The Finance Ministry has confirmed that land tax collection will begin on January 1, 2020. The first house valued up to 50 million baht will be exempt from tax, while properties exceeding this amount will be taxed at 200 baht per million per year. For second homes, tax will be applied from the first million. Agricultural land for individuals will be taxed at 100 baht per million per year. Over a four-year period, this is expected to generate an additional 10 billion baht in revenue.

Mr. Wisut Srisuphan, Deputy Finance Minister and Chairman of the Committee reviewing the draft Land and Building Tax Act, revealed that the committee has finalized the details of the law and will present it to the National Legislative Assembly (NLA) for consideration in the second and third readings in mid-November. The law is expected to take effect on January 1, 2020.

The tax rates will be divided into four categories. For agricultural land owned by individuals, tax will be exempt for the first 50 million baht, with tax starting on the portion exceeding 50 million baht at a rate of 100 baht per million per year. For example, agricultural land valued at 60 million baht will incur a tax of 1,000 baht per year. This part of the law will include a three-year tax exemption to alleviate the impact on small farmers.

Meanwhile, large agricultural businesses registered as legal entities will be taxed from the first baht, with land valued at 1 million baht incurring a tax of 100 baht per year. For instance, land valued at 10 million baht will incur a tax of 1,000 baht, and land valued at 20 million baht will incur a tax of 2,000 baht. There will be no exemptions for large agricultural businesses, unlike small farmers. For residential properties, the committee has agreed to maintain the exemption for the first house valued up to 50 million baht. For properties exceeding 50 million baht, tax will be levied at 200 baht per million. For example, a house valued at 60 million baht will incur a tax of 2,000 baht per year. For second homes and beyond, tax will be applied from the first baht at 200 baht per million, meaning a house valued at 10 million baht will incur a tax of 2,000 baht per year.

For commercial land used for industrial or commercial purposes, a maximum progressive tax rate of 0.7% of the land and building value will be applied. Those who are newly taxed will have a gradual increase over four years, starting with 25% in the first year, 50% in the second year, 75% in the third year, and 100% in the fourth year.

“Commercial land will receive tax relief; for example, private schools, hospitals, and sports facilities will have varying degrees of tax exemptions, with reductions of up to 90% of the tax owed, such as for private schools, as a means of supporting education,” Mr. Wisut stated.

He further mentioned that for vacant land, tax will start at a rate of 0.3% of the assessed value, and if the land remains unused, the tax will increase every three years for up to 27 years at a maximum rate of 3%, until the land is utilized, aiming to encourage the economic value of vacant land. The tax rate for vacant land, compared to the annual increase in land prices of 4%, is not considered a burden for taxpayers.

“In collecting land and building taxes, the committee has considered all sensitive groups, including farmers, residents, certain commercial entities, and vacant land, to ensure that the new tax collection system, which replaces the old tax, is fair to all parties,” Mr. Wisut said.

Previously, property tax and local maintenance tax were collected by local administrative organizations (LAOs) at around 30 billion baht per year. The transition to land and building tax collection is expected to increase tax revenue by approximately 10 billion baht within four years.

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