Inheritance tax of 10% on estates over Bt50m approved

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NEW LAW
Inheritance tax of 10% on estates over Bt50m approved
The Nation

BANGKOK: -- The Cabinet yesterday gave the nod to a draft bill for the country's first-ever inheritance tax.

The tax will be a form of income distribution," Prime Minister Prayut Chan-o-cha said after the Cabinet meeting.

The tax rate will be 10 per cent, as expected, and only assessed on estates worth more than Bt50 million.

Prasong Poontaneat, director general of the Excise Department, said 16 draft organic laws supporting the Inheritance Tax Act would also be tabled with the National Legislative Assembly.

There might be 10,000 people liable for the inheritance tax.

Those liable under the law include Thai individuals and juristic people, foreign individuals and juristic people domiciled in Thailand for at least three years, plus foreign individuals and juristic people bequeathed assets located in Thailand. The draft bill will be sent to the NLA for deliberation this month and should take effect in the third quarter of next year.

It would become law in about six months, or at the end of March, after publication in the Royal Gazette, but there would be a three-month grace period before enforcement begins.

Gift tax on assets above Bt10m

Under the bill, a gift tax of 5 per cent would be levied on assets that are valued above Bt10 million transferred to heirs before the principal's death.

The assets, which must be registered, include houses, land, cars, bonds, deposits and other securities.

Recipients of such assets who are not heirs would include them in their personal income tax return.

To be efficient, Thailand might apply the gift tax as well as a deduction in line with the inheritance tax like in the UK, Japan and South Korea, according to a recent study conducted by Kasikorn Research Centre.

Normally, income tax imposed on inheritance is unlike other taxes, as sums collected are often less than 0.5 per cent of gross domestic product.

KResearch suggested that the government prepare a database linking state agencies that it could examine to ensure the taxes are collected efficiently.

About 70 per cent of people surveyed last week by the National Institute of Development Administration supported the Finance Ministry's plan to collect inheritance tax at the 10-per-cent rate on an amount higher than Bt50 million.

It found that 9 per cent of the 1,249 respondents saw the rate as too high while 6 per cent saw it too low and 13 per cent were opposed to the inheritance tax.

Source: http://www.nationmultimedia.com/business/Inheritance-tax-of-10-on-estates-over-Bt50m-approv-30248108.html


-- The Nation 2014-11-19

[Suriya4]

And how much prayuth got from his father land sales? Is he taxed like Thaksin on his share sales?

[Noi657]

9999 people eligible! Generals father sold his in the nick of time!

[EricBerg]

Smells like the general's dad landtransaction was a nice case of insider dealing

[siampolee]

Going to be some very rich well let's say ''49 million bahts worth of assets'' maid, drivers, gardeners around in the not too distant future no doubt.

[BSJ]

I think it's unfair that foreigner's have to pay the tax if they have lived here for more than 3 years. I have no rights here, can't buy land in my name, can't own a controlling interest in my business, can't do a lot of things so how is it they think I am going to leave my money here in Thailand for them to take 10% away from my dear wife when I turn up my toes?

Factually, I am still short of the 50M mark so maybe I am worried about nothing!

[chainarong]

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I think it's unfair that foreigner's have to pay the tax if they have lived here for more than 3 years. I have no rights here, can't buy land in my name, can't own a controlling interest in my business, can't do a lot of things so how is it they think I am going to leave my money here in Thailand for them to take 10% away from my dear wife when I turn up my toes?

Factually, I am still short of the 50M mark so maybe I am worried about nothing! alt=blink.png>

U come to Thailand with lots of money and leave with no money

[casualbiker]

Smells like the general's dad landtransaction was a nice case of insider dealing

How can it be insider trading when A it hasn't become law yet and B every one with access to a radio, mooban speaker, newspaper or TV knew about the pending legislation!

[Don Aleman]

y the time this becomes law no Thai will have more than 49 Million Baht ,ergo ?, No taxes collected !

[Robert24]

it will be interesting how this pans out. As far as I know, the government here is only aware of assets related to land/property in Thailand. They don't even track assets of companies as they only look at income statements. So my guess will be that there will be plenty of loopholes to avoid this tax for rich people. And if not, you can still choose a domicile without inheritance tax (i.e. Singapore) and spend up to 6 months in Thailand every year without having to pay tax here.

[fforest1]

Sure this tax starts with the very rich

next it will be the rich

then

the almost rich

then

the upper middle class

then

the middle class

then the lower middle class

then everybody

Edited November 19, 2014 by fforest1

[Anthony5]

I would be surprised if 10.000 People were liable.

Where I live bare land is sold at ~ 4 Million a Rai, while at the land department that land is VALUED at 350.000 Baht.

That's a long way to have property VALUED at 50 Million

[maewang99]

Nothing unfair at all. We can't easily buy land in our own names, but that's not a revenue provision and we have been entitled tax refunds all along these many years, which you won't get in the USA.. instead you get taxed again....especially when the Thai corp rate was 30%, it was 40% on top of already great dividends.... Thai revenue law applies equally to non-Thai nationals as to Thai nationals, the only area of Thai law where a resident of Thailand is treated fairly and the same notwithstanding nationality.... as long as you don't use a nominee (which means a non Thai bank or broker).

[Dogmatix]

Smells like the general's dad landtransaction was a nice case of insider dealing

A journalist asked him why his Dad sold the land to a company that had only been incorporated a few days earlier.

[SoFarAndNear]

WOnder how many foreigners "own" land worth more then 50 mio Baht in Thailand.

[Time Traveller]

it will be interesting how this pans out. As far as I know, the government here is only aware of assets related to land/property in Thailand. They don't even track assets of companies as they only look at income statements. So my guess will be that there will be plenty of loopholes to avoid this tax for rich people. And if not, you can still choose a domicile without inheritance tax (i.e. Singapore) and spend up to 6 months in Thailand every year without having to pay tax here.

Sorry Robert, but you have no clue at all.

Assets include "The assets, which must be registered, include houses, land, cars, bonds, deposits and other securities."

So everything, real assets and financial assets. Property, bank accounts, shares, investments, business.

Also the 6 months you speak of is nonsense. In Thailand you are only taxed on thai source income. So if spend 12 months in thailand and all of your income is foreign sourced you are not liable for tax unless it's brought into thailand the same year.

Edited November 19, 2014 by Time Traveller

[whybother]

9999 people eligible! Generals father sold his in the nick of time!

Smells like the general's dad landtransaction was a nice case of insider dealing

How can it be insider trading when A it hasn't become law yet and B every one with access to a radio, mooban speaker, newspaper or TV knew about the pending legislation!

Insider trading that he knew about 18 months ago? The land was sold in May 2013!!!!

Edited November 19, 2014 by whybother

[Robert24]

it will be interesting how this pans out. As far as I know, the government here is only aware of assets related to land/property in Thailand. They don't even track assets of companies as they only look at income statements. So my guess will be that there will be plenty of loopholes to avoid this tax for rich people. And if not, you can still choose a domicile without inheritance tax (i.e. Singapore) and spend up to 6 months in Thailand every year without having to pay tax here.

Sorry Robert, but you have no clue at all.

Assets include "The assets, which must be registered, include houses, land, cars, bonds, deposits and other securities."

So everything, real assets and financial assets. Property, bank accounts, shares, investments, business.

Also the 6 months you speak of is nonsense. In Thailand you are only taxed on thai source income. So if spend 12 months in thailand and all of your income is foreign sourced you are not liable for tax unless it's brought into thailand the same year.

thanks for your compliments about not having a clue at all. But never mind, but I think you agree with my comment that the government here is only aware of land and property here in Thailand. All other assets you quote, like stocks, bonds, cash, various other securities, precious metals, diamonds, art works, cars are not registered (maybe with exception of cars) the government is not aware and those assets would have to be registered upon death of someone. So how do you think the government here in reality can track those assets? And by the way if someone has shares in a company which are passed on, all the assets of a company would have to be valued and to determine if it is above the threshold and how much the inheritance tax would be.

Also the 6 months I mentioned wasn't in relation to income tax, it was in relation to this inheritance tax. So let me give you an example. If one of the rich Thai people would like to avoid the 10% hit, he could move to Singapore and become resident there. As far as I know, he wouldn't be liable to pay the inheritance tax because he is subject to the Singapore tax laws as a resident there and I assume Singapore has a double tax treaty with Thailand that individuals cannot be taxed in both countries. The 6 months relate to time spent in Thailand per year without becoming tax resident. The same happened in many other countries, look at France etc.

So what I'm saying it will be interesting how the exact law will look like and how the government is trying to implement it. Looks like a lot of effort to me to properly implement it and probably little additional tax revenue and also something that makes the country less attractive for investors.

[Time Traveller]

Smells like the general's dad landtransaction was a nice case of insider dealing

A journalist asked him why his Dad sold the land to a company that had only been incorporated a few days earlier.

Great timing, the PM saved his family 55 million baht in future taxes!

[Time Traveller]

thanks for your compliments about not having a clue at all. But never mind, but I think you agree with my comment that the government here is only aware of land and property here in Thailand. All other assets you quote, like stocks, bonds, cash, various other securities, precious metals, diamonds, art works, cars are not registered (maybe with exception of cars) the government is not aware and those assets would have to be registered upon death of someone. So how do you think the government here in reality can track those assets? And by the way if someone has shares in a company which are passed on, all the assets of a company would have to be valued and to determine if it is above the threshold and how much the inheritance tax would be.

Also the 6 months I mentioned wasn't in relation to income tax, it was in relation to this inheritance tax. So let me give you an example. If one of the rich Thai people would like to avoid the 10% hit, he could move to Singapore and become resident there. As far as I know, he wouldn't be liable to pay the inheritance tax because he is subject to the Singapore tax laws as a resident there and I assume Singapore has a double tax treaty with Thailand that individuals cannot be taxed in both countries. The 6 months relate to time spent in Thailand per year without becoming tax resident. The same happened in many other countries, look at France etc.

So what I'm saying it will be interesting how the exact law will look like and how the government is trying to implement it. Looks like a lot of effort to me to properly implement it and probably little additional tax revenue and also something that makes the country less attractive for investors.

'fraid you're wrong again. Stocks, investments, bank accounts, business ownership, property - all are registered in thailand. And proof of tax paid would be required before any transfer of name would happen.

Inheritance tax is very easy to implement. It would be like it's done in other countries. In which case, even if a thai billionaire died with his heir resident in Singapore, all of the thai based personal assets would be liable to the tax. The foreign personal assets may or may not be depending upon the tax residence of the heir.

[whybother]

Smells like the general's dad landtransaction was a nice case of insider dealing

A journalist asked him why his Dad sold the land to a company that had only been incorporated a few days earlier.

Great timing, the PM saved his family 55 million baht in future taxes!

Crystal ball timing. It's amazing he knew about this 18 months ago.

[gemini81]

Glad he sorted all that out for his folks in the nick of time. Good planning.

[whybother]

Glad he sorted all that out for his folks in the nick of time. Good planning.

* sigh * ... great planning, considering the land was sold 18 months ago.

[Robert24]

@Time Traveller: Pls allow me to quote you a few times to respond to you and since you said that I'm wrong again.

1) "Stocks, investments, bank accounts, business ownership, property - all are registered in Thailand." So if I understand you right, you are saying that already now banks and brokers based in Thailand are reporting holdings of individuals and companies to the government on a regular basis. Is that right? Can you share some evidence/details that this is happening?

2) How about banks and brokers outside Thailand? How can the Thai government know what assets a Thai citizen would own abroad?

3) how about physical assets like precious metals, diamonds, art etc? How would that be registered?

4) I own 49% in a Thai company and I can guarantee you that right now the government is only interested in tax related to revenues. I never had to report assets (with exception of property) that the company owns. Maybe that may change going forward but right now I wouldn't know how the Thai government would already know the assets of my company.

5) "It would be like it's done in other countries. In which case, even if a thai billionaire died with his heir resident in Singapore, all of the thai based personal assets would be liable to the tax. The foreign personal assets may or may not be depending upon the tax residence of the heir." What do you mean with "Thai based personal assets"? So are you saying assets in Thailand would be subject to inheritance tax, i.e. if you hold a Thai stock with Kim Eng Bangkok you pay inheritance tax and if you hold the same Thai stock with Kim Eng Singapore you don't pay??? Really? By the way in similar cases with other countries, they can only apply the inheritance in their own jurisdiction unless a double tax treaty would specifically allow for using their tax laws in another country. So to give you an example. If a French citizen moves their tax domicile to Singapore, he/she doesn't have to pay inheritance tax in France because Singapore tax laws apply. For France to be able to tax a French citizen in another country, they would have to negotiate this in a double tax treaty with that country. So if Thailand would want to tax a Thai citizen with Singapore domicile, the would have to negotiate a double tax treaty with Singapore allowing to do that.

All I'm trying to say is that wealthy people that are targeted with this law will find plenty of ways to minimize the impact on them by this law. There is plenty of evidence from other countries. By the way you ever asked yourself why other countries have gotten rid of the inheritance tax? Inheritance tax is one of the key factors about where entrepreneurs choose their tax domicile, this will definitely not attract foreign investment.

[AleG]

Smells like the general's dad landtransaction was a nice case of insider dealing

A journalist asked him why his Dad sold the land to a company that had only been incorporated a few days earlier.

Great timing, the PM saved his family 55 million baht in future taxes!

Crystal ball timing. It's amazing he knew about this 18 months ago.

Obviously he used Suthep's time machine, you know, the one he used to go back in time to stop payments to farmers under the Rice Scheme months before the protests started.

[Hermeric]

How much would you pay inheritance tax in your home country?

[icare999]

And how much prayuth got from his father land sales? Is he taxed like Thaksin on his share sales?

Taksin did not pay any tax because their is and was no CGT tax here. IT wasp ne of his biggest mistakes since it incensed people and even though I was totally anti Taksin I did point this fact to ignorant Thais and forang. IF he'd volunteered to pay some tax or even given say a couple billion to a temple or something people at least in Bangkock would not have been dancing in the streets in joy at 2006 coup

[Anthony5]

And how much prayuth got from his father land sales? Is he taxed like Thaksin on his share sales?

Taksin did not pay any tax because their is and was no CGT tax here. IT wasp ne of his biggest mistakes since it incensed people and even though I was totally anti Taksin I did point this fact to ignorant Thais and forang. IF he'd volunteered to pay some tax or even given say a couple billion to a temple or something people at least in Bangkock would not have been dancing in the streets in joy at 2006 coup

There was no CGT tax because Thaksin himself changed the law to that effect only a few days prior to the sale.

[rickirs]

The gift tax is new and a necessary crosscheck to deliberate avoidance of the inheritance tax. However, it needs to be taxed at the same rate as the inheritance tax, otherwise it can be manipulated to gain a tax advantage, ie., "death bed" gifts - gifts presumbly made by a person on the edge of death.

[rickirs]

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And how much prayuth got from his father land sales? Is he taxed like Thaksin on his share sales?

Taksin did not pay any tax because their is and was no CGT tax here. IT wasp ne of his biggest mistakes since it incensed people and even though I was totally anti Taksin I did point this fact to ignorant Thais and forang. IF he'd volunteered to pay some tax or even given say a couple billion to a temple or something people at least in Bangkock would not have been dancing in the streets in joy at 2006 coup

There was no CGT tax because Thaksin himself changed the law to that effect only a few days prior to the sale.

"Thaksin himself changed the law"

I thought the PM at that time could only submit bills to the Parliament that could pass laws. I caveot "at that time" since the current PM does have the power to enact laws by himself under Articles 17 and 44 of the Interim Charter.