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[ 2015-03-10 ]
Govt reduces land tax rates
No tax on homes worth less than bt1.5 million; tax to be limited to just 1 home
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.
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.
The Nation March 10, 2015 1:00 am
Author: Patrick Lusted