Thailand Considers Inheritance and Property Tax Reforms
The head of Thailand’s National Council for Peace and Order (NCPO), Gen. Prayuth Chan-ocha, has approved plans to reform Thailand’s tax system, namely by incorporating inheritance and property taxes.
The proposed reforms would raise revenue by increasing taxes primarily on the wealthy. Thailand’s Ministry of Finance (MOF) has said Chan-ocha wants the new tax system “to be a mechanism for fairness and income generation for local communities.”
Estimates project the new taxes could generate as much as US$3.1 billion. According to the MOF, this new tax revenue would be used to “help reduce the Government’s budget to finance local communities, resulting in the availability of more funds to develop the country as a whole and decrease social inequality.”
The approved tax reforms are not entirely new to the Thai government. Proposals for inheritance and property taxes have floated around Thailand’s numerous administrations for much of the last decade, but never gained the necessary support for implementation.
The inheritance tax will reportedly levy taxes of five to 30 percent on all domestic assets passed down to heirs, such as real estate, automobiles, stocks and bonds. Certain assets can be moved or already exist overseas however, raising concerns over potential loopholes. Some believe an inheritance tax will also discourage Thais from saving income within the country.
Thailand is not the first ASEAN nation to implement an inheritance tax. Singapore and the Philippines utilize inheritance taxes, and other Asian adopters include China, Taiwan, South Korea, Japan and India.
Not many specifics regarding the property tax are yet known. An old land and building tax bill proposal from a prior administration suggests a maximum tax of 0.5 percent on the value of properties that exist for commercial use, as much as 0.1 percent for private residences and no more than 0.05 percent on land used for agriculture. Temples, palaces and public areas would be exempt.
Other sources say the new land and building tax rates will range from 0.05-2 percent and take into account land purposes and improvements made to it. Exemptions are still being determined.
Thailand’s Housing Business Association has urged the Revenue Department to grant exemptions for residences appraised at less than Bt1 million (US$31,000), or that take up no more than 200 square meters of land. The association’s president, Atip Bichanond, has said “I do not know if the new act has any exemption. If not, that will not be fair to lower-income families.”
The reforms are also expected to provide tax cuts for low-income individuals. In a public survey conducted by the MOF, 80 percent of those polled supported a negative income tax, wherein people making income below a certain threshold would qualify for financial aid from the government in the form of supplemental tax refunds.
The new tax reform bill is being drafted by the Revenue Department. The bill will be presented to an interim civilian government once it is fully assembled and then it is to be submitted to the National Legislative Assembly for review.
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