Law After panic erupted among thousands of Airbnb providers worried the days of sweet, tax-free income were over, the company told them Saturday that yes, they are breaking the law. “Travel is evolving rapidly, and existing rules in Thailand do not reflect how millions of Thais travel or want to use their homes,” read the email, which went on to say the company was “sharing best practices, case studies and our experiences” with the Thai government. It cited a Thai court of first instance ruling in January that owners of two condominium violated the Hotels Act of 2004 by renting their rooms out daily and weekly. The judgments confirmed the opinion of many lawyers that the daily rental business – and operating a hotel business without a license – is illegal. To a bunch of Thai lawyers, the issue is now settled: running an Airbnb business is illegal. For them, the question is no longer its legality, but whether the law will be diligently enforced, and how light or severe the punishment will be meted out. If there is another similar case, the condo owner will find it hard to escape conviction. The prescribed punishment under the Hotels Act for operating a hotel business without a license is one year jail term and a fine not exceeding ฿20,000 (USD$645) on top of a daily fine not to exceed ฿10,000 per day as long as the violation continues. Only daily and weekly rentals are illegal. The Hotels Act specifically exempts monthly rentals because a room rented by the month is not classified as a hotel room and is therefore okay. Even though the rulings were rendered by a court of the first instance, not by the Supreme Court, they will carry a heavy weight of court precedent to be followed by other courts in similar daily rental cases, the reason being that it’s an open and shut case based on a very clear provision of the Hotels Act. The remaining issue now is not whether the business is legal – quite clearly it is illegal. Most condo owners, since the court rulings, currently recognize the illegality but remain enticed by the handsome economic benefits. They have factored in that legal enforcement in the country is lax (See: Grab thumbing its nose at the government for years). The chance they will be caught and punished are remote. But you never know. The peace-loving neighbors of the condo owner, on the other hand, might not like to see strangers coming in and out of rooms next door. If there are no serious legal actions or complaints made by the neighbors or the condo juristic person management, the condo owners will just go on enjoying uninterrupted tax-free extra incomes. “Tax-free” because they are also not paying personal income tax required by the Revenue Code for this handsome cash either. One thing many condo owners overlook is that if they are prosecuted through to a conviction, even with a light punishment, there will have a permanent criminal record with the Thai police, which will hamper future employment forever. At this point, the pros and cons are getting more balanced! In the two court precedents above, the court was merciful and imposed only light punishment against a confession: the maximum fine of ฿20,000 was actually dropped to ฿10,000 and the confession further halved it to ฿5,000. The daily fine not exceeding ฿10,000 per day was reduced to ฿100 per day for 81 days totaling a negligible amount of ฿81,000 in one case, and ฿500 per day for 20 days totaling ฿10,000 in the other. And no jail! Largely, the fate of Airbnb’s business will decided by the condominium juristic person committee and the manager of the condominium juristic person – how strictly they will enforce the condominium rules in accordance with the law. If the committee or the manager is serious, they could file a complaint with the hotels registrar. In Bangkok that’s the director general of the Administrative Department, and in the provinces it’s the governor. The registrar could then assign the district chief to visit the condominium to investigate as demanded by the condo committee/manager. They will enter the rooms alleged, obtain the names of the condo owners, footage of security cameras showing tourists dragging their luggage in and out of the room, and other evidence of wrongdoing. The condo-owners will find it difficult to fight these obvious pieces of documentary evidence. The district chief will sue them in court and the co-owners will have a weak case there and have to confess in exchange for a lenient punishment. Truly, the fate of the Airbnb and daily rental business in Thailand will depend on the condo juristic person committee and the condo juristic person manager and how serious these condo management people will enforce the rules and the law. The reality is condo managements in general are reluctant to take on the violation and will act half-heartedly in a subdued manner when receiving complaints from other co-owners who live in the condo peacefully without doing the business. The net result will be Airbnb and the daily rental business will keep growing in prosperity despite the two court cases. http://www.khaosodenglish.com/featured/2018/06/24/thai-law-case-closed-on-airbnb-heres-why-it-wont-matter/