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Tenants Set to Benefit from Latest Property Tax Tweak

By on Dec 14, 2015 in Property News

It is likely that people who have never been taxed on their assets will be exempted from the planned land and buildings tax.

The move is part of the government’s effort to gain more public acceptance for the new property tax, said a source at the Finance Ministry.

At present, only two taxes are charged on assets — house and land, and local development taxes.

The house and land tax is levied at 12.5% of annual rental income, but landlords always pass the burden on to tenants, causing a tax disparity. The local development tax also creates inequality, given that its median prices are based on outdated appraisal prices, has many waivers and its rates are considered regressive.

The local development tax is based on median prices from appraisals from 1978-81, which are far lower than the present market value. Moreover, landlords who have plots of up to five rai are waived, while those who are liable to the tax are charged at 0.5% of the land value for land priced at no more than 30,000 baht per rai and 0.25% for land valued over 30,000 baht.

The land and buildings tax was initiated by the Prayut Chan-o-cha administration with the intention of replacing the house and land, and local development taxes. The government hopes to reduce the burden of subsidising local administrative organisations if the land and buildings tax comes into force since the new property tax would earn higher income. Both the local development tax and the house and land tax are currently collected by local administrative organisations.

Even though the Finance Ministry has tried to push the land and buildings tax by watering down the potential rate charges, the public outcry over fears of higher tax bills was so strong that Gen Prayut in March decided to halve the bill for the new tax and asked the Finance Ministry to seek ways to reduce the burden on low-income earners.

Permanent secretary for finance Somchai Sujjapongse recently said a draft bill on the tax is expected to seek cabinet approval by 2017 with rates that would be more acceptable to the public.

Local media reported the Fiscal Policy Office has set the latest ceiling rates for the tax at 0.2% of the appraisal value for land used for agriculture, 0.3% for residences and 1% for land for commercial use.

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Source: Bangkok Post – 14 December 2015

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