Inheritance, land taxes expected to start collecting next March

[mahjongguy]

"I would be in favour of taxes of the order of up to 5% per year on unused land and property."

That would likely be the highest property tax rate in the world. It's not justified and would be completely disruptive to the economy.

"Also capital gains tax at the time of sale of perhaps 50% on property that is not your main residence".

Capital gains are, at worst, treated as ordinary income. There are countries like the U.S. where capital gains on assets held for longer than one year are treated separately and currently enjoy a tax rate of only 15%, thus incurring a lower payment for most than if they were ordinary income where the tax brackets extend to 30% and higher. If your aim is fairness, then capital gains should be treated as ordinary income. There's no argument for making them punitive.

If you want to see Thailand increase it's revenues and do so in a progressive manner, then consider this: profit from the sale of stocks is completely exempt from taxation. There's no excuse for that.

[mango66]

Both taxes are repressive , one tax penalises landowners, the other penalises any one who might be successful or is wealthy, could be termed wealth or death tax, these taxes have been phased out years ago , where I come from as anarchic, they form no important part of the tax collection and regarded as money grabbing also prevents people from wanting to progress further up the ladder, Thailand should be mindful that this is not the way to the peoples hearts, regardless of the spin, extra taxes on people should be the last thing Thailand needs and further more which landowners are being tax or is it the selected few , either way it will be interesting.

you are right !

No taxes is good for the reach one, to make them reacher and reacher !!

Dont share with the poor !!

Ho health system,

no pension system,

what else is on your wish ??

[mango66]

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What is the land tax? Is it the tax paid at the land office when land is transferred or is it a new tax paid annually on land?

Land tax is tax paid annually, you would pay a stamp duty when transferring land.

As I understand it - you pay land tax on developed, utilised land annually - if you demolish all structures and the land is not in use - you apply that it is tax-exempt.

Perhaps more accurately - they are removing the tax-exempt status of unused land - that will encourage people to put it into use again. ie. the vacant/demolished lots in the cbd in bkk. Currently landowners frequently demolish - leave the rubble - don't pay tax, and wait until the land value is higher before redeveloping or selling.

Thats what most western countries do,

to minimice land speculation by the reach,

and to avoid rubbis collecting land in the cities;

And make land available for the por and small farmers !!

Hopefully Gen. P suceed with it !

even i will have to pay for my plot which not in use;

But I agree with it !!

[KittenKong]

I would be in favour of taxes of the order of up to 5% per year on unused land and property. Also capital gains tax at the time of sale of perhaps 50% on property that is not your main residence.

You own any unused property in Thailand? I doubt it assuming you are a farang. Easy to say if you wouldn't be affected.

I own property here, yes. I own my condo and I live in it.

I don't think that unused property does anyone any good and I think that it should be taxed to encourage people to do something with it.

[KittenKong]

I would be in favour of taxes of the order of up to 5% per year on unused land and property. Also capital gains tax at the time of sale of perhaps 50% on property that is not your main residence.

Posted from your 5000baht/month rented room in Patts?

No, from the condo in Jomtien that I own.

[KittenKong]

"I would be in favour of taxes of the order of up to 5% per year on unused land and property."

That would likely be the highest property tax rate in the world. It's not justified and would be completely disruptive to the economy.

No, it wouldnt. It would encourage people to either use property or sell it. Which is precisely what they should do with it.

"Also capital gains tax at the time of sale of perhaps 50% on property that is not your main residence".

Capital gains are, at worst, treated as ordinary income. There are countries like the U.S. where capital gains on assets held for longer than one year are treated separately and currently enjoy a tax rate of only 15%, thus incurring a lower payment for most than if they were ordinary income where the tax brackets extend to 30% and higher. If your aim is fairness, then capital gains should be treated as ordinary income. There's no argument for making them punitive.

My aim isn't fairness. My aim is to heavily tax people who speculate on property and/or leave it unused and/or own multiple properties. I think those are splendid reasons for punitive taxation.

[peecee]

The tax is reasonable. The largesse with which it is spent and the amount of corruption involved, is not.

At the higher end of the scale, aircraft carriers and submarine pens without submarines, at the lower end of the scale, three sets of traffic lights installed in my small village which have been flashing red lights only, since two weeks after they were installed more than a year ago.

The theory is good, the implementation is likely to simply mean more wasted money and more skim off the top. In other words, a bigger cess pool.

You own a small village! Taxman will love you!!

[bangkapi]

This death tax will not be applied to..... Oh wait .... I can't go there.

[Thai at Heart]

The amount is reasonable, its just that everyone has got so used to having everything tax free they expect that forever.

Main reason so many Thais here have so much disposable income ( and they do ) is they dont pay tax, period. Imagine how happy we would be with that arrangement.

All Thais pay taxes everyday via the current 7% VAT...and many items have "excise" taxes applied like the purchase of a domestically made vehicle which has an excise tax in the 10 to 30% ballpark primarily depending on engine size (that's the main reason vehicles cost so much in Thailand)....and for import vehicles a very healthy "import" tax is applied combined with the 7% VAT

The current Thai tax system seems to be regressive in that since so many people do not file "personal income" tax returns the govt must get its tax via VAT, excise, import type taxes...basically collect tax via means which does not rely on personal income tax as the main source of tax revenue....instead, rely on a consumption based tax system which is a regressive tax system and hits the poorest the hardest.

And?

The system has been set up to enable companies, owners and families to avoid paying. Realistically, the only people paying income tax are office and some factory employees.

The vast majority of the rest are family run businesses with cash in cash out and the whole family on the payroll.

There is virtually no one in the country declaring income of 100k USD, yet there are billionaires and shows of conspicuous wealth everywhere. So, a modest property tax is a start because this is where the rich hide their cash away from the govt.

[khunsiam]

Both taxes are repressive , one tax penalises landowners, the other penalises any one who might be successful or is wealthy, could be termed wealth or death tax, these taxes have been phased out years ago , where I come from as anarchic, they form no important part of the tax collection and regarded as money grabbing also prevents people from wanting to progress further up the ladder, Thailand should be mindful that this is not the way to the peoples hearts, regardless of the spin, extra taxes on people should be the last thing Thailand needs and further more which landowners are being tax or is it the selected few , either way it will be interesting.

"phased out years ago"...where?

[mahjongguy]

"I would be in favour of taxes of the order of up to 5% per year on unused land and property."

That would likely be the highest property tax rate in the world. It's not justified and would be completely disruptive to the economy.

No, it wouldnt. It would encourage people to either use property or sell it. Which is precisely what they should do with it.

"Also capital gains tax at the time of sale of perhaps 50% on property that is not your main residence".

Capital gains are, at worst, treated as ordinary income. There are countries like the U.S. where capital gains on assets held for longer than one year are treated separately and currently enjoy a tax rate of only 15%, thus incurring a lower payment for most than if they were ordinary income where the tax brackets extend to 30% and higher. If your aim is fairness, then capital gains should be treated as ordinary income. There's no argument for making them punitive.

My aim isn't fairness. My aim is to heavily tax people who speculate on property and/or leave it unused and/or own multiple properties. I think those are splendid reasons for punitive taxation.

I think we agree that unchecked property speculation damages the economy, but I don't believe in simplistic solutions, and punitive tax rates usually have unintended consequences.

Besides, it's all in the details of the law and how it's implemented. What is unused land? If I have 100 rai and I put in one cassava per rai and let it die, isn't it now agricultural land? If I spend a few baht on a shack and let some squatters live in it, isn't it now residential land? If I leave the land alone for three years and the "unused" tax kicks in, then I sell it to my friend, doesn't the "unused" clock start over?

[NoshowJones]

Both taxes are repressive , one tax penalises landowners, the other penalises any one who might be successful or is wealthy, could be termed wealth or death tax, these taxes have been phased out years ago , where I come from as anarchic, they form no important part of the tax collection and regarded as money grabbing also prevents people from wanting to progress further up the ladder, Thailand should be mindful that this is not the way to the peoples hearts, regardless of the spin, extra taxes on people should be the last thing Thailand needs and further more which landowners are being tax or is it the selected few , either way it will be interesting.

I agree with the sentiment of your post, but if implemented fairly, those taxes hopefully will create some kind of social justice in the long run.

A lot of land is owned by big tycoons with 100.000's of rai "investmentland", only fair those guys pay tax on unused land!

As for the inheritance tax, again we are talking about some people in this country being stinking rich, normally not contributing anything to the state coffers. So a "death-tax" might not be such a bad idea!

Actually the first time the general has suggested anything going against the rich and powerful amart, so maybe there is hope after all?

If people get powerfully rich on the backs of ordinary people, ie Richard Branson types, in any country, then inheritance tax should be very heavy, no one should be powerfully rich through an accident of birth. This may be controversal, but I say it as I see it.

[NoshowJones]

"As I understand it..."

No, there is currently no annual property tax at all.

The proposed tax will be pretty steep for undeveloped land but very minimal for typical residential properties. The proposed residential rate is 0.1%, ten times less than in most U.S. states.

Once the law goes into effect, the battle between rich and poor will shift to the appraisal values on which the tax is imposed. It will take years for fair and reasonable appraisals to be established, and then they must be constantly reviewed. It's an expensive process and will be a fertile plain for corruption.

mahjongguy,

You got a reference/weblink/etc. for the 0.1% residential rate. All I've seen in articles so far is the rates proposing several percent up to around 5%. I fully expect the property tax would apply residential condos and homes. Thanks.

Let's say you have a condo or house in Bangkok worth say Bt7M...the house applies in my case (in wife's name) but for many condo projects in Bangkok Bt7M would be on the lower end....and I expect quite a few farangs own condos in Bangkok and other locations in Thailand like Pattaya and Phuket easily worth Bt7M and much more. Anyway, 0.1% on a residence valued at Bt7M would be a Bt7,000 property tax bill yearly.

That should help the economy along while also raising the VAT from 7 to 10% and implementing an inheritance tax...throw in a few more excise tax increases like on tea drinks and the Thai economy should pickup speed again. This unelected govt seems to have gone tax crazy.

Pib

If it is true that the General has a brother who has a personal fortune of around 80 million Baht, it would be very interesting to know where it came from.

[NoshowJones]

"The major reason from collecting land tax is for the owners to make use of the land instead of doing nothing, he said." ---

Why must people do something with the land? What's wrong with vacant land and trees? The last thing Thailand needs are more derelict shophouses or factories because people were forced to do something with the land.

The Land Tax is a punch in the face to the ordinay person and Bangkok is the worst example of this. Unfortunately, Thailand has laws preventing an honest discussion of Landlords and Tax.

However, it's sad when the largest landowner in Bangkok decides to turn city land into another condo/office hi rise building instead of parks for people to enjoy.

How do land owners who own for example fifty acres of land aquire it in the first place? Probably stolen by their ancestors, land is for all the people of the country, any country, not just the privilaged few.

[KittenKong]

I think we agree that unchecked property speculation damages the economy, but I don't believe in simplistic solutions, and punitive tax rates usually have unintended consequences.

Besides, it's all in the details of the law and how it's implemented. What is unused land? If I have 100 rai and I put in one cassava per rai and let it die, isn't it now agricultural land? If I spend a few baht on a shack and let some squatters live in it, isn't it now residential land? If I leave the land alone for three years and the "unused" tax kicks in, then I sell it to my friend, doesn't the "unused" clock start over?

The details are up to the government to implement, of course; that's their job. But I did say "up to" 5% and perhaps a lower tax on empty land would be sufficient? Or a tax that slides depending on the distance to town centres or nearby built-up areas? Or a progressive tax that increases the more land is owned by one entity?

Personally it's the tax on constructed land/properties that interests me more, and this should be easier to calculate.

[whgthai]

I would be in favour of taxes of the order of up to 5% per year on unused land and property. Also capital gains tax at the time of sale of perhaps 50% on property that is not your main residence.

You are being very generous with my money, I must say! 5% annual property tax on a property worth Bath 5 Mio = Baht 250,000 each year (US$7,700)? Yes, that would do wonders for the Thai real estate market, don't think so!

[mahjongguy]

Issues like the redistribution of wealth are a bit too grand for me; I usually focus on my surroundings, and what I've noticed most about Bangkok and Pattaya is the incredible number of vacant condos and houses. I've thought for years now that Thailand needs a property tax, if only to encourage owners to keep their properties spruced up and rented out.

I live in a mooban that's pretty old but has high property values due to its location. Among forty-some homes there are ten two-story houses that are worth at least 12 million baht but the owners don't bother to rent them out. They sit there empty, the roofs rotting away and the yards untended. Most of the absentee owners refuse to pay the very modest annual maintenance fees. This brings down the neighborhood in terms of property values and quality of life, but they have little reason to care. There is a condo next to the mooban that has problems specific to condos but they too suffer from the low occupancy rate that is encouraged by the lack of property taxes.

[Pib]

Issues like the redistribution of wealth are a bit too grand for me; I usually focus on my surroundings, and what I've noticed most about Bangkok and Pattaya is the incredible number of vacant condos and houses. I've thought for years now that Thailand needs a property tax, if only to encourage owners to keep their properties spruced up and rented out.

I live in a mooban that's pretty old but has high property values due to its location. Among forty-some homes there are ten two-story houses that are worth at least 12 million baht but the owners don't bother to rent them out. They sit there empty, the roofs rotting away and the yards untended. Most of the absentee owners refuse to pay the very modest annual maintenance fees. This brings down the neighborhood in terms of property values and quality of life, but they have little reason to care. There is a condo next to the mooban that has problems specific to condos but they too suffer from the low occupancy rate that is encouraged by the lack of property taxes.

See this also here in Bangkok. I expect a lot of the empty condos is just overbuilding....supply far exceeds demands in many locations. And even in my own Bangkok moobaan which is around 20 years old which has homes ranging in price from around Bt5M to Bt50M I guessimate 10% of the homes have no one living in them or for sale signs up...mostly no one living in them...you may see folks come by once a month to do some landscape cutting for some of the houses...others seem to be abandoned--nice houses for the birds and other critters.

In some cases the empty homes have been bought for investment or for a family member...like a son or daughter when they get married. And then there are the homes where people have just walked away from due to job loss, family illness, just can't make the mortgage payment any more....these folks could care less about paying a property tax because they can't afford the home already...let the bank holding the defaulted mortgage worry about that. And we have some homes that been under construction for 3 or more years...I guess building a little more on the dream house when they get the money.

[Chris Lawrence]

Yes, but what is the estimate to be collected?

The inheritance tax sounds a bit like a resource tax?

[mahjongguy]

"...what is the estimate to be collected?".

By the fifth year, they will annually collect 0.1% of the appraised value of a residential property. For a home worth 10 million baht that would be 10,000 baht.

"The inheritance tax sounds a bit like a resource tax?"

If you mean an annual assets tax, as applied in Switzerland for example, the answer is No.

It's also not an estate tax such as those found in the U.S. and many other countries, where the estate is taxed before distribution to the heirs.

As proposed, the deceased's assets will be divided amongst the heirs and then each of them would be taxed. For each heir, the first 50 million baht would be exempt. This method won't accomplish much because there are too many ways (both legal and illegal) to work around it.

[SantiSuk]

I don't recall anyone voting for a government that would raise taxes. Woops - forgot where I was living for a moment there

[TPI]

Rural land in Phrae is taxed around 9Baht for 10 Rai.....I think most can cope with that?

[belg]

what are the chances that someone BIG and his family in this country will be excempt from this ... all equal right, but some more equal than others

[Eric Loh]

What are the chances that the inheritance tax law will not be legislated by next year and will be kicked down the road to the next government. Who in the establishment and the generals will want this tax law when it's from their pockets.

[KittenKong]

I would be in favour of taxes of the order of up to 5% per year on unused land and property. Also capital gains tax at the time of sale of perhaps 50% on property that is not your main residence.

You are being very generous with my money, I must say! 5% annual property tax on a property worth Bath 5 Mio = Baht 250,000 each year (US$7,700)? Yes, that would do wonders for the Thai real estate market, don't think so!

What real estate market? There isnt one. What there is are hundreds of thousands of unused properties up for sale at absurdly overinflated asking prices. They sit there for months and years on end without any interest and something should be done to encourage the owners to sell at realistic prices. That is a market.

[naboo]

How about a 5% tax on residence, discounted 90% when the person named as head of house in the Tabien Baan can show that she/he is paying income tax in Thailand.

That would increase the payments of income tax, whilst simultaneously enraging ThaiVisa. Good all around?

[mahjongguy]

deleted

[Pib]

How about a 5% tax on residence, discounted 90% when the person named as head of house in the Tabien Baan can show that she/he is paying income tax in Thailand.

That would increase the payments of income tax, whilst simultaneously enraging ThaiVisa. Good all around?

Not a requirement to file any personal income tax return in Thailand unless you exceed a certain income....the majority of Thais fall in this category.

I also expect such a requirement would greatly impact foreigners, like farang retirees or just any farang who wanted to buy condos/real estate in Thailand, from buying. Expect real estate prices and sales in places like Pattaya, Phuket, etc., would plummet.