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

Yours sincerely,

The editorial team at Invest Bangkok Property