Thailand Shelves New Real Property Tax

Construction News

In a surprise move on March 12, Thailand’s Prime Minister Prayut Chan-o-cha announced an indefinite postponement of the proposed land and buildings tax, due to its potential impact on low-income homeowners and the country’s uncertain economic outlook.

The new land and buildings tax would replace the local house and land tax that is based on historical and low property valuations. This change was thought to be an integral part of the military-led Government’s overall plans to reform Thailand’s tax system through increased taxes on the wealthiest individuals to fund economic development.

However, while chairing a policy meeting, Prayut requested a delay to the proposed tax and instructed the relevant government departments to reconsider and study its structure. No timeframe has been set for the completion of that study.

There was an indication that the Prime Minister’s decision to defer the introduction of the tax had been due to public disquiet over the taxation of homes. Thailand’s plans will be reviewed based on other countries’ regimes and Thailand’s tax mix, he said.

The announcement of an indefinite delay to the land and buildings tax was also, it seems, a surprise to Finance Minister Sommai Phasee, who is reported to have still insisted that a similar tax will need to be imposed as soon as possible.

The Finance Ministry had appeared to be in the process of fine-tuning the tax. Thailand’s plans were not yet final, but the threshold exemption had already been increased and the annual rate lowered.