Land and Building Tax Proposal Clears Thai Cabinet

Following a meeting on June 7, 2016, the Thai Cabinet has approved, in principle, a draft “Land and Buildings Tax Act”, which is intended to take effect in 2017.  The new act would replace the current Land and Building Tax Act (B.E.  2475) and the Municipal Tax Act (B.E. 2508) and will now be forwarded to the Office of the Juridicial Counsel for review, to be followed for consideration by the Thai Parliament.

Major items under the draft act are as follows:

Broad application.  Tax will apply to the appraised value of land, buildings and condominium units, regardless of location.

Local benefit.  Tax revenues under the new act are intended to benefit the jurisdiction in which they are collected and will thus be available for the local authorities.

Tax rates based on land usage and state of development.  The new act sets out the maximum rates that may apply depending on the use of the underlying land and building (farm, residential or commercial) and whether the underlying land is vacant or underdeveloped (actual rates will be announced separately by royal decree).

The maximum rates range from 0.2% (for farm land) up to 5.0% (for vacant land) and are progressive based on the appraised value of the underlying land and buildings.  There is a fairly high appraised value threshold before tax will apply (main homes and farmland with a value of under 50 million THB are exempt from the tax).  A summary of the maximum rates and suggested progressive rates listed in the press release of the Ministry of Finance (which fall short of the maximum rates) are set out in the following link:

Land Building Tax Rates

Exemptions.  Certain types of property will be exempt from tax, including:

property owned and used by the Thai government, embassies, and the Red Cross,

common areas of condominiums property of the condominium,

public infrastructure projects, and

private property made available for public benefit.

Exemptions will also apply to certain events involving inheritance of property, foreclosures by financial institutions, construction of main homes, and the development of residential projects

Who is liable to pay. Persons liable for tax will be the owners of the applicable land, buildings and condominium units.  Also, persons who possess or use land or building owned by the government will be liable for tax on such property.