Last November the Thailand National Legislative Assembly approved the Land and Building Tax Act (“Act”), which replaces the current House and Land Tax Act B.E. 2475 and the Local Land Development Tax Act B.e.2508 as of 1 January 2020. The Act has since been published in the Government Gazette and is now in effect.
The Act is an attempt to decrease tax burden on property owners, encourage land utilization, and improve the effectiveness of tax collection with an aim to increase public revenue.
The Act introduces major changes to the tax base and the tax rate. The current House and Land Tax Act calculates tax based on the annual rent that a property owner should derive, while the Act uses the government’s appraised value of the land as the tax base. As for tax rates, the current House and Land Tax imposes a flat 12.5% rate on any property, while the Act introduces progressive rates that vary depending on the purpose of property usage.
The Act replaces the outdated Local Land Development Tax Act which has been in place for approximately 40 years. Many commentators have argued for its repeal, as it calculates tax based on the median value of land at regressive rates and provides several exemptions which do not encourage land utilization.
The following table summarizes the main points of the Act:
| Purpose of property use | Appraised value (Million Baht) | Tax rate |
| Agricultural | 0-75
75-100 100-500 500 – 1,000 Above 1,000 |
0.01%
0.03% 0.05% 0.07% 0.1% |
| Residential | 0-50
50-75 75-100 Above 100 |
0.02%
0.03% 0.05% 0.1% |
| Other purposes (e.g. commercial, industrial) | 0-50
50-200 200-1,000 1,000-5,000 Above 5,000 |
0.3%
0.4% 0.5% 0.6% 0.7% |
| Unused | Any appraised value | 0.3%, to increase by 0.3% every 3 years and capped at 3% |
The Act provides tax exemptions for certain owners. For example, an individual who owns residential property will receive an exemption on the main house with an appraised value that does not exceed Baht 50 million (or Baht 10 million if the owner does not also own the underlying land). Owners of land used for agricultural purposes will be entitled to a three-year tax exemption from 2020 to 2022.
Reduced taxes may also apply for property used for certain purposes, including hospitals, golf courses, sports stadiums, private educational institutions.
Penalties for late payment, and enforcement thereof, are potentially severe. Tax must be paid by May of every year, and late payments will be subject to penalties of 40% of the tax payable along with a monthly surcharge of 1%. Penalties and surcharges must be paid within 90 days after the property owner receives an assessment letter. Local authorities are empowered under the Act to seize, levy and sell by auction the underlying property in order to recoup any unpaid tax, penalty and surcharge without having to first obtain a court order.