by wilbersuen | Apr 18, 2024 | News
The revision of the land and building tax law aims to boost revenue by improving collection efficiency and establishing appropriate tax rates, while also tightening criteria to close tax loopholes, according to Lavaron Sangsnit, the finance permanent secretary.
Lavaron stated that the land and building tax law, which has been operational for five years, necessitates periodic reviews every five years to address implementation issues. Initially, the criteria were not overly strict, particularly for vacant land, which typically incurred higher tax rates compared to residential, agricultural, or commercial/industrial land.
However, Lavaron noted that some owners of vacant urban land avoided higher tax rates by planting fruit trees like limes, claiming agricultural status with the lowest tax rate. This strategy now obligates owners to pay agricultural land tax rates, whereas previously, no tax was levied on such land.
Determining vacant land status falls under the jurisdiction of local administrative organizations responsible for tax collection. Vacant land, legally defined, refers to land not utilized to its fullest potential. Lavaron emphasized the principle that landowners should derive benefits from the land exceeding the tax imposed.
He emphasized the gradual tightening of tax collection criteria in the future, as current levies remain relatively low. Tax rates should increase over time, with adjustments based on appropriate timing and circumstances, according to Lavaron. While the law specifies minimum rates, local administrative organizations can increase them, but not below the legal limit.
The land and building tax replaced the house and land tax and the local development tax, resulting in slightly higher revenue collection after deductions expired, and full rates were enforced. The current system bases property tax on land appraisal values multiplied by respective tax rates, unlike the previous house and land tax, which used annual rental values multiplied by a fixed rate of 12.5%.
Lavaron mentioned that certain properties like department stores may face higher tax levies, while others could have lower rates than before. This system is deemed fairer as it applies the same tax rate universally, without reliance on tax collectors’ discretion.
Source: Bangkok Post
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The editorial team at Invest Bangkok Property
by Daryl Lum | Apr 11, 2024 | News
The Thai Department of Revenue has enacted Departmental Instruction No. Paw 161/2566, which introduces substantial amendments to the taxation of foreign-sourced income for personal income tax purposes, effective from January 1, 2024. 161/2566 was issued to provide interpretation to Section 41 Paragraph 2 of the Thai Revenue Code. This directive mandates that Thai taxpayers, including both citizens and residents, who earn income from employment, business activities, or property outside of Thailand, are required to pay taxes on such income upon repatriation to Thailand.
Under the prior regulations, foreign-source income was taxable only if repatriated to Thailand within the same calendar year it was earned. The new instruction closes this loophole by requiring the declaration and taxation of overseas income regardless of the repatriation timeline, within the tax year it is earned.
This revised taxation rule applies to all Thai taxpayers. This includes:
- Thai nationals;
- Residents who have previously filed taxes in Thailand;
- Foreign nationals residing in Thailand for 180 days or more within a tax year.
For the 2024 tax year, with tax filings due by March 2025, income tax will be applicable under the following conditions:
- Income earned both within and outside of Thailand, including wages, business income, and passive or property income as specified under sections 40 and 41 of the Revenue Code.
The income tax rates for Thai citizens and permanent foreign residents are structured as follows:
- Income up to 150,000 baht is exempt;
- Income over 150,000 baht up to 300,000 baht is taxed at 5%;
- Income over 300,000 baht up to 500,000 baht is taxed at 10%;
- Income over 500,000 baht up to 750,000 baht is taxed at 15%;
- Income over 750,000 baht up to 1 million baht is taxed at 20%;
- Income over 1 million baht up to 2 million baht is taxed at 25%;
- Income over 2 million baht up to 5 million baht is taxed at 30%;
- Income above 5 million baht is taxed at 35%.
Instruction No. P 161/2566 signifies a pivotal shift in Thailand’s approach to taxing foreign-sourced income, aimed at creating a more equitable tax environment for individuals earning from both domestic and international sources. This is particularly relevant for foreign investors and expatriates residing in Thailand.
Yours sincerely,
The editorial team at Invest Bangkok Property
by Daryl Lum | Apr 11, 2024 | News
Thailand is set to unveil new real estate initiatives on Tuesday, April 9, as confirmed by the finance ministry, in an effort to rejuvenate the nation’s economy, the second largest in Southeast Asia.
Deputy Finance Ministers Krisada Chinavicharana and Julapun Amornvivat will present economic stimulation strategies through the real estate sector at a briefing scheduled for 0730 GMT on Tuesday, after a cabinet session, as announced by the ministry.
The presentation is expected to detail initiatives aimed at positioning Thailand as a leading global industrial hub, though specific information was not disclosed.
Reports from Thai media suggest that the finance ministry will recommend to the cabinet a series of real estate incentives, including a reduction in transaction fees for properties valued at up to 7 million baht (approximately US$190,891), decreasing ownership transfer fees to 0.01 per cent from the current 2 per cent.
Additional measures reported include tax incentives for individuals constructing their own homes and mortgage assistance for those with lower incomes.
The ministry is also set to suggest amendments to regulations governing foreign property ownership, notably by extending lease terms to 99 years from the existing 30 and permitting foreign nationals to purchase certain residential properties.
Prime Minister Srettha Thavisin, underscoring the need for significant economic stimulus, indicated on Monday that economic growth for the first quarter of 2024 might not exceed 1 per cent, a deceleration from the 1.7 per cent growth rate recorded in the preceding quarter.
Source: Reuters
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The editorial team at Invest Bangkok Property
by Daryl Lum | Mar 20, 2024 | News
Thailand’s government is moving forward with a 500 billion baht ($13.9 billion) stimulus initiative and may consider borrowing to fund it, according to a deputy finance minister speaking on Wednesday.
Julapun Amornvivat made these comments during parliamentary proceedings, which commenced a three-day discussion on a 3.48 trillion baht ($96.5 billion) budget proposal for the 2024 fiscal year, aimed at revitalizing the economy of Southeast Asia’s second-largest nation.
“We emphasize the potential necessity of securing a loan through a legislative measure, though any adjustments would likely require re-approval from parliamentary members,” he stated. “Nevertheless, the initiative will proceed as planned.”
The initiative entails providing 10,000 baht to 50 million Thai citizens to be spent over six months, although concerns have been raised regarding its funding, with certain experts labelling it as fiscally irresponsible.
Julapun also expressed the government’s aspiration to achieve a balanced budget within an appropriate timeframe.
The proposed budget for the 2024 fiscal year aims for a 9.3 per cent increase in expenditure and a 0.3 per cent reduction in the budget deficit to 693 billion baht from the previous year.
Following the debate on the budget’s second and third readings, it will require further approval from the Senate and the King.
The government anticipates that the budget will be available for use by early next month, a delay from the original start date of October 1, 2023, due to prolonged political deadlock following a May election. A new government was established in August.
by Daryl Lum | Mar 6, 2024 | News
The Thai business group has upheld its growth forecast for 2024, anticipating a GDP expansion of 2.8% to 3.3%. Thailand’s economy is poised to maintain this projection, with the Joint Standing Committee on Commerce, Industry, and Banking, comprising representatives from these sectors, affirming that exports, a pivotal driver, are expected to increase by 2% to 3% this year.
Last year, Southeast Asia’s second-largest economy recorded a growth rate of 1.9%. The business group’s decision to retain its forecasts is grounded in the deployment of the government budget in the second quarter, providing a boost to the economy. Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries, highlighted during a press briefing that growth is anticipated to improve in the latter half of the year, driven by the enhancement of tourist arrivals.
The business group foresees 34 million to 35 million foreign arrivals in 2024, with tourism being a crucial driver for Southeast Asia’s second-largest economy. The expected improvement in growth is attributed to the deployment of government funds and the positive impact of increasing tourist numbers. Prior to the pandemic, Thailand welcomed nearly 40 million visitors, contributing 1.91 trillion baht ($53.41 billion) to the economy.
In 2023, the country registered 28 million foreign visitors, generating tourism revenue of 1.2 trillion baht ($33.71 billion).
(Source: Channelnewsasia)
by Daryl Lum | Mar 1, 2024 | News
Karlo Pobre, Colliers’ Deputy Managing Director, highlighted insights from the Real Estate Information Centre (REIC) of the Government Housing Bank, revealing a strong interest among Myanmar buyers in real estate across Bangkok, Phuket, and Chiang Mai.
According to REIC, individuals from Myanmar invested around 2.25 billion baht in Thai properties in 2023, securing the third position in terms of expenditure, trailing behind Chinese and Russian buyers. Pobre underscored that the average property price acquired by Myanmar nationals is 6.5 million baht, surpassing the figures for Chinese or Russian buyers. This positions them as a promising customer base for property developers, particularly in the post-pandemic era when demand for Thai properties among foreigners is on the rise.
Pobre further observed that Myanmar customers predominantly show interest in luxury condos in Bangkok, ranging from 10 to 20 million baht, favoring locations such as Sukhumvit, Phrom Phong, and Asoke—areas in close proximity to hospitals, international schools, shopping malls, and hotels.
For mid-level spenders from Myanmar, there is significant interest in condos priced at 5-10 million baht in the Aree and Phaya Thai zones, particularly along the BTS/MRT routes. This offers convenient transportation options and lucrative opportunities for rent or resale. Pobre noted that this buyer group, primarily the younger generation, frequently secures prime units during the pre-sale period.
Pobre emphasized the affluent individuals from Myanmar’s interest in luxurious pool villas in Phuket, especially in the Laguna and Bang Thao zones. Units exceeding 40 million baht are often sold out before completion. In Chiang Mai, Myanmar buyers are acquiring detached houses worth 20-30 million baht for retirement or family vacation purposes, taking advantage of the city’s proximity to Myanmar and its comparable facilities and tourist attractions to Bangkok. Popular locations include San Kamphaeng and Hang Dong districts.
Acknowledging political instability in Myanmar as a significant motivator, Pobre highlighted the distinction of Myanmar buyers from their Chinese counterparts, emphasizing a preference for privacy over communal living arrangements, such as those in Chinatown. Property developers should be attentive to this preference when aiming to attract high-spending individuals from Myanmar.
