The Finance Ministry is hopeful for the smooth passage of the land and building tax law, which will take effect in 2020, with actual tax collection starting on January 1, 2020. The law sets tax ceilings for four categories and will not impact taxpayers. It specifies that homes valued over 50 million baht will incur a tax of 200 baht per million, affecting only a little over 10,000 properties.

           Mr. Pornchai Teeravech, an economic and financial advisor at the Fiscal Policy Office (FPO), revealed that today (November 15), the National Legislative Assembly (NLA) will consider the draft of the Land and Building Tax Act in its second and third readings. This law will replace the old laws, namely the Local Maintenance Tax Act and the House and Land Tax Act, ensuring no adverse effects on taxpayers but rather enhancing the efficiency of tax collection by local administrative organizations (LAOs).

           The draft Land and Building Tax Act sets the tax rates for land in four categories: 1. Agricultural land at 0.15%, 2. Residential land at 0.3%, 3. Commercial, industrial, recreational, and other land at 1.2%, and 4. Vacant land at 3%.

           However, the actual tax rates will need to be established through subordinate legislation, which has already been considered for inclusion in the transitional provisions of the law for actual tax collection in the first two years. Agricultural land for individuals will be exempt from tax on the value not exceeding 50 million baht, accounting for 99.9% of all farmers receiving tax exemptions. For values exceeding 50 million baht, a tax of 0.01% or 100 baht per million will be applied, with a three-year exemption to mitigate impacts. For corporate farmers, tax will be collected from the first baht at a rate of 0.01%.

           For residential properties, homes valued at not exceeding 50 million baht will be exempt, which also accounts for 99.9%. For homes exceeding 50 million baht, a tax of 0.02% or 200 baht per million will apply, affecting only about 10,000 homes. For the second home onwards, tax will be collected from the first baht at a rate of 0.02%.

           Commercial land valued over 50 million baht will incur a tax of 0.3% or 3,000 baht per million, and for values exceeding 200 million baht, a tax of 0.4% or 4,000 baht per million will apply. This will not impact SMEs or large enterprises, as the tax base will only consider the assessed value of land and buildings, excluding machinery costs, similar to the previous Local Maintenance Tax Act. Land used for schools, hospitals, sports facilities, and golf courses will receive up to a 90% tax reduction.



           “Those liable for agricultural, residential, and commercial land taxes, if their burden exceeds what they previously paid under the old law, the new law provides relief for the excess tax burden in the first year at 25%, in the second year at 50%, in the third year at 75%, and in the fourth year at 100%,” Mr. Pornchai stated.

For vacant land, a tax of 0.3% will be imposed, increasing by 0.3% every three years if not utilized. According to the Land Development Department, there are 8.31 million rai of unused land across the country out of approximately 300 million rai in total.

           Nevertheless, the tax collection from the Local Maintenance Tax Act of 1965 generated 900 million baht annually, and the House and Land Tax Act of 1932 collected about 29 billion baht annually. The new Land and Building Tax Act, which will replace both old laws, is expected to increase tax collection by approximately 10 billion baht in the fourth year after the law comes into effect.

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