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New Land and Building Tax Thailand

New Land and Building Tax In Thailand

The New Land and Building Tax Act B.E. 2562

Thailand has become the most attractive country in Southeast Asia regarding real estate investments, specifically land acquisitions. 

Subsequent to the enactment of the new Land and Building Tax Act, B.E. 2562 on January 1, 2020, published in the government gazette on March 12, 2019, the two previous tax acts (Building and Land Tax B.E. 2475 and Land Development Tax B.E. 2508) have both been abrogated.

The Land and Building Tax Act objective is amending the determination of the tax base to reduce inequalities. In application of the previous Land and Building Tax, annual rental incomes were imposed at a rate of 12,5 %.

Therefore, the new Act prescribes taxation of the property’s value and not the rental income. Regarding the tax rate, it will differ with the property's purpose of use.

 Tax Liability 

The new Act applies to any natural or legal person, owner or usufructuary of a land or a building. Any property including lands, condominiums, apartments, houses or buildings, be it for industrial, commercial, or storage use, is subject to the tax property.

Taxpayers will have to pay the tax due on properties to the local Subdistrict Administrative Organization (“SAO”) within April of each year. However, for 2020, the tax return submission has been postponed to August.

Tax Base

The tax base is calculated on the appraised value of the property, as defined by the Thai Land Code and government authority. Consequently, the tax base now depends on the appraised value of the property rather than the annual rental income derived from it.

Tax Rate 

The tax rate is link to the property’s purpose of use. The Act recognizes four different purposes of use: Agricultural, residential, commercial, or vacant. For each purpose of use, the Act sets out a tax rate ceiling (reproduced in the table below).

During the transition period from January 1st, 2020, until December 2022, property owners are subject to the following rates:

Agricultural

Residential

Commercial

Unused / Vacant

Tax rate ceiling 0.15%

Tax rate ceiling 0.3%

Tax rate ceiling 1.2%

Tax rate ceiling 1.2%

Appraised value of property (millions THB)

Tax rate

Appraised value of property (millions THB)

Tax rate

Appraised value of property (millions THB)

Tax rate

Appraised value of property (millions THB)

Tax rate

0-75 

0.01 %

0-50

0.02 %

0-50

0.30 %

0-50

0.30 %

75-100

0.03 %

50-75

0.03 %

50-200

0.40 %

50-200

0.40 %

100-500

0.05 %

75-100

0.05 %

200-1000

0.50 %

200-1000

0.50 %

500-1000

0.07 %

> 100

0.10 %

1000-5000

0.60 %

1000-5000

0.60 %

>1000

0.1 %

> 5000

0.70 %

> 5000

0.70 %

 

Tax Exemptions

The Act prescribes three cases in which property owners are exempted to pay Land and Building tax:

  • First, individual owners of lands and properties for agricultural use will be exempted to pay the tax if the appraised value is below THB 50 million.

  • Secondly, individual owners of lands and buildings for residential use and whose name are on the household registration document on January 1 of that tax year will be exempted to pay the tax if the appraised value is below THB 50 million.

  • Thirdly, individual owners of buildings for residential use and whose names are on household registration documents on January 1 of that tax year, but do not retain full ownership of the land will be exempted to pay the tax if the appraised value is below THB 10 million.

Summary

After the transition period ending on 2022, a Royal Decree will publish the new applicable tax rates that will not exceed the existing ceiling rates. We will continue to keep you updated on any future developments through our website.

If you wish to find out more about the new Land and Building Tax Act, contact our Bangkok or Phuket office for a free consultation with our lawyers and international consultants!

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