Opera Consulting: The New Land and Building Tax Act B.E. 2562 (2019): update on its practical application
The New Land and Building Tax Act B.E. 2562 (2019), adopted by the legislative assembly on the 16th of November,2018 had come into force on the first of January 2020.
It replaces and revokes the previous House and Land tax B.E (1932) and Land development Tax B.E 2508 (1965).
With a transition period between the 1rst of January 2020 and 2022, it responds to three main objectives:
the distribution of the tax burden
· Encourage land utilization to help to enhance the Thai economy
· Improve the effectiveness of the tax collection
· Reduce income disparity with enhanced distribution of the tax burden
Taxes rates are now based on the appraised value and categories of property:
· residential
· commercial
· agricultural
· unused/ vacant land.
The category is determined following the use of the asset. It will replace the actual rate: 12.5% previously calculated on the property annual rental value.
Luckily for owners, it was confirmed by the Finance Ministry that condominiums units are under the residential category, even for units that are rent out.
Indeed, the purpose of the unit is still for a residential purpose. On the contrary, if your property is used as a restaurant for example, then it falls back to commercial use.
The New Land and Building Tax Act B.E. 2562 provides several exemptions based on the appraisal value and asset's category:
· Agricultural: Tax base exemption: Less than 50 Million THB
· Residential: Owner of a Land and Building: Less than 50 million THB*
· Residential: Owner of Building: Less than 10 million THB*
* the Second residence will be subjected to the residential tax rate
The local Subdistrict Administrative Organization (“SAO”) will newly be in charge onward to collect the tax. Individuals and juristic persons, owning land or a building, including condominium unit will be entitled to pay the land and building tax
In order for the taxpayer and local authorities to be ready, the tax filling application set originally in April has been pushed to August 2020.
Vacant landowners are the most impacted as taxpayers with the new legislation, however small actions, like planting trees, can update the land into the agricultural category.
Further updates will still be released in the upcoming month by the ministry of finance while certain categories are not clearly yet determined.
This article is a general briefing note which does not replace the advice for any individual situation. Its content shall not be liable to the firm in the event of a different application by the authorities. Contact us for further information.
Opera Consulting is a professional and reliable law firm with head office in Bangkok's Central Business District (Sukhumvit Soi 13). Our lawyers and consultants speak Thai, English and French.
