PD HOUSE Urged Government To Stop VAT Leakage From Home Builder Business 3,000 M.Baht a Year.

Real Estate Press Releases Thursday February 19, 2009 14:09
Bangkok--19 Feb--PD HOUSE

Research and Business Development Department,PD HOUSE corporation Co.,Ltd. Reported that the amount of the houses built by individuals(not by housing development project)in Bangkok and perimeter and nearby provinces (Bangkok,Samut PraKarn,Nonthaburi,Patumthani,Nakorn Pathom and Samut Sakorn)were between 18,900-19,000 units and the total value was about 47,000-48,000 M.Baht.The amount was shared by two groups of entrepreneur—private contractors and home builder companies.The first group—private contractors took 83% of the shares valued 39,000-40,000 M.Baht and the second group—home builder companies took the rest,17% valued about 7,900-8,000 M.Baht.The amount of houses built in 2008 in other provinces all over the country were about 45,000-50,000 units so the total amount of the houses built in the year 2008 all over the country were about 70,000 units.

Adjustment and Tendency of Growth in Home Builder BUsiness

Research and Business development Department,PD HOUSE Corp. predicted in 2009 houses built by individuals in Bangkok and nearby provinces will decline according to the economic situation and buying power of people.This caused the two groups of entrepreneur sharing the market have to prepare to face the situation.The home builder companies which had been assembled beforehand seemed to have more movement than private contractors so the public and consumers knew and trusted home builder companies more than in the past.The consumers tend to have home builder companies build more houses in the future so the competition with in the home builder companies became as serious as those among the private contractors.

“Considering the value of houses built by individuals in 2008,private contractors took the shares valued 39,000-40,000 M.Baht.The VAT 7% of the amount was about 2,500 M.Baht.The home builder companies took the shares valued 7,900-8,000 M.Baht so the VAT 7% of the amount was about 500 M.Baht.The VAT government should have got from the 2 groups of entrepreneur was around 3,000 M.Baht.It was found that the two groups made some agreement with the owner of the houses t try to avoid the tax system and didn’t bring the VAT to the government.In some cases,the entrepreneurs included the VAT in the price of the houses but avoid to hand over to the Revenue Department which caused the lost of more than 3,000 M.Baht a year for the government.

Tricks of the entrepreneur to the government policy

The government and Revenue Department has issued the policy to try to collect more tax from juridical persons especially home builder business because it is suspected the the entrepreneurs made an exaggerated expenses.In this case we think that to try to collect more tax cannot solve the problem.If the Revenue Department examine the balance sheet of theprivate contractors and home builder companies it will be found that less than 70% of the entrepreneur declared their income very low.For example, some earned less than 1 million Baht a year,some medium companies earned less than 5 millions.This means that they built only 1-2 houses a year.When the expenses were assessed it was found that the cost of construction, marketing, wages and management cost was about 5-10 millions a year.This shows that the entrepreneur avoid to hand in the VAT or declared their income less than actually was.When the entrepreneurs concealed their real income,there was no benefit in the balance sheet because it showed much of expenses.Considering the competition situation in home builder business,it is a low return business because the return is only 2-8% of the price of the house and there were many factors and high risk during the construction such as the rises of the price of construction materials.

VAT Refun to Consumers to Increase Tax Income

From the case of home builder business,the government should raise the awareness of the entrepreneur to follow the taxation law to give justice to those who hand in the VAT to the government correctly or arouse the consumers to ask for receipt (including VAT) from the entrepreneur.To refund tha VAT,it is not necessary to refund in form of cash but it can be deducted for imcome tax or reduce loan interest rate.This will force the entrepreneurs to involve in the tax system.Then the entrepreneurs cannot avoid handing in the VAT and the balance sheet will be a real one that shows real income of the companies so the government can collect the tax as expected.The Revenue Department can use the figures to forecast thetax to be collected in the following year.

Khun Pisan Thammawiset,the manager of PD HOUSE Corp. and The executive member of PD HOUSE Home Builder said that as some entrepreneur try to avoid handing in VAT,the image of home builder business both market value and real cost of construction is vague especially among small and medium home builder companies.Research and Business Development Department ,PD HOUSE has assembled names and numbers of the entrepreneur from Google website and examine their balance sheets with Department of Business Development and found that some companies which are still running business has never handed in the balance sheet to the Department.It was also found that those who haded in the balance sheets, the sheets show very low income.How can they survive with the income of only 300,000 Baht a year? It is suspected that these companies have hidden something wrong in the business so it is possible for them to cheat their customers in many ways such as propose a low price house and disappear with some amount of money or try toterminate the contract and hold the money the customer has deposited.

The customers,Khun Pisan said,don’t easily believe only the words from the ad.or the names of the companies because you will be cheated by the devils joined in the business.They look smart in their neat suit and show you their social status such as the member of many associations,an advisor of a politician.They can speak to persuade you to believe and pay.If not sure,try to examine their background with the government agencies concerned such as Office of Consumer Protection Commission or Department of Businees Promotion.You will never get a big house with little amount of money ,Khun Pisan concluded.

For more information please contact:
Thitichaya Ngamsom(Nam)

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