New Property Tax Law in Thailand
HLB Thailand Tax Team
After numerous attempts over the years to reshape the way property tax is imposed in Thailand, new property tax legislation has finally entered into law in Thailand.
The new law replaces the current House and Land Tax Act and the Local Development Tax Act and aims to encourage the productive use of land and improve tax collections. Taxes will commence to be collected under the new law from 1 January 2020.
Taxable properties
The tax will apply to land as well as condominiums, apartments and buildings, including houses, or any construction which can be used as a residence or for storage, industrial or commercial purposes.
People will now potentially be liable to tax on their homes, although a generous tax exemption threshold will apply.
The tax will be imposed on property held at 1 January of each tax year.
Tax base
Tax is currently imposed under the House and Land Tax Act on a property’s annual rental value at the rate of 12.5%.
Under the new law, the tax base shall be the appraised value of the property as determined for the purpose of collecting registration fees under the Land Code. In the case where there is no appraised value, the tax base will be calculated in accordance with the criteria, method and conditions as prescribed in Ministerial Regulations.
Tax rates
The following ceiling rates have been introduced for four categories of property:
(1) Properties used for agricultural purposes: 0.15%
(2) Properties used for residential purposes: 0.30%
(3) Properties used for purposes other than (1) and (2): 1.20%
(4) Vacant/non-utilised properties*: 1.20%
*If the land or building is left vacant or undeveloped for three consecutive years, the rate will increase by 0.3% every 3 years subject to a cap of 3%.
Tax rates have been announced for 2020 and 2021. For example, for a condominium unit owned by an individual that uses the unit as their place of residence and their name appears in the house registration book, the tax rates are:
Tax rates after 2021 shall be prescribed by Royal Decree. The local authority empowered to collect the tax has the power to impose a higher rate but in any case it shall not exceed the ceiling rates.
Tax exemptions
Tax exemptions are provided in the following cases:
- Land and buildings owned by individuals that are used for agricultural purposes shall be exempt from tax until 2022, after which a tax exempt threshold of Baht 50 million shall apply.
- A tax exempt threshold of Baht 50 million shall apply to land and buildings owned by individuals that are used as their place of residence, if their names appear in the house registration book on 1 January of the tax year
- A tax exempt threshold of Baht 10 million shall apply to buildings owned by individuals, where they are not the land owner, that are used as their place of residence, if their names appear in the house registration book on 1 January of the tax year. By definition this would include a condominium unit.
Transitional relief
In the first three years that the new property tax is collected, if the tax assessed is higher than the tax previously payable under the House and Land Tax Act, the taxpayer shall be liable to pay the house and land tax amount plus a portion of the excess in each year, being 25% in the first year, 50% in the second and 75% in the third year.
Due date for tax payment
In December 2019, a number of time extensions were announced in respect of the implementation of the new law in 2020. Instead of tax assessments being issued to taxpayers in February 2020 for payment in April 2020, they will now be issued in June 2020 and tax payments will be due in August 2020.
The Fiscal Policy Office has issued a summary of the implications of the new law (in Thai language):
