Thailand’s cabinet has approved a land and buildings tax bill aimed at boosting revenue, which is expected to become a Thai law in 2017.
Finance Minister Apisak Tantivorawong told reporters that after becoming Thai Law, the bill is expected to generate THB 64.3 billion (US$1.82 billion) in the first year.
The bill will replace the Household Tax and Land Act B.E. 2475 and Community Development Tax Act B.E. 2508, as recommended by the Finance Ministry.
When it becomes a Thai law, owners of land for agriculture, housing or for other purposes and buildings or condominium units will be subjected to taxation.
The highlights of the bill are that houses worth more than THB 50 million each will be subjected to 0.05-0.1 percent tax for the amount exceeding THB 50 million, land for agriculture is liable to 0.2 percent and land for housing not exceeding 0.5 percent.
Unused empty land will also be subjected to tax at a rate which will increase every three years.
In April 2016 the cabinet approved a new personal income tax structure, which is set to take effect from the 2017 tax year. It will see those who earn a monthly income of up to THB 25,833 no longer be liable for personal income tax after hikes in the caps on personal and expense allowances come into force.
Approval was given to the hike in the expense allowance cap to 50 percent of annual income, but not exceeding THB 100,000. The personal allowance was doubled to THB 60,000.
The new structure will also abolish the cap on the child allowance, which currently is limited to three children. And the allowance per child will double to THB 30,000.
The new structure includes increases in the income band for the 30 percent bracket to THB 2-5 million from THB 2-4 million, with the top rate of 35 percent starting from Bt5 million. The five percent, 10 percent, 15 percent, 20 percent and 25 percent income bands remain unchanged.
The government estimated it would lose THB 32 billion in tax revenue from the changes to the personal income tax structure, with around 70-80 percent of the foregone revenue stemming from the higher personal and expense allowances for low and middle income groups, according to the Revenue Department.
One industry commentator noted that the government’s move to restructure the personal income tax was reasonable, in that it reflected the higher cost of living.
This followed two tax deduction schemes the government rolled out for the New Year and traditional Thai New Year (in mid April) holidays. For the Thai New Year, known as Songkran, the tax deduction scheme allowed taxpayers spending on dining and travelling domestically within the kingdom to use this against their taxable income. The New Year scheme put in place in December 2015 allowed a tax deduction of up to THB 15,000 on purchases made during the New Year holiday.