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Frequently Asked Questions (FAQ) for Warehouse or Factory Rental / Sale in Thailand

Yes, it’s possible to temporarily lease the property under the name of an authorized individual. Subsequently, the landlord will furnish you with the required documents for setting up your company. Then, you can modify the lease agreement to reflect your new company’s name. Alternatively, if you prefer to establish a company before renting the warehouse or factory, you can enlist the assistance of a law firm to provide a temporary address, which can later be changed to the rented property address.

Leasing a warehouse or factory within an IEAT (Industrial Estate Authority of Thailand) zone typically offers certain advantages compared to a non-IEAT zone:

  1. Infrastructure and Facilities: IEAT zones often provide better infrastructure, including roads, utilities (such as water, electricity, and internet), and other amenities tailored for industrial activities. Non-IEAT zones may have varying levels of infrastructure development.

  2. Regulatory Environment: IEAT zones usually have streamlined regulatory processes and procedures for obtaining permits and licenses, making it easier and faster to set up and operate a business. Non-IEAT zones might have more complex bureaucratic procedures.

  3. Tax Incentives and Benefits: Businesses operating within IEAT zones may be eligible for tax incentives and benefits provided by the Thai government, such as tax exemptions or reductions. Non-IEAT zones may not offer the same level of tax incentives.

  4. Community and Networking: Being part of an IEAT zone can provide opportunities for networking and collaboration with other businesses within the industrial estate, fostering a supportive business community. Non-IEAT zones may lack this organized community environment.

  5. Accessibility to Services: IEAT zones often have access to additional services and support, such as security, maintenance, and business support services, which may not be as readily available in non-IEAT zones.

However, leasing in a non-IEAT zone might offer advantages such as greater flexibility in location choice, potentially lower costs (including land lease rates), and less stringent regulations, depending on the specific location and circumstances.

Ultimately, the choice between leasing in an IEAT or non-IEAT zone depends on factors such as your business requirements, preferences, location needs, and the incentives or benefits you seek. It’s essential to carefully evaluate these factors before making a decision.

Yes, it is generally allowable under the BOI application to lease or buy a warehouse or factory in a non-purple zone. Typically, the location or color zone of your factory isn’t a significant factor in determining the BOI incentives you’ll receive. BOI applications focus more on the type of industry encouraged by the government and its potential economic value to Thailand. However, it’s advisable to verify this with the specific regulations and requirements outlined by the BOI, as policies can evolve or have specific conditions that must be met. You can click here for more information about BOI.

Obtaining a factory license for a property in a non-purple zone is generally possible. However, eligibility is contingent upon factors such as the nature of business activities, the total machine horsepower, the workforce size, and environmental considerations. For instance, if your property falls within an orange zone, you can still obtain a factory license for specific types of businesses such as car repair or furniture manufacturing.

The exact requirements and procedures may differ based on the regulations and policies of the local authorities overseeing the area. It’s recommended to reach out to the relevant authorities or consult with legal experts to fully comprehend the specific steps and criteria for acquiring a factory license in a non-purple zone. For more information for applying factory license, you can click here.

In Thailand, most lease agreements from landlords are in Thai. Some may offer translations in English. Alternatively, you can hire a law firm for an official translation. Ultimately, in case of disputes, the Thai court will require a translation into Thai.

Yes, you can. The landlord will furnish you with all the required paperwork for the electricity upgrade. However, you will be responsible for sourcing an electrician company for the installation. Alternatively, the landlord may handle the installation, but the expenses will be borne by the tenant.

When your company pays rent to the landlord, a portion is withheld as tax by your company and submitted to the revenue department as mandated by the Thai government. This withholding tax is an expense for your company and income for the landlord. It’s legally the tenant’s responsibility to pay this tax on behalf of the landlord and provide a withholding tax certificate as proof. Sometimes, the listed rental price doesn’t include the withholding tax, so you need to factor it in to determine your actual expense. It’s wise to clarify this with the landlord before renting to avoid any disputes. The amount deductible for withholding tax is 5% for rent and 3% for services.

In Thailand, property tax, known as “land and building tax,” is applicable to various properties, including industrial ones. While many assume landlords should cover this tax, there’s no fixed rule in Thailand. Responsibility usually relies on the agreements reached between landlords and tenants. Some landlords include property tax in rental rates, while others prefer tenants to pay directly to the government, considering it’s not part of their income. Property tax is a yearly cost and can be listed as an expense for the tenant’s company. To learn how the government calculates property tax, click here

When you rent a warehouse or factory in Thailand, it’s important to get insurance. You should consider getting insurance that covers things like fire, flood, theft, and accidents. The landlord should have insurance to cover the building and property, but you should get your own insurance to protect your belongings and liability. It’s a good idea to talk to an insurance provider to find the right coverage for your needs.

When renting a warehouse or factory as a tenant, you should consider the following types of insurance:

  1. Commercial Property Insurance: This type of insurance covers the physical structure of the warehouse or factory, as well as the contents inside (equipment, inventory, machinery, etc.). It protects against risks like fire, theft, vandalism, and certain natural disasters. Make sure to understand whether the landlord’s insurance covers the building structure itself so you can tailor your coverage accordingly.

  2. General Liability Insurance: General liability insurance is essential to cover third-party bodily injury or property damage claims that occur on your rented premises. This can include incidents like a visitor slipping and falling on the warehouse floor or damage caused by your operations to someone else’s property.

  3. Business Interruption Insurance: This type of insurance provides coverage for lost income and certain operating expenses if your business operations are interrupted due to a covered event (such as fire or natural disaster). It helps to mitigate the financial impact of downtime and can assist in covering ongoing expenses while your business recovers.

  4. Workers’ Compensation Insurance: If you have employees working in the warehouse or factory, workers’ compensation insurance is typically mandatory. It provides coverage for medical expenses and lost wages for employees who are injured or become ill while on the job.

It’s important to assess your specific business operations and risks when selecting insurance coverage for a warehouse or factory. Working with an insurance agent or broker who specializes in commercial insurance can help ensure you have the right coverage tailored to your needs.

As a landlord of a warehouse or factory, it’s important to protect your investment and mitigate potential risks. Here are key types of insurance you should consider purchasing:

  1. Commercial Property Insurance: This insurance covers the physical structure of the warehouse or factory, including fixtures, equipment, and any improvements made to the property. It typically protects against risks such as fire, flood, theft, vandalism, and certain natural disasters. Make sure the policy covers the full replacement cost of the property.

  2. Landlord Liability Insurance: This type of insurance provides coverage if someone is injured or their property is damaged on your property and you are found legally responsible. It helps cover legal fees, medical expenses, and damages awarded in a lawsuit.

  3. Loss of Rental Income Insurance: Also known as rental income protection or business interruption insurance, this coverage provides compensation for lost rental income if your property becomes uninhabitable due to a covered peril (like fire or storm damage). It helps you maintain cash flow while repairs are being made.

Before purchasing insurance, carefully assess the specific risks associated with your warehouse or factory property and consult with an insurance agent or broker who specializes in commercial property insurance. They can help customize a policy that meets your needs and provides adequate protection for your investment.

They are the units of measurement typically used for industrial property and land in Thailand as shown below:

Rai: A unit for land size where 1 Rai equals 1,600 square meters (sqm).

Ngan: Another unit for land size with 1 Ngan equivalent to 400 sqm.

Sq.wah: Used for smaller land areas, where 1 Sq.wah equals 4 sqm.

Sqm: A unit for measuring usable area within buildings or sheltered/enclosed spaces.

Scenario:
A warehouse/factory spans 1,200 sqm on a land plot of 2-1-1 Rai.

Explanation:
2-1-1 Rai translates to 2 Rai, 1 Ngan, and 1 Sq.wah. Therefore, the total land area is calculated as (2 x 1,600 sqm) + (1 x 400 sqm) + (1 x 4 sqm) = 3,604 sqm.

The 1,200 sqm warehouse/factory includes all sheltered or enclosed spaces, including a second-floor office, meaning the actual production area is smaller due to the office space within the warehouse.

A Free Zone is an indicated area for industrial manufacturing, logistic and other business activities operations with no customs duty and VAT on purchases or importation of raw materials, components or finished goods.

In a General Zone, unlike a Free Zone, customs duty and VAT are imposed on those imported raw materials, components or finished goods.

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