New Property Tax in Thailand from 2020

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Thailand’s new land and building tax will take effect in tax year 2020. Above, Bangkok’s skyline on Sept. 6.
Photographer: Mladen Antonov/AFP via Getty Images

New Property Tax in Thailand from 2020

Nopporn Charoenkitraj and Jirapas Amonpiticharoen, of Baker McKenzie, Thailand, discuss the impact of the new property tax which will be introduced in 2020.

After lengthy deliberation the Land and Building Tax Act (Act) will become effective in tax year 2020; it is the first land and building tax to be introduced in Thailand.

The Act is intended to replace the regressive and outdated property tax under the Household and Land Tax Act, B.E. 2475 (1932), and Local Land Development Tax Act, B.E. 2508 (1965), and decreases income disparity; improves and encourages land use; increases efficiency in tax collection; and increases public revenue.

  • Significant changes under the Act include:
  • the change of the tax base from the yearly rent determined by individual district officials to the value of the land, buildings, and condominium units as appraised by the government, which is intended to increase impartiality and reduce the scope of discretion for individuals;
    the change of the tax rate from the flat rate of 12.5% to different rates, depending on how the property is used;
    tax collection from residential property, which was not previously subject to property tax.

In addition, the collecting agent will now be the local sub-district administrative organization (SAO) for each sub-district (tambon).

Tax Base

The official appraisal value, as appraised by the Treasury Department, is used as the tax base for land, buildings and condominium units under the Act. The appraisal value is used for the calculation of the registration transfer fee for the transfer or assignment of ownership or right over land or immovable properties under the Land Code; the Land Code further provides that the transfer fee calculation is determined from appraisal values as provided in the appraisal value schedule issued under the Property Appraisal for the State Benefits Act, B.E. 2562 (2019) (Property Appraisal Act).

The new appraisal values under the Property Appraisal Act have not been issued. Therefore, the previous appraisal values, which applied before the enactment of the Property Appraisal Act, will remain in use until the announcement of the appraisal value schedule under the Property Appraisal Act. The announcement is set to be issued within two years from the enactment of the Property Appraisal Act.

Under the Property Appraisal Act, the appraisal values must reflect the uses and types of properties and be in accordance with the appraisal and economic principles, particularly the market value of the property. It is therefore anticipated that new appraisal values under the Property Appraisal Act could be higher than the previous appraisal values, or even equivalent to the market value.

What are Taxable Properties?

The taxable properties under the Act are sub-categorized into land, buildings, and condominium units. The terms are further defined below.

  • Land: grounds which include areas that are hills and waterways (rivers and sea are not considered land).
  • Buildings: houses, buildings, boathouses or other constructions that are habitable or utilizable, used as storage units, or used for industrial or commercial purposes.
  • Condominium units: condominium units to which the title document has been assigned under the Condominium Act.

It is worth noting that the definition of the term “buildings” is different from the term “household” under the Household and Land Tax Act. For example, component parts that are permanently fixed to the building or properties that are under construction, which owners cannot use, are not considered buildings under the Act.

The new terminologies will solve past problems involving inconsistent interpretations by relevant authorities of what is a “property,” such as ATM booths, windmills, phone booths, telecommunication poles, or solar cells, all of which will no longer be considered as buildings which are subject to tax under the Act.

What are the Exempt Properties?

The Act specifically provides a list of properties that are exempt from land and building tax. Examples include:

  • state-owned properties that are used non-commercially;
  • private properties that are used for the benefit of the public (subject to criteria under subordinate legislation);
  • properties in which the offices of the United Nations; embassies; consulates; and the offices of the Red Cross are located;
  • properties belonging to religious organizations that are used for religious purposes;
  • common properties under the Condominium Act, such as swimming pools, fitness room and parks; and
  • other properties as specified in subordinate legislation such as railways; museums; wells; roads; lawns and fences.


Who are the Taxable Persons?

  • An individual or corporate land and building owner; if land and buildings are separately owned by different people, the person having the title over either the land or building is liable for the tax attributable for such properties.
  • A beneficiary to land and building owned by the government. For example, a tenant to the state-owned properties is liable for the tax incurred.
  • Any persons liable to pay tax on behalf of taxpayers under the Act. This provision allows an estate administrator; a legal representative of a minor; a legal guardian of a disabled person; a curator of a quasi-incompetent person; one of the co-owners of the properties to pay tax on their behalf; or a representative or a liquidator of a corporate property owner.

It is worth considering the director of a company, as a person liable to pay tax, would be subject to pay tax on the company’s behalf if the company fails to pay tax.

Different Uses of the Property

Ceiling tax rates vary for four types of property—agricultural, residential, commercial and vacant—depending on how the property is used.

Changes in Property Use

If the use of property changes in any tax year, the taxpayer must notify the SAO within 60 days from the date in which the change occurs. However, the applicable rate corresponding to the new use of property will be levied in the next tax year.

This is due to the nature of the land and building tax, whereby the tax is collected based on how the property is used or who owns the property on January 1 of any given year.

For example, let us say Mr. A lives in a house on land he owns, as shown in the house registration certificate on January 1. Later that year, he moves, and rents out the property for commercial purposes instead. Because the benchmark is January 1, Mr. A will still be subject to land and building tax at a residential rate, with the 50 billion baht ($1.6 billion) tax base exemption.

Tax Relaxation

Following the implementation of the Act, both individual and corporate taxpayers which hold properties, whether used commercially or non-commercially, will be affected. Therefore, the government has provided short-term and long-term tax relaxations, benefits, and exemption for different scenarios as follows.

Short-term Relaxation

1. Low applicable tax rates (tax year 2020–21)

To minimize the burden for taxpayers these tax rates will apply for the tax years 2020 and 2021.

Starting in tax year 2022, applicable tax rates that do not exceed the ceiling rates will be issued by way of royal decree. However, the Act allows each SAO to tax at a higher rate than under royal decree via local legislation, but these still cannot exceed the ceiling rates. In a letter issued by the Act’s drafting committee to the secretariat of the Cabinet (Letter), the committee suggested that before the lower-rate period ends in 2021, a royal decree should be issued so that taxpayers are aware of their future liabilities.

2. Three-year tax relaxation for current property taxpayers

For tax years 2020–22 the Act provides a tax relaxation for property that has been subject to property tax (either house and land tax or local development tax). This tax relaxation is only applicable if the land and building tax liable for tax years 2020–22 is higher than the property tax liable for tax year 2019. This clause allows the current property taxpayers to pay property tax liable for tax year 2019 plus a portion of the additional tax which would be due owing to the land and building tax.

3. Full tax exemption for owners of agricultural properties

Individual owners of agricultural properties will not be subject to land and building tax for the tax years 2020–23.

Long-term Relaxation

1. Tax reduction for land and buildings used for certain purposes

The Act also provides a broad tax reduction clause (of up to 90% of tax) from computed tax for reasons such as economic necessity or social context. Separate royal decrees are expected to affect these reductions. Key assets with specific purposes qualify for the following reductions.

50% reduction:


  • inherited property used for residential purposes for which the owner’s name is in the house registration book on January 1, whereby the registration of property transfer takes place before March 13, 2019; and
  • property used for energy infrastructure such as a dam or power plant.


90% reduction:


  • property owned by financial institutions that are for sale, which the financial institutions have been holding for no more than five years;
  • property under development for residential or industrial purposes under the Land Development Act for no longer than three years from the date of approval;
  • property under development for residential condominium units under the Condominium Act for no longer than three years from the date of approval;
  • property under development for an industrial estate under the Industrial Estate Authority of Thailand Act for no longer than three years from the date of approval;
  • property under the Industrial Estate Authority of Thailand Act or Condominium Act that is pending for sale for no longer than two years from 13 March 2019;
  • property used for private schools or universities; and
  • property used for transportation infrastructure.


2. Tax base exemption for primary residential property

Under the Act, individuals holding residential land and buildings as shown in a house registration certificate (primary residential property) on January 1 in any given tax year will receive a tax base exemption, as follows:

50 million baht for an individual who owns both land and buildings; and
10 million baht for an individual who only owns buildings.

Those who own multiple residential properties will only receive a tax base exemption for their primary residential properties.

Planning Points

We believe it is vital for individual and corporate property owners to understand how their properties will be affected once the tax collection starts in 2020.

In brief, key relief will be granted to agricultural property owners, for whom full tax exemption will be provided for the first three years of tax collection (2020–22). However, most corporate property owners will not enjoy as much benefit unless their businesses fall within the specific categories where up to 90% reduction is granted.

In addition, as the new tax base under the Land Appraisal Act will result in higher appraisal values, aiming to reflect the market value of the property, we foresee a significant change in terms of the property tax collection numbers in the coming years.


Nopporn Charoenkitraj is a Partner and Jirapas Amonpiticharoen is an Associate at Baker McKenzie, Thailand

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.