On July 10, 2018, the Cabinet approved the principle of the "Draft Act on Taxation of Benefits from the Development of State Infrastructure in Transportation, B.E. ...." This lengthy official title is informally referred to as the "Windfall Tax," which corresponds to the English terms "Windfall Tax" or "Windfall Gains Tax (WGT)" and could also be called a "falling tax."

Although the Cabinet approved the principle of this draft law about four years ago, it has yet to be enacted. One reason may be that at that time, the government was focused on pushing through another important piece of legislation related to the real estate sector, namely the Land and Building Tax Act, which was enacted later in 2019.

It wasn't until mid-June 2022 that news emerged again about the Ministry of Finance considering the draft Windfall Tax Act for further action.

The essence of the draft law states that the government is currently investing in numerous projects to develop state infrastructure in transportation to enhance the country's long-term competitive capacity. Once these projects are underway and completed, the land and condominiums in the vicinity will increase in value. Therefore, to create fairness in the tax system and encourage participation in development from those who benefit, it is deemed appropriate to impose a tax on landowners or condominium owners who gain benefits from the development of infrastructure projects, with the revenue from this tax being used for further national development.

The draft law specifies the criteria for taxpayers, which include individuals or legal entities that own land or possess state property or own commercial-use condominiums valued over 50 million baht, as well as real estate developers who own unsold condominiums located around the infrastructure project areas, such as high-speed rail, dual-track rail, mass transit rail, ports, airports, expressway projects, and other projects specified in ministerial regulations. These projects must be under construction on the date the law comes into effect or will commence after the law takes effect.

The tax collection method is defined in two scenarios: First, during the development of the infrastructure project, tax will be collected from the sale or transfer of ownership of land or condominiums located within a specified radius around the infrastructure project. Second, once the project construction is completed, a one-time tax will be collected from (1) land or condominiums specifically used for commercial purposes valued over 50 million baht (with exemptions for land or condominiums used for residential purposes and agricultural land) and (2) unsold condominiums owned by real estate developers located around the infrastructure project area, with the taxable area defined as not exceeding a 5-kilometer radius around the infrastructure project. A committee will be established to determine the tax collection area and issue further announcements.

The tax base will be calculated based on the increase in the value of land or condominiums from the date the state begins construction of the project until the project is completed, using the assessed value determined by the valuation committee as a benchmark. In cases where the value of a condominium cannot be assessed due to a lack of an appraisal price, the difference will be calculated as 20% of the condominium's value, with a maximum tax rate capped at 5% of the tax base. The actual collection rate will be specified in a royal decree.

The tax collection agencies will include the Land Department and local administrative organizations where the infrastructure projects are located. The collected tax revenue will be deposited into the treasury as state income.

When considering the overall context of the Windfall Tax that the Cabinet has previously approved, it is evident that this Windfall Tax has a different rationale compared to the Windfall Gains Tax in other countries, which is often used to tax privatized public utility companies that can trade their securities in the stock market, benefiting from stock prices and a quasi-monopoly.

Another significant purpose currently used in other countries is to collect taxes from businesses that benefit from special circumstances due to changes in the economic context, leading to sudden "windfall" situations, such as wars benefiting arms trade, pandemics benefiting medical businesses, or wars and energy supply shortages benefiting energy companies. The latter has occurred multiple times over the decades.

Windfall Gains Tax collection often has a short or undefined collection period, and after a certain time, the government will cease collection (not a permanent tax). It is typically a one-off collection. In collecting Windfall Gains Tax, the government may set certain incentives for those businesses to alleviate their tax burden if they increase employment, innovate to reduce costs, or meet other conditions.

Generally, Windfall Gains Tax is primarily collected from energy companies, particularly Oil & Gas Companies, which benefit from rising oil and gas prices while households and consumers suffer. The collected funds are often used to compensate households affected by those businesses, serving as a tax collected for the greater social good, rather than for other purposes.

At the end of May 2022, the UK government passed legislation to collect a Windfall Gains Tax from oil and gas companies at a one-time rate of 25% on the taxes due from profits over the next 12 months, aiming for a total tax collection of about £5 billion (approximately 218 billion baht) to support or compensate energy costs for households at £400 (about 17,400 baht) each. In particular, around 8 million households classified as "poor" will receive £650 (about 28,000 baht) each.

Italy also collects a Windfall Tax from energy companies at a rate of 25%. In the past, similar Windfall Taxes have been implemented in both the UK and the US.

The implementation of a Windfall Tax specifically targeting the real estate sector is a debatable issue. Additionally, the stipulation that all collected Windfall Tax revenue goes into the treasury as state income is also contentious, as a portion or the majority of the collected tax should ideally be used for economic and social benefits (For the Social good) in a way that households can tangibly experience relief in the short term, as practiced in other countries. If the government seeks to generate revenue for the treasury, there are still ways to improve the collection of existing taxes under current laws, such as land and building taxes, corporate income taxes, etc., without creating new overlapping or redundant laws, as explained in the rationale for the Land and Building Tax Act, which aimed to reduce legal redundancies from the past, such as building taxes and local maintenance taxes.

In practice, the status of the Windfall Tax in Thailand is currently just a concept to revisit the draft law. However, during the consideration process, it is essential to allow affected sectors to participate in various dimensions, as there are still many practical issues, especially in inner Bangkok and the suburban areas of Bangkok, where various infrastructure projects are located within a 5-kilometer radius, almost covering every square meter. Additionally, there should be a maximum cap on the tax collection, and incentives should be provided to taxpayers for engaging in public benefit activities to reduce their tax burden, etc.