New Property Tax Rates for Land and Building in Thailand is Approved by NLA

New Land and Property Tax was approved in Thailand. The National Legislative Assembly (NLA) to pass new land and property tax rates which will come into effect on January 1, 2020.

Under the new Land and Building Tax Law the income-based method previously used in tax calculation will be replaced by an assessment based on a property’s appraised value to improve the clarity of future tax calculations. Appraised value of property deriving from separate standard prices of land and buildings will also help to minimize officers’ discretion in the assessment process, whilst the different land use purposes will have varying implications on tax treatment for property.

– EIC Analysis –

The new land and building tax rate is 0.3 per cent for a residential unit worth more than Bt50 million, property worth below Bt50 million is exempt. However, if a house owner does not own land, the tax exemption will apply to a house worth no more than Bt10 million.

Meanwhile, a government representative, who sat on the NLA committee vetting the bill, responded that studies had been carried out before the bill was introduced and stressed that 97% of farmers would not be affected by the legislation.

A new land and building tax bill passed by National Legislative Assembly (NLA) that will come to effect January 2020.

EIC sees the new Land and Building Tax Law coming into effect on January 1st, 2019 having both negative and positive effects on Thai property developers. Overall, the new law will likely cause greater disruptions to those are renting property than those involved in selling property.

– EIC Analysis –

The new tax covers agricultural, residential, commercial and undeveloped property. It was passed 169-0 with two abstentions.

Farmland will be taxed on a graduated scale based on its value. Those owning farmland worth up to 50 million baht will be taxed annually at 0.02 percent of the land’s estimated value.

Those with holdings valued at 75 million to 100 million baht will pay 0.03 percent, while those with land worth 100 million to 500 million baht will be taxed at 0.05 percent.

Hardest hit are owners of undeveloped tracts, who will be taxed at 0.3 percent of the value per annum. That rate will tick up an additional 0.3 percent every three years the land remains used until it caps at 3 percent.

Residential land and houses worth up to 50 million baht will pay a 0.02 percent annual tax on the property’s value, an equivalent of 200 baht per every 1 million baht. Homes and land worth 50 million to 75 million baht will be taxed 0.03 percent. If worth 75 to 100 million baht, the annual rate will be 0.05 percent. If more than 100 million baht, the annual tax rate increases to 0.1 percent.

Primary residences worth no more than 50 million baht will be exempt. If owners own only a building, tax will be exempt if the estimated price is not over 10 million baht.

Owners of commercial property valued under 50 million baht will be taxed at the rate of 0.3 percent. If it’s valued between 50 million to 200 million baht, it will be subjected to a 0.4 percent tax, or 4,000 baht per 1 million baht in value. Commercial property worth between 200 million and 1 billion baht will be taxed by 0.5 percent. Those between 1 billion to 5 billion baht will be taxed at 0.6 percent, while those over 5 billion will be subject to 0.7 percent tax.

In the first three years after the law comes into effect, ordinary land and building owners as well as agricultural land owners will remain exempt.

For undeveloped land, a tax rate of 0.3% will be applied and it will increase by 0.3% every three years; however, it will be capped at 3%.

The new 94-section land and building taxation law will be enforced immediately upon its publication in the Royal Gazette, but actual tax collection will commence from Jan 1, 2020.

Source: Economic Intelligence Center (EIC), Khaosod English, The Nation, Bangkokpost