Thai Finance Ministry comes out with fresh changes in building tax exemptions

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Finance comes out with fresh changes in tax exemptions



BANGKOK: -- The Finance Ministry has now come out with new revision of its proposed land and buildings tax for residences with tax exemption for appraised value for houses raised to between 2-2.5 million baht from earlier 1.5 million baht, and also exemption for retirees who have no earnings.

This was revealed yesterday by Mr Sommai Phasee after taking various factors into cautious consideration, particularly low income earners and aged people who have retired and had no more earnings.

Mr Sommai admitted that the earlier proposed tax exemption for appraised value for houses at 1.5 million baht was inappropriate and unrealistic particularly in Bangkok and surrounding provinces.

He said the more realistic figure should be between 2 and 2.5 million baht for houses in Bangkok and surrounding areas and a maximum 1.5 million baht for other provinces.

For earlier proposed 50% tax reduction for house of over 1.5 million baht but not exceeding 3 million baht, Mr Sommai said this would also be adjusted to 4-5 million baht.

He said the ministry also consider ways to relieve the tax burden of retirees aged over 60 who no longer earned any income.

He stressed that the poor are of the most concern for the planned implementation of the land and buildings tax.

He admitted that there has been some miscommunication, but insisted the tax is being proposed at the right time.

But he said when the bill becomes law, it will be enforced over the next two years at the earliest or in 2017 as the Treasury Department needs to complete the appraisal of 30 million land plots on an individual basis and get all related government agencies prepared for tax collection.

He said the draft bill on the land and buildings tax will go before the meeting of economic ministers next Wednesday before being forwarded to the cabinet.

The new tax will replace the local development tax and house and land tax, which have been criticised for being regressive and based on outdated median prices.

Source: http://englishnews.thaipbs.or.th/finance-comes-out-with-fresh-changes-in-tax-exemptions

-- Thai PBS 2015-03-12

[96tehtarp]

From the start of this new tax discussion my gut told me 5 million was an equitable cut off point. If things keep going the way they are, we'll be there in a few days. The question then is; will this raise the 200 billion in tax revenue that General and prime minister Prayuth wants?

[mango66]

I think this minister told about this figures just days before !

so now I might think even the minister is: innappropiate and unrealistic ?

[timewilltell]

Why doesnt the government go after VAT tax evaders - it's almost every business. They could employ and properly train a few thousand to root out all these and there would be cash overflowing in the treasury. Then check the incomes of everyone because for sure the super rich are cheating. I never hit tax receipts from two lawyers despite asking copious times and met with a giggle.

[Jeffrey346]

Why doesnt the government go after VAT tax evaders - it's almost every business. They could employ and properly train a few thousand to root out all these and there would be cash overflowing in the treasury. Then check the incomes of everyone because for sure the super rich are cheating. I never hit tax receipts from two lawyers despite asking copious times and met with a giggle.

They do.. The issue is there are no real penalties in place so why pay the tax. If there was a tax evasion law that carried jail time this country would be in much better shape.

[96tehtarp]

Why doesnt the government go after VAT tax evaders - it's almost every business. They could employ and properly train a few thousand to root out all these and there would be cash overflowing in the treasury. Then check the incomes of everyone because for sure the super rich are cheating. I never hit tax receipts from two lawyers despite asking copious times and met with a giggle.

They can't do it yet.

To do this they will need to first implement a CPR system. CPR, that's a Central Personal Registry, where people cease to be people and become instead production units, Thailand has at the moment only their Tabian bahn system, where most people do not live where they are registered. That system is broken, badly.

If they fix this, they can tax Thai citizens to death.

[SOUTHERNSTAR]

So they are going to look after their BKK elites and middle class and damn the rest of the country. The property prices in Phuket/Pats/CM/Huahin central is higher than for the same type of property in BKK's outskirts. So why are BKK going to have a higher fresh hold value? The further they are going with this the deeper they are digging the hole. The best and easiest way is to increase VAT to 10%. With the inflation rate indicating that Thailand could enter into deflation, a VAT increase could prevent this and increase the tax income to pay for all the generals and their cronies.

[Daniel Ingalls]

I told you......changes are coming, and its not over quite yet......... I'm all for retired over 60, tax exempt (Fits my wife's category perfect.)

Going to celebrate with my love to night, champagne' and a few bits of cheddar cheese! (looking out my widow seeing Thais cutting the rice stocks) Thinking "Back to work Peasants!"..............................."some more champagne my dear?"

[bassman]

"The new tax will replace the local development tax and house and land tax, which have been criticised for being regressive and based on outdated median prices."

OK now where is the local governments going to get their money from for road repair, trash pick up, assist the schools and local administration? More power to Bangkok is not the answer that the villages want to hear. They will be beholding to the "selected/appointed" governments seated in Bangkok for survival. Not a good way forward as powers become even more centralized. As when PTP was in power if a village voted against the regime no national funds that year to the village.

[Pib]

If it ever passes there may be so many exemptions it will cost more to administer it than it collects. Hopefully for a farang who owns property (or his Thai wife owns it but all income is from the retired farang spouse side) if you are over 60 and your income such as a pension comes from "outside" of Thailand then you'll be exempt also.

I expect the next group of folks to bitch louder will be in areas such as Bangkok where property is much higher than out in the provinces....Bangkok folks will start saying OK Mr Govt you proposed exemptions which will all but exclude most homes/folks in the provinces...now you need to raise the exemptions even higher for us Bangkok folks because although our property is worth more we are still just barely getting by also due to the higher cost of living and property in Bangkok.

Funding for road repair, trash pickup, and schools has always come from general tax funds since there was practically no property tax collect under the current law, so "not" passing a new property law will not have any affect on funding for schools, garbage pickup, road repair, etc.

If this law goes into effect whatever group gets tagged with the blame for this new tax will lose votes in the next election (if there is ever a next election).

Edited March 12, 2015 by Pib

[elgordo38]

From the start of this new tax discussion my gut told me 5 million was an equitable cut off point. If things keep going the way they are, we'll be there in a few days. The question then is; will this raise the 200 billion in tax revenue that General and prime minister Prayuth wants?

They should go with the VAT increase its easier to ratchet up over time.

[Pib]

From the start of this new tax discussion my gut told me 5 million was an equitable cut off point. If things keep going the way they are, we'll be there in a few days. The question then is; will this raise the 200 billion in tax revenue that General and prime minister Prayuth wants?

They should go with the VAT increase its easier to ratchet up over time.

VAT is a very regressive form of tax...it hits the poorest the hardest. Sure 7% VAT is the same on say a B1,000 buy of whatever for the poor or rich (equates to Bt70), but the rich can easily handle 7%....that 7% tax hit on the poor if only making like Bt10K per month hurts much more than someone making Bt50K, Bt100K, or more per month. Thailand has many more poor people than it does rich people.

[gchurch259]

Knock off the BS and raise the VAT to 8% that way everybody gets to feel the pain, no exemptions and other stuff. Also, Tourist, Drug Dealers etc will share in the pain. Don.t be like USA, they pass one law and have hundreds of exemptions.

[dsfbrit]

Prayut holds back controversial land and buildings tax bill

in Business | March 12, 2015 9:20 pm

• 

Prime Minister Gen Prayut Chan-ocha has held back the controversial land and buildings tax bill proposed by the Finance Ministry with reason that it is untimely to push it into law under the current economy.

Government spokesman Yonyuth Maiyalarp revealed the decision of the prime minister to put on hold the bill saying the bill won’t be table for cabinet consideration next Tuesday.

He said the prime minister has ordered the Finance Ministry to hold back the bill indefinitely.

The spokesman said that there was no mentioning of timeframe to put the bill on hold while affirming that the decision was not made under pressure by the societies or because the bill received widespread opposition from the public.

He said that the prime minister also advised the Finance Ministry to withdraw its proposed bill for review and to compare it with same tax collection in other countries.

Source: http://englishnews.thaipbs.or.th/prayut-holds-back-controversial-land-and-buildings-tax-bill

Edited March 12, 2015 by dsfbrit

[irwinfc]

From the start of this new tax discussion my gut told me 5 million was an equitable cut off point. If things keep going the way they are, we'll be there in a few days. The question then is; will this raise the 200 billion in tax revenue that General and prime minister Prayuth wants?

They should go with the VAT increase its easier to ratchet up over time.

VAT is a very regressive form of tax...it hits the poorest the hardest. Sure 7% VAT is the same on say a B1,000 buy of whatever for the poor or rich (equates to Bt70), but the rich can easily handle 7%....that 7% tax hit on the poor if only making like Bt10K per month hurts much more than someone making Bt50K, Bt100K, or more per month. Thailand has many more poor people than it does rich people.

those who earn more are also likely to spend more.

enough with the subsidy on diesel, i say. too many BMWs, Volvos, etc. around bangkok. who can afford those things?

[96tehtarp]

See post #14. The proposed bill has been shelved..

[mikehock]

So they are going to look after their BKK elites and middle class and damn the rest of the country. The property prices in Phuket/Pats/CM/Huahin central is higher than for the same type of property in BKK's outskirts. So why are BKK going to have a higher fresh hold value? The further they are going with this the deeper they are digging the hole. The best and easiest way is to increase VAT to 10%. With the inflation rate indicating that Thailand could enter into deflation, a VAT increase could prevent this and increase the tax income to pay for all the generals and their cronies.

I think its the higher ' fresh hold value' that really intrigues me.

What is that??

[Pib]

Killing the property tax proposal is even good news for renters. Now their next rent increase will not be because the landlord needed to raise rent in order to pay property tax.

[96tehtarp]

The Bangkok post reported today that the finance minister was unaware and not informed that coup leader, junta chief, army general & Prime Minister Prayuth had shelved the tax bill.

[dsfbrit]

96tehtarp, I am no expert on Thai politics, in fact I have made an effort to not get involved since I retired out here 10 years ago.

However, I suspect you could add 'FInance Minister' to that impressive list of roles held by the dear general. In fact he can have ALL the roles when it suits him.

Although I have only got involved in this issue briefly, I cannot really understand why it is so difficult to come up with a 'formula' to get revenue from people with land and housing. There are plenty of successful models around the world that achieve this quite easily. In the UK we have 'council tax', that is controlled by local councils responsible for local activities like rubbish collection, local planning etc...

Council Tax simply groups properties into bands. So smaller houses are in band 'A' and as the houses get larger and more expensive then higher bands are added. So you have households living in properties in Bands A,B,C,D,E,F,G etc... Then LOCALLY the councils charge a certain amount for each band. So those in band A pay much less council tax than those in the larger and more expensive Band G properties.

The 'council tax' amount is decided locally, by the locally elected council. This money is then used to pay for local services, for example rubbish collection, lighting etc... If you don't like what the council is spending the money on or you think the council tax is too high, then at the next local elections you can vote for someone who will reduce the council tax in each band.

It seems a pretty simple model to me. Even if they don't want local democracy in Thailand and want it run from Bangkok - this model still works.

Am I being naive here ? I have just realised, that those people with the bigger more expensive houses who would pay more council tax, may be the very people the powers in Bangkok don't want to 'penalise' with these taxes.

If that is the case, I don't really see how you can have a tax collection system based on property values at all, as there is no 'formula' that could ever be implemented that would target just certain groups with property BELOW a certain value - so those in band G would pay less than those in band A - it could never happen - or am I missing something?

Anyway, the good news is, it does not look like we will be paying any additional property taxes in the foreseeable future.