Thai Property Tax Proposal Reviewed

[george]

Thai property tax proposal reviewed

SOME BRIEF THOUGHTS ON THE PROPOSED PROPERTY TAX

The government's transformation of property tax is major news across the nation. Part of this tax reform is to implement the Land and Construction Tax bill to replace the ageing House and Land Tax Act, which has been in force for over 76 years. It is also the case that whenever the bill has been proposed in the past, the government fell and failed to accomplish the task.

In the midst of this financial crisis, the government needs to squeeze some tax from the rich, who are expected to be property-owners, to balance the deficit budget. If the government can make it happen, local administrative bodies will be able to rely on their own revenue sources, allowing the government to cut down its financial support.

It is also very logical to reform property tax. The current law has served for a long time - too long, as its ambiguity and uncertain interpretation create plenty of disputes between local authorities and taxpayers. The House and Land Tax is currently applied even to expressways and telephone booths, which seems to go too far and perhaps beyond the spirit of the law. So, the New Property Tax is again brought forward for government consideration and inheritance tax is in the pipeline.

Supporters of the New Property Tax believe that the current law has a narrow tax base, particularly restricted to commercial properties, and has yet to achieve its objectives in redistributing wealth from the rich to the poor. The new tax bill is intended to provide a more effective tool for the government to do this and to optimise land use. According to the bill proposed in 2007, some of the key features of the law will be:

- Individual owners are not exempt from the New Property Tax.

- Local authorities are empowered to collect the New Property Tax while the government will provide a checks and balances system.

- A two-year transition period will enable taxpayers to prepare themselves for the new system.

- Owners of land or constructions (both individual and corporate) and possessors who utilise public land or government constructions are subject to tax.

- The New Property Tax will be the source of revenue for local administrative bodies and municipalities.

- Exemptions are provided to certain properties - such as properties owned by public, crown properties, government properties used for non-profit business or properties used as premises by the United Nations and other international organisations.

- The tax base means the gross value of land and construction according to assessment value. The law allows 1% deduction with a ceiling of 10% for property maintenance.

- The tax rate is reduced to 0.5% of the assessment value for general properties, 0.1% for non-commercial properties and 0.05% for agricultural properties.

Importantly, for non-utilised properties or green-field properties, owners will be subject to 0.5% of the assessment value for three years. Thereafter, if the non-utilisation continues, the owner will be subject to a 100% penalty every three years, but the penalty will not exceed 2% of the tax base.

With the tax rate reduction from 12.5% to 0.5%, the arrival of the New Property Tax is more than welcome to businessmen. In exchange for this, the government will enjoy a much broader tax base, applicable to all properties with limited exemptions.

But despite the appeal of this reform, the government must still consider the following issues that may arise from tax policy:

- The rich will be affected less than the poor. To be precise, they are unlikely to have a serious problem from the tax bill, and they should be able to get away from the penalty in many ways, such as plantation or farming.

- Farmers and low-income owners may not have enough cash in hand for paying the tax, even though the new system will be implemented at a low tax rate for agricultural businesses. As a result, some may be forced to sell part of their properties to settle tax bills.

The imposition of the new system will also depend on the official assessment value, which is now only used for government transfer fees. The assessment value will need to be based on criteria and methodology that are internationally acceptable and fair. Otherwise, it could create endless debates and sap willingness to adopt the new tax bill.

To ensure this objective as well as transparency, assessment should be done from the centre - by the Treasury Department or any special governmental authority - rather than by local administrative bodies or municipalities, which should limit corruption and loopholes.

Prepared by Thanasak Chanyapoon and Piphob Veraphong, who can be reached at admin(at)lawalliance.co.th or 026515490.

-- lawalliance.co.th 2009-02-03

[Mobi]

Some sort of property tax is inevitable sooner or later.

The problem is that with the proposed 2 year transition period, it is more than likely that the Democrats will do all the hard work and some new government will reap the rewards in terms increased tax revenue, and blame the nasty dems for imposing the tax.

In the case of retired farangs living in Thailand ( of which I am one) we presently enjoy a very unique situation. Our pension income is transferred to Thailand tax free, and we currently pay no property taxes. This means that we enjoy the benefits of the local infrastructure and services, (roads, law and order, fire prevention, etc etc ) yet pay not a penny in tax. I know the infrastructure often leaves a lot to be desired, but without it, we would be living in a lawless jungle.

I for one would have no objection to paying a reasonable amount of tax on my property.

[Fore Man]

I concur with Mobi above in that paying a tax for our property is worthwhile. While we farangs don't have to pay tax now, our Thai wives who own property we live in are now eligible for taxation, and would of course continue to be eligible under the provisions of the new legislation. My question is definition of 'general properties' versus 'non-commercial properties". Which category would a private dwelling and its land fall into? There is a difference of 0.4% involved. For say, a THB 10M valuation, the annual tax would be either THB 50K (0.5%) or THB 10,000 (0.1%). That's a big difference. And the disparity grows with higher-valued properties. Would a home located outside a municipality have a lowered assessment or would the rate be the same regardless of location? Lots of issues to be understood here.

Edited February 3, 2009 by Fore Man

[kennkate]

We are not living here Tax FREE

Everybody who buys enything in Thailand will be paying TAX @ 7%

Maybe not to the Somtam Lady. But certainly on Fuel Bus Train and Air fares Ect

Plus you should be paying Tax on your income That includes Pensions.

Sure it's not high taxation as it is in the west VAT !5% in the UK at the moment Reduced from 17.5% In order to stimulate the Economy

[Mobi]

We are not living here Tax FREE

Everybody who buys enything in Thailand will be paying TAX @ 7%

Maybe not to the Somtam Lady. But certainly on Fuel Bus Train and Air fares Ect

Plus you should be paying Tax on your income That includes Pensions.

Sure it's not high taxation as it is in the west VAT !5% in the UK at the moment Reduced from 17.5% In order to stimulate the Economy

Yes we all pay VAT - indirect taxes on certain goods & services.

Tell me somewhere else in the world where you don't pay some kind of property tax on property that you own, which normally goes to paying for local services, road maintenance etc.?

You are wrong about pensions. I receive my pension outside of Thailand, as it was earned outside of Thailand and I am subject to tax in accordance with the rules operating in the country or countries where I receive that pension and other investment income.

No one (including pensioners) is liable to tax on remittances to Thailand. One day they may be - in fact they were some 35 years ago, but not at present.

[cmsally]

There is an inherent problem with this tax, in that anybody that owns land that is very valuable might not have money to pay the tax. Just looking around where I live in downtown Chiang Mai, valuations are through the roof but you have second/third generation owners many of whom cannot afford the ratio of tax viz. valuation. They simply won't be earning enough to pay.

[Mobi]

There is an inherent problem with this tax, in that anybody that owns land that is very valuable might not have money to pay the tax. Just looking around where I live in downtown Chiang Mai, valuations are through the roof but you have second/third generation owners many of whom cannot afford the ratio of tax viz. valuation. They simply won't be earning enough to pay.

Yes, that certainly is a problem that needs to be addressed, and was mentioned in the OP's article.

But times move on - even in Thailand - and they have to get some proper structures in place. The kind of problem you refer to happens in other countries as well. Sometimes this is solved by doing a form of "means test" on the property owner, and if his income is insufficient he would be exempt. More commonly though, anyone who owns an expensive piece of real estate and has little or no income, will in the fullness of time, be obliged to sell it and use the proceeds to better his standard of living and move to more modestly priced accommodation. I'm not saying these solutions apply to Thailand, but I'm just pointing out that there should be ways around the problem and it shouldn't become a stumbling block.

[swain]

Not excited by a property tax, its small and easily paid for most who come to thailand to retire. But take a elderly Thai couple that is living on basically nothing and this is a new nightmare. I hope this idea is shot down in flames.

**slippery slope alert**

[cmsally]

I would disagree, you have a number of people that are quite happy with their standard of living, but are living on very expensive pieces of real estate. They might be for example, nurses, teachers, small business owners, they don't have large salaries but they do earn enough to live comfortably and are set up with a pension, educational subsidisation and health care etc. For many of these people there will be no necessity to sell their land throughout their life.

Another scenario is where you have elderly parents living on their land which throughout their lifetime has increased in value dramatically. Such taxes are going to be a very large extra burden on children in many cases.

The scenario of "times moving on" will be for these people to be priced out of their homes. As for the increase of infrastructure amd services, well where I live those are almost on par with 20 years ago.

As for the transparency of local admin and municipality, well I suppose that would be a new topic.

[Mobi]

So, because there some decent, hard working middle class folk living in houses where the value has sky rocketed, all plans to bring in property taxes should be abandoned?

As I said in my previous post, there is no reason why the tax shouldn't be structured in such a manner to deal with these 'anatomies' and not force people from their homes, if they don't want to go. Likewise, the aged and impoverished. Maybe there should be a minimum income before you are even considered to be within the property tax net, and there could be special discounts for low wage earners living in high value properties. Everything is possible, if the will is there to do it.

Maybe the quality of your infrastructure and services hasn't increased in 20 years because there are no local property taxes to pay for such improvements

[M555]

Not excited by a property tax, its small and easily paid for most who come to thailand to retire. But take a elderly Thai couple that is living on basically nothing and this is a new nightmare. I hope this idea is shot down in flames.

**slippery slope alert**

I guess many members will be paying the wife's family land tax. My wife has no land either does her family but as soon as this passing I guess they will find some land.

Edited February 3, 2009 by M555

[cmsally]

Property tax in itself, if a reasonable sum, is understandable. The question is will it just add to the assortment of taxes or replace them.

For example as a business in downtown Chiang Mai (depending what kind) you will pay a variety of taxes. There are 6 that I can think of and that doesn't include extra charges such as rubbish collection. Some of these go to the Municipality, some to the Amphur and some to the Or Bor Jor (Provincial Admin). As far as I can see some of these taxes overlap and the ever increasing taxes would just go to finance an ever burgeoning bureaucracy.

The whole idea of land tax is to cut the purse strings to the local government and let it feed itself. In reality do you suppose this will take from the rich to feed the poor or simply take from anybody to feed the bureaucracy.

If some local govt offices can afford to build huge new mega structures (ie. their offices) and send employees on overseas field trips, I think their funding is hardly lacking.

Certainly a prerequisite for any increase in their funds would be a transparent assessment of how money has been spent on previous projects and do the books add up. Also regarding local government officials showing their face in the office on a Friday and if they do working all day would make a better impression, they all seem to start their weekend a day early.

Quite frankly , I would like to think that more taxes would bring better services, but from what I have seen, I have my doubts.

[Pib]

When a new tax starts, that means the government wants/needs "more" money; and more taxes "does not" necessarily mean more services. Just because some other countries have a certain tax does not make it automatically right/needed in another country. Each country's tax system is different and can be like comparing apples and oranges.

Edited February 3, 2009 by Pib

[cmsally]

When a new tax starts, that means the government wants/needs "more" money; and more taxes "does not" necessarily mean more services. Just because some other countries have a certain tax does not make it automatically right/needed in another country. Each country's tax system is different and can be like comparing apples and oranges.

Quite right I think basically the issue here is to get more money.

You also need to take a look at which organisation is collecting what and what percentage they are keeping and what percentage they are sending to central govt agencies.

By saying that local govt is responsible for collection so they will be self supporting - which branch of local govt are we talking about? Are they going to be keeping just this tax or all taxes (incl. that they presently keep or percentages). Do they relinquish other taxes and just keep this land tax and receive nothing back from central govt.

Unless you see the absolute breakdown it could be that local govt is left with less than before with the new tax to make up the difference. In which case where does the money come from to bolster services; it has gone into central govt pockets. Local govt has the same (maybe more or less depending on its ability to collect) or as much as it can squeeze out of land tax. It also has less ability to bargain with central govt. If this is it's money earner there will be an onus to make sure land valuations stay high and criteria to collect tax remains as all encompassing as possible.

[Pearlgirl]

When a new tax starts, that means the government wants/needs "more" money; and more taxes "does not" necessarily mean more services. Just because some other countries have a certain tax does not make it automatically right/needed in another country. Each country's tax system is different and can be like comparing apples and oranges.

Quite right I think basically the issue here is to get more money.

You also need to take a look at which organisation is collecting what and what percentage they are keeping and what percentage they are sending to central govt agencies.

By saying that local govt is responsible for collection so they will be self supporting - which branch of local govt are we talking about? Are they going to be keeping just this tax or all taxes (incl. that they presently keep or percentages). Do they relinquish other taxes and just keep this land tax and receive nothing back from central govt.

Unless you see the absolute breakdown it could be that local govt is left with less than before with the new tax to make up the difference. In which case where does the money come from to bolster services; it has gone into central govt pockets. Local govt has the same (maybe more or less depending on its ability to collect) or as much as it can squeeze out of land tax. It also has less ability to bargain with central govt. If this is it's money earner there will be an onus to make sure land valuations stay high and criteria to collect tax remains as all encompassing as possible.

[Pearlgirl]

When a new tax starts, that means the government wants/needs "more" money; and more taxes "does not" necessarily mean more services. Just because some other countries have a certain tax does not make it automatically right/needed in another country. Each country's tax system is different and can be like comparing apples and oranges.

Quite right I think basically the issue here is to get more money.

You also need to take a look at which organisation is collecting what and what percentage they are keeping and what percentage they are sending to central govt agencies.

By saying that local govt is responsible for collection so they will be self supporting - which branch of local govt are we talking about? Are they going to be keeping just this tax or all taxes (incl. that they presently keep or percentages). Do they relinquish other taxes and just keep this land tax and receive nothing back from central govt.

Unless you see the absolute breakdown it could be that local govt is left with less than before with the new tax to make up the difference. In which case where does the money come from to bolster services; it has gone into central govt pockets. Local govt has the same (maybe more or less depending on its ability to collect) or as much as it can squeeze out of land tax. It also has less ability to bargain with central govt. If this is it's money earner there will be an onus to make sure land valuations stay high and criteria to collect tax remains as all encompassing as possible.

In december this year we were given a tax bill by our " builder" - our house

has been built for 3 years and we're leasing the property. Apparently,

there is a land tax now on leased properties: here's what we were quoted

by the building:

With regards to the tax which needs to be paid to the

Sanpakwaan Sub-district, this year all foreigners with the lease agreement have

to pay tax. In the past year the sub-district miscollected the taxes only some

foreigners in Tanaboon paid it.

This tax is from rental income at

the rate of 12.5% of the annual rental value (Your land leased at

900,000 Baht x 12.5% / 30 years = 3,750 Baht per year).

This came as quite the surprise to us. We're still trying to find out

more info. on this and we feel that the builder is ripping us off. What

what we've found out is that the owner of the land who is leasing the property

should be paying this tax. Does anyone know what I'm talking about and

have any info. on this? Thanks - it seems every year we have this house,

something new comes up that costs us more and more (albiet not that expensive,

but that's not the point).

[dsfbrit]

I currently pay an annual sum to the local housing committee for many of the services usually provided by the local council in the UK. Such as rubbish collection, street cleaning etc... So this new tax will not be to cover those services. I also pay road tax of 7000 Baht, for (I naively say) road maintenance. When I use the motorways there is usually a toll to pay.

I dont pay tax on my Thailand Savings interest - as they wont give me any interest.

I dont really mind about this tax. However, like governments around he world, this is just a way of getting money into their coffers. There is no 'right or wrong', 'fair or unfair' about it. I am susprised they have not started to adopt the UK apporach and suggest this is to combat 'global warming'. .

If some of it filters through to the poor sods who live here in poverty, then I am happy to pay a lot more.

Sadly, I suspect this will just end up bolstering the life of some already well off Thai.

[cmsally]

When a new tax starts, that means the government wants/needs "more" money; and more taxes "does not" necessarily mean more services. Just because some other countries have a certain tax does not make it automatically right/needed in another country. Each country's tax system is different and can be like comparing apples and oranges.

Quite right I think basically the issue here is to get more money.

You also need to take a look at which organisation is collecting what and what percentage they are keeping and what percentage they are sending to central govt agencies.

By saying that local govt is responsible for collection so they will be self supporting - which branch of local govt are we talking about? Are they going to be keeping just this tax or all taxes (incl. that they presently keep or percentages). Do they relinquish other taxes and just keep this land tax and receive nothing back from central govt.

Unless you see the absolute breakdown it could be that local govt is left with less than before with the new tax to make up the difference. In which case where does the money come from to bolster services; it has gone into central govt pockets. Local govt has the same (maybe more or less depending on its ability to collect) or as much as it can squeeze out of land tax. It also has less ability to bargain with central govt. If this is it's money earner there will be an onus to make sure land valuations stay high and criteria to collect tax remains as all encompassing as possible.

In december this year we were given a tax bill by our " builder" - our house

has been built for 3 years and we're leasing the property. Apparently,

there is a land tax now on leased properties: here's what we were quoted

by the building:

With regards to the tax which needs to be paid to the

Sanpakwaan Sub-district, this year all foreigners with the lease agreement have

to pay tax. In the past year the sub-district miscollected the taxes only some

foreigners in Tanaboon paid it.

This tax is from rental income at

the rate of 12.5% of the annual rental value (Your land leased at

900,000 Baht x 12.5% / 30 years = 3,750 Baht per year).

This came as quite the surprise to us. We're still trying to find out

more info. on this and we feel that the builder is ripping us off. What

what we've found out is that the owner of the land who is leasing the property

should be paying this tax. Does anyone know what I'm talking about and

have any info. on this? Thanks - it seems every year we have this house,

something new comes up that costs us more and more (albiet not that expensive,

but that's not the point).

As I understand this, you are leasing and paying rent to the actual owner of the land (ie you hold the lease and pay the rent?)

This I presume is in Sanpakwaan which is Hang Dong, Chiang Mai. I am presuming you have received a bill from your builder (who also sounds like the owner/owner of the compound). Ask him for the relevant bill from the district office. It will be in Thai. Scan and post it on here and I will translate for you.

If he can't provide the relevant bill/statement, that of course explains a lot.

[CTM]

Pearlgirl,

If I understand you right then you’re the renter of the land upon which you built a house. The builder is the landlord as far as the government is concerned. Landlord gets the income so he pays the tax. The 12.5% tax on rental income is not new.

Don’t pay. What's next asking you to pay his personal income tax on profits made building your house for you? That's about what this amounts to. It is not your fault he is an idiot who didn’t do basic tax planning. Tough titty for him.

But don’t feel bad, it is still a great deal for him as you probably did as most farangs and paid full value for the land, which he still owns, and then set up a fake lease agreement to skirt landownership laws.

------------------------------------------------------------------------------------------------------------------------------------------------

And I'm with cmsally, this new tax is terrible and so is the timing given where the economy is headed.

This country is full of small family owned shop house businesses. Many don't make a large profit already and also serve as the family home. A 50-100k+ new tax bill is astronomical for them. Many won't be able to pay and who will buy except for the small circle of super rich that still have access to credit and can sit on non-productive properties until the next boom cycle. They won't be offering a fair market price. And what is to stop a connected person from using their influence to have the valuation of a property they covet set extraordinarily high in order to help the process along?

More taxes and regulation that’s the solution. Some farangs are so...I'll be polite and say naive.

Another way for the rich to evict the poor and middle class sitting on nice pieces of property.

[CRUNCHER]

A proprty tax, if not too onerous, cannot be complained about. Most cuntries have one of one sort or another.

How will this be applied to condos.

[Jingthing]

How will this apply to condo owners? Do foreigners technically own a share of the "land" of a condo building? This is confusing to me because I thought foreigners were never able to own land so how could they be liable for a property tax based on land ownership?

Edited February 10, 2009 by Jingthing

[quiksilva]

Its called household and land tax. Its due on rental income, payable annually but according to the law this is payable only by the Landlord, and not by tenant. This is the reason why so many leases are split into two or even three parts, to lower their exposure to tax. As Im sure you are aware a Lease is often made up a Rental, Service and sometimes a Furniture Hire agreement (more prevalent in residential property). The latter two are subject only to VAT, which is currently just 7%.

However, many landlords try to pass HH&L on to the tenants too, who under the law are not obligated to pay it. However, the most common retort I hear when challenged, is that they will increase the rent proportionately, which exposes this practice for what it really is: a sneaky way to go about asking for more rent.

At this point you are left with two options agree to pay more, or find something more reasonably priced.

[Pearlgirl]

Pearlgirl,

If I understand you right then you're the renter of the land upon which you built a house. The builder is the landlord as far as the government is concerned. Landlord gets the income so he pays the tax. The 12.5% tax on rental income is not new.

Don't pay. What's next asking you to pay his personal income tax on profits made building your house for you? That's about what this amounts to. It is not your fault he is an idiot who didn't do basic tax planning. Tough titty for him.

But don't feel bad, it is still a great deal for him as you probably did as most farangs and paid full value for the land, which he still owns, and then set up a fake lease agreement to skirt landownership laws.

------------------------------------------------------------------------------------------------------------------------------------------------

And I'm with cmsally, this new tax is terrible and so is the timing given where the economy is headed.

This country is full of small family owned shop house businesses. Many don't make a large profit already and also serve as the family home. A 50-100k+ new tax bill is astronomical for them. Many won't be able to pay and who will buy except for the small circle of super rich that still have access to credit and can sit on non-productive properties until the next boom cycle. They won't be offering a fair market price. And what is to stop a connected person from using their influence to have the valuation of a property they covet set extraordinarily high in order to help the process along?

More taxes and regulation that's the solution. Some farangs are so...I'll be polite and say naive.

Another way for the rich to evict the poor and middle class sitting on nice pieces of property.

As a leasee, we don't pay month/yearly rent - we paid for the property upfront then the builder and us went to the land registraty office and legalized the lease agreement for the next 30 years. The "tax" isn't very onerous for us, but it just doesn't seem fair that even though we paid in full the price of the land, we now have to pay their tax on it. And apparently "farangs" are the ones being targeted, not the Thais in our same complex. The sub-district contacted the builder directly to collect these taxes from us and the other farangs in the village.

[cmsally]

If you have been told only farangs have to pay, again ask the builder for the relevant document from the district. Don't pay unless you have received this. It could be that for some reason the builder is being targeted for additional income from the district, in which case that is his problem and not yours.

Are you assuming that the district contacted your builder or do you have actual proof; proof being an official document from the district, not a letter from the builder.

[donx]

As a leasee, we don't pay month/yearly rent - we paid for the property upfront then the builder and us went to the land registraty office and legalized the lease agreement for the next 30 years. The "tax" isn't very onerous for us, but it just doesn't seem fair that even though we paid in full the price of the land, we now have to pay their tax on it. And apparently "farangs" are the ones being targeted, not the Thais in our same complex. The sub-district contacted the builder directly to collect these taxes from us and the other farangs in the village.

I would guess that the reason only farangs are being asked to pay this tax is because this is a business tax. The Thai's aren't leasing the land. They own the land directly. You were not allowed to buy the land, so you have a lease. I would suspect that the builder didn't anticipate having to pay this tax, or this tax has been recently increased which is why the builder is asking you to pay it for them. They would have preferred to not be the owner of the land, but in order to sell to farang, they used the 30 year lease method as a way of selling their development to farang. Does this make sense?

[Pearlgirl]

As a leasee, we don't pay month/yearly rent - we paid for the property upfront then the builder and us went to the land registraty office and legalized the lease agreement for the next 30 years. The "tax" isn't very onerous for us, but it just doesn't seem fair that even though we paid in full the price of the land, we now have to pay their tax on it. And apparently "farangs" are the ones being targeted, not the Thais in our same complex. The sub-district contacted the builder directly to collect these taxes from us and the other farangs in the village.

I would guess that the reason only farangs are being asked to pay this tax is because this is a business tax. The Thai's aren't leasing the land. They own the land directly. You were not allowed to buy the land, so you have a lease. I would suspect that the builder didn't anticipate having to pay this tax, or this tax has been recently increased which is why the builder is asking you to pay it for them. They would have preferred to not be the owner of the land, but in order to sell to farang, they used the 30 year lease method as a way of selling their development to farang. Does this make sense?

That makes perfect sense, and it is what I had figured out to be the reason. I guess I'm just being stupid about this whole thing because I figured that since we paid the full amount for the land, even though we're just leasing the property, that the leasor should be responsible to pay this tax. When and if the government decides to charge "property taxes" - the leasor will probably pass that onto us as well.

[donx]

As a leasee, we don't pay month/yearly rent - we paid for the property upfront then the builder and us went to the land registraty office and legalized the lease agreement for the next 30 years. The "tax" isn't very onerous for us, but it just doesn't seem fair that even though we paid in full the price of the land, we now have to pay their tax on it. And apparently "farangs" are the ones being targeted, not the Thais in our same complex. The sub-district contacted the builder directly to collect these taxes from us and the other farangs in the village.

I would guess that the reason only farangs are being asked to pay this tax is because this is a business tax. The Thai's aren't leasing the land. They own the land directly. You were not allowed to buy the land, so you have a lease. I would suspect that the builder didn't anticipate having to pay this tax, or this tax has been recently increased which is why the builder is asking you to pay it for them. They would have preferred to not be the owner of the land, but in order to sell to farang, they used the 30 year lease method as a way of selling their development to farang. Does this make sense?

That makes perfect sense, and it is what I had figured out to be the reason. I guess I'm just being stupid about this whole thing because I figured that since we paid the full amount for the land, even though we're just leasing the property, that the leasor should be responsible to pay this tax. When and if the government decides to charge "property taxes" - the leasor will probably pass that onto us as well.

I don't think you are being stupid about this. I actually think you shouldn't agree to pay this tax. It is the builder's responsibility not your responsibility. My post was just to provide an explanation as to why I think the builder is asking you to pay this tax. Then again, less than 4000 baht/year may not be worth fighting over. You say you have a 30 year lease. Did the builder promise to extend that lease another 30 years once the original lease is up? If so, how likely do you feel it is that they would do this? Paying or not paying this tax may have an effect on their decision. I agree that the builder will try to pass on property taxes to you if and when they are passed into law.

Another alternative would be for you to find a Thai to buy the property that would be willing to pay the yearly tax with the understanding that in 30 years they own the land. However, this may be more complicated than it is worth for both you and the Thai citizen.

[CTM]

As a leasee, we don't pay month/yearly rent - we paid for the property upfront then the builder and us went to the land registraty office and legalized the lease agreement for the next 30 years. The "tax" isn't very onerous for us, but it just doesn't seem fair that even though we paid in full the price of the land, we now have to pay their tax on it. And apparently "farangs" are the ones being targeted, not the Thais in our same complex. The sub-district contacted the builder directly to collect these taxes from us and the other farangs in the village.

I would guess that the reason only farangs are being asked to pay this tax is because this is a business tax. The Thai's aren't leasing the land. They own the land directly. You were not allowed to buy the land, so you have a lease. I would suspect that the builder didn't anticipate having to pay this tax, or this tax has been recently increased which is why the builder is asking you to pay it for them. They would have preferred to not be the owner of the land, but in order to sell to farang, they used the 30 year lease method as a way of selling their development to farang. Does this make sense?

That makes perfect sense, and it is what I had figured out to be the reason. I guess I'm just being stupid about this whole thing because I figured that since we paid the full amount for the land, even though we're just leasing the property, that the leasor should be responsible to pay this tax. When and if the government decides to charge "property taxes" - the leasor will probably pass that onto us as well.

I don't think you are being stupid about this. I actually think you shouldn't agree to pay this tax. It is the builder's responsibility not your responsibility. My post was just to provide an explanation as to why I think the builder is asking you to pay this tax. Then again, less than 4000 baht/year may not be worth fighting over. You say you have a 30 year lease. Did the builder promise to extend that lease another 30 years once the original lease is up? If so, how likely do you feel it is that they would do this? Paying or not paying this tax may have an effect on their decision. I agree that the builder will try to pass on property taxes to you if and when they are passed into law.

Another alternative would be for you to find a Thai to buy the property that would be willing to pay the yearly tax with the understanding that in 30 years they own the land. However, this may be more complicated than it is worth for both you and the Thai citizen.

Pearlgirl, you didn't buy the land. You technically paid 30 years of lease payments up front. An amount which was coincidentally equal to what a Thai would have paid to own the land outright.

I was under the impression that in these cases the Government collects all the due taxes immediately. (Thais understand each other. ) What are the odds the builder spent all the money on something else and now the Government is on him for being past due? You might want to get your lease documents check by someone knowledgeable. And stand up for yourself. If you don't he will take it as a sign of weakness and continually come up with new charges for you to pay. Your not in the wrong, he is.

[manarak]

I am against this tax.

Being taxed on what you earn is more equitable than on an assessed value of what you own. It is the same as being taxed on non-realized profits, which is deeply "not right".

Also the crown would be exempt *frown* - talk about wealth redistribution...

If they pass this law, it will be a step more towards transforming the Thai society into a western sweatshop. Many will be forced to sell, of which many will probably not buy another property.

Thailand must avoid to become another "squeeze the max out" society, western style. Rents and Debts are tools for sqeezing out the poor... And property tax the best way to ensure they pay rent and alienate their time and freedom to be forced to work for a salary...

Of course, the prices will then rise further and better infrastructure, etc. will be built, the gdp will rise, people will work more... but this leads nowhere.

I hope they say no.

[colibra]

Manarak.

I totally agree. This tax would force a lot of low income thai families to sell homes and land that they no longer can afford to pay the taxes on. But I think its inevitable that some type of land tax will eventually be adapted in thailand how else are they going to steal the wealth of the poor.

I know people in the states that are paying hundreds of dollars each month to live on the property they own outright. This should be illigal as it at least double taxation if not a more. As you pay taxes on the money when you make to buy the land and pay again on that money and its appreciated value each year that you own the property. I

If you live in the states. Start a church. It cost me 50usd to start one. I simply put the house in the churches name and use it as the residence of the minister, me, and because churches are nonprofit they pay no land taxes. If you want to see a real uproar, watch what happens if they try to change this law. Also as a minister of a church you can write off a lot on your taxes. Such the cost for a phone, internet, cable, clothing, and on and on.