Thailand: Property developers want tax reductions to be extended

Real estate developers are calling for an extension of the 90% reduction in the rate of the land and building tax as the impact on the sector remains severe.

Issara Boonyoung, chairman of the committee on real estate development at the Thai Chamber of Commerce, said there was some confusion over maintaining the land and building tax for another two years which was announced in December last year.

“Many people misunderstood that maintaining the land and building tax rates was about a 90% reduction which the government previously offered in 2020. But actually, it means maintaining the rates for tax calculation which ranged from 0.01-0.7%,” he said.

The Joint Standing Committee on Commerce, Industry and Banking asked the Finance Ministry in August last year for an extension to the land and building tax reduction for another year or two as the impact of the Covid-19 pandemic on business had been enormous.

“The great effect was not only on property business, but also hotels and industries as well as Thai people,” he said. “The government should extend the reduction for another year to help them survive this year.”

Mr Issara also suggested the establishment of a committee to review the structure of the land and building tax as the current scheme is unreasonable, impractical and still avoidable if there is good tax planning.

Another tax issue related to the property sector was a cut in transfer and mortgage fees from 2% and 1%, respectively, to 0.01% for a residential unit priced 3 million baht or lower which the government agreed to extend from the end of 2021 to the end of 2022.

“As this tax measure announced by the government hasn’t yet become officially effective, it creates a vacuum,” said Mr Issara, who is also honourary president of the Housing Business Association.

“Some homebuyers put their purchase on hold as they are waiting for the effective date of the measure.”

He said this would affect home transactions which are valued at around 75 billion baht per month. It would eventually have an impact on economic activities related to the housing sector.

He also suggested the cut in transfer and mortgage fees cover resale of residences. It can help boost sales of new residential units as some people want to change their living place.

“It can also help those having financial problems solve their problem by selling their properties more easily as those get a cut in transfer fees to attract new owners,” he added.