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Draft Tax Bill Seeks to Curb Real Estate Speculation

By on Feb 09, 2016 in Investment-Land, Property News

A new version of the draft bill on the land and buildings tax, this one with an eye towards curbing speculation, will be proposed soon to Finance Minister Apisak Tantivorawong.

The draft is expected to push real estate speculators to use their land at a faster pace and fill up the coffers of local administrators’ organisations.

It is further aimed at lowering the government’s burden in subsidising them, finance permanent secretary Somchai Sujjapongse said without providing further details.

The draft has been modified to win over the public following opposition to the previous version, he said, adding that exemption to the tax would be applied on a necessary and acceptable basis.

The Fiscal Policy Office (FPO) has set the tax ceiling rates at 0.2% of appraisal value for land used for agriculture, 0.3% for residences and 1% for land for commercial use.

Undeveloped land would be taxed at 1% for the first three years before doubling to 2% for the next three years, hitting the 3% ceiling only in the seventh year. The draft is expected to be implemented in 2017.

The actual tax rate would be levied progressively. Agricultural land would be charged at 0.01% if the appraised price is no more than 2 million baht or up to 200 baht a year, while land worth more than 100 million would be taxed at 0.1%.

Residences appraised at no more than 2 million baht would be taxed at 0.03% or up to 600 baht a year, while homes priced at more than 100 million would be charged at 0.2%.

Commercial land would be taxed at 0.1% or up to 2,000 baht a year if the appraisal value is less than 2 million baht and at 0.6% or up to 4.35 million for land valued at more than 1 billion.

The Finance Ministry is pinning its hopes on levying the land and buildings tax to raise the government’s revenue ratio on assets from its low current rate of 1%, with taxes on consumption and income dominating the rest.

In another development, Mr Somchai said the adjustment of the personal income tax structure was almost completed and would be proposed to Mr Apisak in the first quarter.

The adjustment will cover tax brackets, allowances and deductions.

The tax burden on low-income earners in particular will be reduced and the overall tax base expanded.

The adjusted tax will encourage more people to pay personal income tax, but the expectation that higher earners will share a larger part of the tax burden than those earning less will remain unchanged, Mr Somchai added.

Source: Bangkok Post – 9 February 2016

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