Based on the effective tax rates, an estimated 200 billion baht will be collected, up from 25 billion collected under the current local development tax and house and land tax, Finance Minister Sommai Phasee said after meeting with the Committee on Monetary, Finance, Banking and Financial Institutions.
The new rates were in the draft bill proposed by Mr Somchai Ruechuphan, the committee chairman, at a meeting with Mr Sommai yesterday.
Under the draft bill, lower than the present tax rates will be allowed for certain types of properties such as agricultural farm land where only 0.05% of taxes will be collected as opposed to the stated 0.25%.
As for properties used as private residences 0.1% tax will be charged, while commercial properties at 0.5%.
Vacant or unutilized land will be subjected to 0.5% tax and finally, to ensure minimum effects on lower income households, the meeting also agreed to tax exemptions for homes appraised value at 1.5 million baht.
The proposed exemption will also take into account properties owned by temples, foundations, the Royal Household and private properties that have been utilized for public use such as in the case where roads have been constructed over parts of private property for public utility.
Proposals for reduction in taxes were also agreed upon for private residences appraised values between 1 – 5 million baht whereby only 0.05% taxes will be collected. This will mean that for houses with appraised value between 4 – 5 million baht only 2,000 – 2,500 baht in taxes will be collected per year. Previously, taxes for such homes were 4,000 baht per year.
With regard to vacant or unutilized lands initially, 0.5% will be charged but taxes will be doubled for every consecutive 3 years. But the incremental increase will be capped at 2% as set by the law.
An effective tax rate for commercial use at 0.2% will not be burdensome for hotel operators, as that will be on par with the house and land tax, which is charged at 12.5% presently.
Mr Sommai said his ministry would allow businesses to use the amount after deducting the land and buildings tax as taxable revenue for corporate income tax.
Local administrative organisations will collect the tax, using it for funding, he said.
Prime Minister Gen Prayuth Chan-o-cha today publicly clarified the reason for the new tax rates stating that it was a necessity that will help in developing the country.
He goes on to say that in the past tax collection was well below target as many individuals had avoided paying taxes.
Furthermore, the prime minister stated that if the new land and building taxes rates were not proposed then VAT (value added tax) will have to be increased instead.
But he reassured the public that there was need to be alarmed as many details have yet to be worked out and it will take at least 1 – 2 years before the taxes come into effect.