Finance Minister Apisak Tantivorawong expects the National Legislative Assembly (NLA) to pass the draft bill on the land and buildings tax in the next two months, paving the way for it to come into force on Jan 1, 2019 as scheduled.
The burden for the land and buildings tax should be lower than the common fee paid by owners of luxury homes, he said.
The bill is now being vetted by the NLA's standing committee after recently being passed in its first reading. The committee will hold the second public hearing on the tax on Dec 19.
Deputy finance minster Wisudhi Srisuphan recently said the standing committee agreed to slash the exemption ceiling for first homes to 20 million baht from 50 million as proposed by the Finance Ministry. The bill has been stuck under NLA deliberation for months, with the waiver at the centre of the debate.
The new property tax will replace the outdated house and land tax and the local development tax.
The Finance Ministry earlier estimated that cutting the exemption ceiling for first homes to 20 million baht would nearly triple the number of residences subject to the land and buildings tax to 30,000.
As for the draft bill proposed by the Finance Ministry, it calls for the tax to be levied on first-home owners and farmland appraised at more than 50 million baht. A tax rate of 0.05% would be applied to first homes and agricultural land worth between 50 million and 100 million baht, and a 0.1% rate for homes above 100 million. People owning second homes would be taxed in a range of 0.02-0.1% of the appraisal price.
The tax on vacant land would rise by 0.5 percentage points every three years, up to a cap of 5%, while land for commercial and industrial use would be levied at 0.3-1.5%.
Based on the 50-million-baht tax exemption for first residences, the land and buildings tax is forecast to generate 64.2 billion baht for local administrative organisations, up from the 25.9 billion recently contributed by the house and land tax and local development tax.
Mr Apisak said landlords are subject to higher tax payments when the land and buildings tax is enforced, as the current tax is based on land appraisal prices made in 1978, while the new tax would use the current land appraisal price.
Meanwhile, Mr Wisudhi said the draft bill has been adjusted to please all parties that will be affected by the new property tax. Details of the draft bill will become clearer on the date when the second public hearing takes place, he said.
Mr Wisudhi said one of the relief measures to mitigate the impact of the new tax on businesses is a 25% increase over the course of four years for the additional tax burden.
