Thailand’s Latest Tax Relief Package for Businesses to Reduce Operating Costs

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  • Thailand’s government has issued its latest tax relief package to assist businesses impacted by the pandemic.
  • This latest package includes the reduction of land and building tax by 90 percent for 2021, in addition to extending the filing deadline for personal, value-added, and withholding tax.
  • The reduction in land and building tax applies to agricultural, residential, commercial, and vacant land.

On January 26, 2021, Thailand’s government issued its latest tax relief package for businesses, as it continues to offer initiatives to alleviate the economic impact caused by the pandemic.

This latest package provides a reduction in the land and building tax, property transaction fees, in addition to an extension in the tax filing deadline for personal income tax (PIT), value-added tax (VAT), and withholding tax (WHT).

Thailand has issued an array of incentives throughout 2020 to assist businesses, households, workers, and the financial services sector. In April last year, the government provided its largest stimulus package valued at US$58 billion, equivalent to 10 percent of GDP.

Named Phase 3, the package saw US$15 billion provided to commercial banks to lend to SMEs in the form of soft loans. A further US$30 billion was allocated as financial aid for farmers and US$18 billion to temporary workers, contract workers, and self-employed persons. This includes providing 5,000 baht (US$154) in monthly handouts for six months.

Furthermore, the Board of Investment (BOI) — the main agency responsible for promoting foreign investments in Thailand — has also been active in trying to encourage more foreign investment through tax cuts and holidays for selected BOI projects.

In late 2020, the BOI provided corporate income tax (CIT) deductions for large-scale projects and for businesses seeking to adopt digital technologies in their operations.

The reduction of land and building tax

The government will provide a 90 percent reduction of the land building tax for 2021, which covers the following categories of land:

  • Agricultural;
  • Residential;
  • Commercial; and
  • Vacant land.

The tax payments are due in April of every year with the following applicable rates:

Maximum-tax-rates-properties-Thailand

If a property remains vacant for more than three consecutive years, the rate will be increased by 0.3 percent every three years until it reaches a cap of three percent.

Thailand’s new Land and Building Act was issued in 2019 and came into effect in January 2020. Prior to this act, tax rates on land and properties were assesses on an income-based method to an assessment based on the property’s value.

The Act does provide a two-year transition period starting January 1, 2020, to help property owners adjust to the new law. During this transition period, the tax rate has been further reduced which can be seen from the following tables.

Residential-property-thailand-tax

Agricultural-Property

Unused-property-tax-Thailand

Thus, for 2021, if a residential property was appraised at five million baht (US$166,610), then the tax would be calculated as follows for those eligible:

5 million baht (US$166,610) x 0.02 percent tax rate = 1,000 baht (US$33.32).

1,000 baht x 90 percent tax reduction = 900 baht (US$29.98).

The final tax is 100 baht (US$3.33).

The reduction of property transaction fees

To assist the sale of real estate in the country, the government has reduced the registration fees for real estate transfers from two percent to 0.01 percent, and mortgage registration fees from one percent to 0.01 percent.

This tax reduction applies to the following property categories:

  • Condominium registered below 3 million baht (US$100,014); and
  • Land with buildings, twin houses, detached houses, or commercial buildings being sold by an authorized land developer.

This incentive will be effective from January 12 to December 31, 2021.

Extension of e-tax filing

The government has extended the deadline for PIT returns from March 31 to June 30, 2021. In addition, the deadline for WHT and VAT payments have been extended to the last day of each month from February to June 2021.

 


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