Foreign property buyers in Phuket face renewed scrutiny as Thai authorities identify the island as an area of concern for nominee business structures—arrangements that may violate ownership laws and leave investors exposed to legal risk.
According to a recent report from The Phuket News, Phuket ranks 8th nationally for high-risk nominee businesses. The finding comes as Thai regulators intensify enforcement of laws designed to prevent foreign nationals from circumventing ownership restrictions through proxy Thai shareholders.
What nominee structures are and why they matter
In Thailand, foreign nationals are generally prohibited from owning land. To work around this restriction, some buyers establish Thai limited companies to hold property, with Thai nationals acting as majority shareholders on paper. These arrangements are known as nominee structures when the Thai shareholders hold shares in name only, without genuine investment or control.
Thai law treats such arrangements as illegal. The Foreign Business Act and the Land Code both prohibit the use of nominees to gain ownership rights reserved for Thai nationals. Penalties can include fines, dissolution of the company, forced sale of assets, and in some cases criminal charges.
For Phuket property buyers, the ranking signals that regulatory attention is increasing. Properties held through improperly structured companies may face investigation, especially as Thai authorities focus on high-risk provinces.
Why Phuket ranks as a concern area
Phuket’s position on the list reflects decades of foreign investment in land and villas, much of it structured through Thai companies. The island has long been a destination for foreign buyers seeking long-term residency, second homes, or rental income from holiday villas.
The use of company structures is not inherently illegal. Many legitimate businesses operate this way. The issue arises when the structure is designed solely to bypass foreign ownership restrictions, with no genuine business activity and no real control by Thai shareholders.
The report does not specify how many businesses in Phuket are under review or what enforcement actions may follow. However, the identification of Phuket as a high-risk area suggests that regulators are aware of patterns that warrant closer inspection.
What this means for Phuket property buyers
For buyers who already own property through a Thai company, the ranking does not mean immediate action is likely. However, it does mean the structure should be reviewed by a qualified Thai lawyer to ensure compliance with current interpretations of the law.
Key questions include whether the Thai shareholders have made genuine capital contributions, whether they participate in decision-making, and whether the company conducts real business activity beyond holding property.
For prospective buyers, the message is clearer: relying on nominee structures carries legal risk. Alternative ownership models exist, including long-term leases, condominium units (where foreign ownership is permitted up to 49% of the building), and usufruct agreements that grant use rights without ownership.
Each option has trade-offs in terms of tenure, resale value, financing and estate planning. Legal advice tailored to the specific property and buyer situation is essential.
What remains unclear
The report does not detail the methodology used to rank provinces, nor does it specify whether enforcement actions are already underway in Phuket. It is also unclear whether the focus is on residential property holdings, commercial businesses, or both.
What is clear is that Thai authorities are paying closer attention to ownership structures in areas with high foreign investment. For Phuket buyers and sellers, that attention means greater importance on legal due diligence, transparent structuring, and realistic understanding of the legal limits on foreign ownership.
Frequently Asked Questions
What is a nominee structure in Thai property law?
A nominee structure is an arrangement where Thai nationals hold shares in a company on behalf of a foreign national, without genuine investment or control. Thai law prohibits such arrangements when used to circumvent foreign ownership restrictions on land.
Can foreign buyers own land in Phuket legally?
Foreign nationals generally cannot own land in Thailand. Legal alternatives include purchasing condominium units (up to 49% foreign quota per building), long-term leases (typically 30 years, renewable), or usufruct agreements. Company structures are legal only when shareholders have genuine involvement and the company conducts real business activity.
What happens if a property is held through an illegal nominee structure?
Penalties may include fines, forced dissolution of the company, sale of the property, and in some cases criminal charges. Properties held through non-compliant structures may also face difficulties in resale, financing, or estate transfer.
Does this ranking mean Phuket properties are under investigation now?
The report identifies Phuket as a high-risk area but does not specify whether enforcement actions are underway. It suggests regulatory attention is increasing, making legal review of existing ownership structures advisable.
Should existing buyers review their company structures?
Yes. Buyers who own property through a Thai company should consult a qualified Thai lawyer to ensure the structure complies with current legal standards, including genuine shareholder participation and legitimate business activity.
Sources
- The Phuket News — PHUKET XTRA: VIDEO: Freedom Beach Arrest, BOLT Stays In Thailand, Nominee Business Crackdown || May 13 — link
