NCPO approves inheritance tax

– Thailand news selected by Gazette editors for Phuket’s international community

PHUKET: For the first time in the Kingdom’s modern history, Thais who are bequeathed fortunes by their wealthy relatives would have to start paying an inheritance tax under a Finance Ministry proposal that has already been blessed by the ruling National Council of Peace and Order.

The ministry also has floated two taxes on real estate and beverages. Permanent secretary Rungson

Sriworasat said the ministry had briefed the NCPO about the inheritance tax plan last month. The junta has agreed with this initiative and will send it to the Council of State for legal review. When the NCPO finalises the draft tax bill, the Finance Ministry will table it before the National Legislative Assembly when it comes into existence this year. The inheritance and real-estate tax ideas are not new. The Finance Ministry has bounced them off all governments over the past 10 years because both taxes will ensure fairness for all taxpayers, he said.

However, all of the governments, which came from elections, could not pass this act because it would have burdened some people who are landowners and estate recipients.

The inheritance tax would be levied on all domestic assets passed down to descendants such as residences, land, cars, stocks and bonds. But it would not be collected from assets overseas. The ministry declined to disclose details such as progressive tax rates.

Thailand would become the third country in Asean to adopt an inheritance tax, behind Singapore and the Philippines, and join other Asian countries – India, Japan, South Korea, China and Taiwan.

The real-estate tax would be assessed on land and improvements at a rate ranging from 0.05-2 per cent.

This means vacant land appraised at Bt10 million would incur a tax bill of Bt5,000 at the tax rate of 0.05 per cent for the first year. As the idle land is held longer, the liability would rise to Bt200,000 a year at a rate of 2 per cent.

The owners of residences appraised at Bt1,000,001 would pay a real estate tax of Bt1,000.001 a year. For every Bt1 million in appraised value, the real-estate tax would amount to Bt1,000 a year.

Atip Bichanond, director of major residential developer Supalai, said this will impact owners of more undeveloped land, not property developers.

However, the Business Housing Association has proposed to the Revenue Department an exemption for residences appraised at not over Bt1 million or occupying not more than 50 square wah of land.

“I do not know if the new act has any exemption. If not, that will not be fair to lower-income families,” said Atip, who is also president of the association.

The new excise tax on beverages is proposed to be imposed according to sugar content, to expand the country’s tax base.

— Phuket Gazette Editors