Are Thailand property Taxes changing?
Are Thailand property Taxes changing?
Q. I’m pondering purchasing a property in Thailand. What are the property taxes like there?
A. After numerous attempts over the years to reshape the way tax is imposed on property in Thailand, new property tax legislation has finally entered into law in Thailand. However, they will be slow to roll due to limited manpower.
The new law replaces the current House and Land Tax Act and the Local Development Tax Act and aims to encourage the productive use of land and improve tax collections on Thailand property.
The tax will apply to land but also condominiums, apartments, and buildings, including houses, or any construction which can be used as a residence or for storage, industrial or commercial purposes.
Owners will now potentially be liable to taxation on their Thailand real estate, although a generous tax exemption threshold will apply.
The tax will be imposed on property held on 1 January of each tax year.
Tax is currently imposed under the House and Land Tax Act on a property’s annual rental value at the rate of 12.5%.
Under the new law, the tax base shall be the appraised value of the Thailand property as determined for the purpose of collecting registration fees under the Land Code. In the case where there is no appraised value, the tax base will be calculated in accordance with the criteria, method, and conditions as prescribed in Ministerial Regulations.
The following ceiling rates have been introduced for four categories of property:
(1) Properties used for agricultural purposes: 0.15%
(2) Properties used for residential purposes: 0.30%
(3) Properties used for purposes other than (1)and (2): 1.20%
(4) Vacant/non-utilized properties*: 1.20%
*If the land or building is left vacant or undeveloped for three consecutive years, the rate will increase by 0.3% every 3 years subject to a cap of 3%.
Tax rates have been announced for 2020 and 2021. For example, for a condominium unit owned by an individual that uses the unit as their place of residence and their name appears in the house registration book, the tax rates are:
Tax rates after 2021 shall be prescribed by Royal Decree. The local authority empowered to collect the tax has the power to impose a higher rate but in any case, it shall not exceed the ceiling rates.
Tax exemptions are provided in the following cases:
- Thailand real estate - Land and buildings owned by individuals that are used for agricultural purposes shall be exempt from tax until 2022, after which a tax-exempt threshold of Baht 50 million shall apply.
- Thailand real estate - A tax-exempt threshold of Baht 50 million shall apply to land and buildings owned by individuals that are used as their place of residence, if their names appear in the house registration book on 1 January of the tax year
- Thailand real estate - A tax-exempt threshold of Baht 10 million shall apply to buildings owned by individuals, where they are not the landowner, that are used as their place of residence, if their names appear in the house registration book on 1 January of the tax year. By definition, this would include a condominium unit.
In the first three years that the new tax on property in Thailand is collected, if the tax assessed is higher than the tax previously payable under the House and Land Tax Act, the taxpayer shall be liable to pay the house and land tax amount plus a portion of the excess in each year, being25% in the first year, 50% in the second and 75% in the third year.
The due date for tax payment
In December 2019, a number of time extensions were announced in respect of the implementation of the new Thailand property law in 2020. Instead of tax assessments being issued to taxpayers in February 2020for payment in April 2020, they will now be issued in June 2020 and tax payments will be due in August 2020.
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