Thai govt reduces land tax rates

[webfact]

Govt reduces land tax rates
Business reporters
The Nation

No tax on homes worth less than bt1.5 million; tax to be limited to just 1 home

BANGKOK: -- The government has relaxed a new law on land and building tax in order to push for prompt implementation of a new tax structure that previous administrations failed to bring in.

The Finance Ministry has raised the maximum value of land and buildings exempt from tax from Bt1 million to Bt1.5 million as part of the proposed Land and Building Tax Act.

Meanwhile, Prime Minister Prayut Chan-o-cha has signalled that the decision to raise the value-added tax (VAT) late this year may not happen.

"There may be no need to increase the VAT rate from 7 per cent currently if we can collect taxes from land and buildings," the PM said.

The legal draft for the land and building tax may take one to two years before it is enforced, Prayut said, explaining that the government would prudently consider the issue.

Property developers have urged the government to reduce more tax rates.

Meanwhile, hotel operators plan to meet with Revenue Department officials to ask them to reduce the tax to be imposed on land and buildings, as they feel a 2 per cent tax on commercial properties is high.

Finance Minister Sommai Phasee said after a meeting yesterday of a committee tasked with reforming fiscal, budget and tax systems that the committee agreed to extend the tax-waiving ceiling for land and buildings from Bt1 million to Bt1.5 million.

Land and buildings exceeding Bt1.5 million in value, but no more than Bt5 million, will be taxed at half the 0.1 per cent rate, while sites valued over Bt5 million will be taxed at 0.1 per cent.

The proposed minimum tax rate for residences is 0.1 per cent, with a maximum of 0.50 per cent.

Sommai said the proposed tax rate on agricultural land was cut from 0.5 per cent to 0.25 per cent, while the rate for commercial land was 2 per cent for three types of businesses - coffee shops, commercial buildings and small and medium-sized enterprises.

Somchai Ruchupan, chairman for the National Reform Council's economic and financial reform committee, said that the government was considering exemptions, including house prices, for the proposed bill.

Kobsak Pootrakul, the committee's spokesman, said it also proposed budget inspections of local administrative organisations for detailed procurements, while the calculation of the proposed land and building tax should be used for a wide range of people.

Thai Condominium Association president Prasert Taedullayasatit said that although the exemption ceiling for land tax would be lifted from Bt1 million to Bt1.5 million, the tax rates were still high and could result in people having a higher cost of living.

He said the current Land and Building Act established a tax rate 0.05 per cent for agriculture land, 0.1 per cent for residential land, and 1 per cent for undeveloped land and commerce buildings.

Business Housing Association honorary president Issara Boonyoung said that when the land and building tax is collected, the government should reveal how taxpayers benefit because the tax will be collected by local organisations.

Issara said local organisations have to inform people in all locations what they will do with the revenue collected, including the building and repairing of roads and the development of local infrastructure such as water systems, parks and schools. This would stop people refusing to pay taxes.

He said the Finance Minister had to reform other taxes relating to land and buildings because people had to pay things like a transfer fee, a mortgage fee and personal income tax when they sell a home. Doing so would reduce the public backlash to the Act.

"Only 20 per cent of residential properties will receive benefits from the land tax exemption and there will also be a lesser number of beneficiaries, as there will be evaluations every five years," he said.

Supawan Tanomkieatipume, vice president of Thai Hotels Association, said that if the new land and building tax was enforced, it would have a major negative impact on the hotel and travel sectors because it would result in increased costs. "Hotels might push their costs derived from the land tax onto clients by having higher room rates," she said.

Source: http://www.nationmultimedia.com/business/Govt-reduces-land-tax-rates-30255684.html


-- The Nation 2015-03-10

[ColdSingha]

at the stroke of a pen a loophole big enough to drive a London bus through was created for their influential buddies..

primary house is a a shack in Nakhon Nowhere, cost 1.5M.. all their others.. now tax free

[KittenKong]

Apart from the phrase "tax to be limited to just 1 home" there does not seem to be any information given about this limitation at all.

It's very odd in that in most countries there would be an exception for just one home, rather than limiting the tax to just one home.

I wonder if it is a bad translation?

[bangkokheat]

seems like everyone is going to pay for the previous governments greed

[maidee]

I guess my soon to be ex wife will be happy not to have transferred her blue book to the new house of 12 millions... paying tax on the old 5 million house will be better

loooooooool

[SOUTHERNSTAR]

seems like everyone is going to pay for the previous governments greed

Work out for yourself how much it cost the country to maintain 1400 generals (the US army only have 140 with 3 times the soldiers). Then add to that 2 double digit military budget increases. Then add to that how much the fighting in the south cost. Then add to that the interest costs of the B 3 tn to B 5 tn of mega projects they want to implement. Then add to that the B 150 bn energy subsidies that paid every year. After you have done these calculations you will see that the cost of the rice scheme is pale in comparison. The truth is that the economy is tanking and therefor their tax collection is not enough and they need to come up with new taxes to pay for the fat cats.

[cooked]

Apart from the phrase "tax to be limited to just 1 home" there does not seem to be any information given about this limitation at all.

It's very odd in that in most countries there would be an exception for just one home, rather than limiting the tax to just one home.

I wonder if it is a bad translation?

Not necessarily a bad translation, just a vague waffling about what may or may not happen. If you read through the way it is written and take it literally, it would be in everyone's interest to build a hovel in their back garden. YOU don't understand? Nobody understands what the hell they are doing.

[spacebass]

Apart from the phrase "tax to be limited to just 1 home" there does not seem to be any information given about this limitation at all.

It's very odd in that in most countries there would be an exception for just one home, rather than limiting the tax to just one home.

I wonder if it is a bad translation?

Not necessarily a bad translation, just a vague waffling about what may or may not happen. If you read through the way it is written and take it literally, it would be in everyone's interest to build a hovel in their back garden. YOU don't understand? Nobody understands what the hell they are doing.

No Farang understands anything that any Thai people do.

[Nickhick]

at the stroke of a pen a loophole big enough to drive a London bus through was created for their influential buddies..

primary house is a a shack in Nakhon Nowhere, cost 1.5M.. all their others.. now tax free

. Mickey Mouse laws....Nick

[greenchair]

seems like everyone is going to pay for the previous governments greed

Rubbish. this is the new governments greed.

All the funds will go to the district office, of which most of the heads have been hand picked by the current powers.

Of course only the good people were chosen for these positions.

At the end of the day, millions of poor will pay a little bit. And the few rich will pay nothing . The many poor might see a few benefits for a few years to settle the dust of the new laws. Then the rich will make sure all those lovely funds go to benefit their construction companies, private schools, private hospitals and salary side salads.??

[Daniel Ingalls]

Finger are crossed for another cu within a cu. Some young three star will emerge soon. PM stepping on to many toes all at once, Or someone is not get a fair

cut in the deals behind closed doors. There is no honor among thieves, and the military takeover is no exception. Multable schemes with in schemes to tax the weary will be revealed down the road when real calculators are used. Fudging the figures to hide discrepancies will be discovered in different Ministries, and pointing fingers at each other blowing smoke to obscure corruption will persist. ..............Yes indeed, Thailand has a long way to go cleaning up this mess!

[Time Traveller]

..."tax to be limited to just 1 home"....

What's the point of the tax then? A guy that owns 35 houses, only has to pay tax on one of them. Disband this government and jail them all immediately for stupidity.

Even Thaksin at his most worst, was a million times more competent and a better leader than these buffalo soldiers

Edited March 10, 2015 by Time Traveller

[FangFerang]

This morning in the BP PM said Land Tax or VAT Tax...it seems the wealthy have dodged the bullet again.

[derekwyoung]

Who is going to value my house and land, and will I be able to contest the valuation?

[thedivezone]

Who is going to value my house and land, and will I be able to contest the valuation?

Certainly . . . In your dreams .

[zyphodb]

seems like everyone is going to pay for the previous governments greed

Everyone apart from the rich... surprise surprise.... although to be fair the rich don't pay much tax in the western world either...

[727Sky]

I have to agree with the other posters about the tax on one house only ... Makes absolutely no sense unless the rich land owners are writing the laws.

[khunPer]

It’s not totally clear, how the rates are going to be, but 0.1 percent is a lot ”better” than 0.5 percent, for the property owner.

Many expats lives in houses worth more than 1.5 million baht, even up cheaper Issan.

Now let’s take a 2 million baht property, does that mean:

First 1.5 million: 0 tax

Remaining 0.5 million: 0.05 percent tax (half 0.1%) = 250 baht

Or:

2 million taxed at 0.05 percent = 1,000 baht...?

Not a huge difference between 250 baht and 1,000 baht, so affordable.

But what about a 10 million baht home, not an unrealistic price level:

First 1.5 million: 0 tax

From 1.5 to 5 million, 3.5 million of 0.05 percent = 1,750 baht

Remaining 5 million, 0.1 percent = 5,000 baht

Total tax 6,750 baht

Or:

0.1 percent tax of all 10 million = 10,000 baht...?

However still affordable for most, but maximum residential property tax is mentioned as 0.5 percent, will there be other break points at the tax stair...?

And those foreigners having a home within a company set-up, shall they pay 2 percent...?

Suddenly a 10 million baht property can cost 200,000 baht in annual tax instead of 10,000 baht only – or will that still be considered “residential”, as long as you don’t open a coffee shop on the ground floor...?

[Daniel Ingalls]

So whats the point of being/getting rich if every sore looser or those who haven't manage to crawl up the ladder of success. I'm rich, and want to stay that way, or get even more! In chicken terms, its called pecking order. All the rest of you 99 behind me, stop complaining about those on the top of you, and figure out a way how to climb,..... climb the latter of success yourself. Isn't this is what life is really all about, getting up to the top, and keeping all you have for as long as possible? In every society, its the rich on the top of things, and the poor yelling injustice, unfair, your corrupt! So here it is wealthy bureaucrats, flick down a few half chewed pork chops, and it appease them. It won't take much! And in time, newbies in the pecking order of things will emerge to the top of the hep digging in on the spoils. A never ending story of mankind's, greed for wealth and power. The ones that shared to the poor and keep a little to themselves......they will be remembered as the crusaders of sharing the spoils of war. And it is a war you know......between the haves and the have nots. I prefer to be the haves, cause its no fun breaking piggy banks, and digging deep to make ends meet! That's it in a nutshell, pay up! or shut up!........you only have one foot on the latter I see!.........

here my friend....have a pork chop!

[scandinavi]

It must be like this. One ( value less than 1.5M ) home can be tax free. All other, even the cheap ones, are taxable. Tax freedom is limited to just one home.

"No tax on homes worth less than bt1.5 million; tax to be limited to just 1 home"

[khunPer]

It must be like this. One ( value less than 1.5M ) home can be tax free. All other, even the cheap ones, are taxable. Tax freedom is limited to just one home.

"No tax on homes worth less than bt1.5 million; tax to be limited to just 1 home"

Or "tax to be limited to just 1 home" means that filthy rich folks with several homes, only pay tax of the first – and cheapest – home...

[khunPer]

It must be like this. One ( value less than 1.5M ) home can be tax free. All other, even the cheap ones, are taxable. Tax freedom is limited to just one home.

"No tax on homes worth less than bt1.5 million; tax to be limited to just 1 home"

Or "tax to be limited to just 1 home" means that filthy rich folks with several homes, only pay tax of the first – and cheapest – home...

So here's some additional explanation from The Nation (posted in ThaiVisaNews):

»Previously the exemption was only applicable to houses priced at less than Bt1 million. The minister said those who own more than one house would only have to pay for the most expensive one. The ministry is also looking into a possibility of including houses worth less than Bt45 million under the same criteria as houses worth less than Bt3 million.« (sic)

Source: http://www.thaivisa.com/forum/topic/807388-land-and-house-tax-to-be-submitted-to-thai-cabinet-this-month/

[Srikcir]

"The government has relaxed a new law on land and building tax in order to push for prompt implementation of a new tax structure that previous administrations failed to bring in."

No surprise there. Having absolute power over the government, not having to be accountable to the electorate (ie., voters), and operating under martial law, a junta-led government will be much more efficient in raising taxes than any elected government. And if taxation policies favor the wealthy and burdens the middle class - too bad. There is no appeal except to General Prayut, Chief of the Junta.

[trogers]

I think there was a translation mistake. Tax discount is limited to 1 home makes more sense.

Or in this case, tax exemption. That means, if you have got 2 houses or more with value less than Bt1.5m, only one is exempted from tax.

Edited March 11, 2015 by trogers

[Pib]

The Prime Minister indefinitely shelved the new land and building tax proposal today. She this Nation article: Link.

And if you read the article in today's Bangkok Post on the same subject the PM said it would be shelved until at least 2017 while the govt does more research on the matter. The current govt will be out of power by then and hopefully the next govt will not want to touch the 3d Rail of Land and Building Tax.