Minimum 0.5% tax rate on used land approved

Thailand has to restructure its tax revenue to rely less on income tax and more on consumer, wealth and asset taxes as the ageing population expands, Fiscal Policy Office director-general Somchai Sujjapongse told the “Impacts of Fiscal Policy and Public Sector Investment on Thai Property Market Development” seminar, organised by the Real Estate Information Centre.

The tax on unused land is part of a draft bill on land and building taxes, which Kittiratt is trying to get onto the statute books as soon as possible. 

 

Guidelines by year-end 

The Fiscal Policy Office expects to conclude the guidelines on this issue by year-end, after which they will be forwarded for deliberation by the House of Representatives.

Somchai said a proposed tax on unused land had been in the pipeline for more than a decade. The tax would be assessed on land and buildings based on their use and under rate structures set by local authorities.

The draft bill, which was proposed when the Democrat Party was in power, calls for penalty tax rates to be assessed on unused land in order to deter land speculators – starting at 0.5 per cent of the value of land and buildings in the first year, and doubling every three years up to a maximum rate of 2 per cent. 

However, the applicable maximum tax rate of 2 per cent may not be high enough to deter land speculation, Somchai said.

The government wants to pass the tax into law to support broader policies aimed at easing wealth inequality, as well as encouraging landowners to use land more efficiently and productively, he added.

The National Economic and Social Development Board recently said people aged 65 and over would account for 20 per cent of the population by 2021. Hence, tax revenue in the future would depend less on the income of the overall population, and more on consumption and wealth assets, such as land.