Thailand: Cabinet approves land windfall tax

The cabinet approved a draft bill Tuesday on the land windfall tax — a levy on inflated property prices driven by transport infrastructure projects.¬
Nathporn Chatusripitak, an adviser to the PM’s Office Minister, said the new tax will charge both individual and corporate owners for commercial purposes and condominium projects¬ worth more than 50 million baht every time their ownership is transferred from the time when the transport infrastructure project starts construction until the project’s completion.¬
A draft bill on the land windfall tax caps the ceiling at 5% of the inflated price, but the applicable rate will be decided on later.¬
Those liable for the tax must own land within a radius of five kilometres of a station serving high-speed, double-track or electric trains, or of the on- or off-ramp of an¬ expressway. Those who own plots within 5km of building-restricted zones such as airports or ports will also be required to pay the tax.¬
2841594Mr Nathporn said the government has been investing in a number of infrastructure projects that need huge budgets, while tax collection from landlord owners or property¬ developers will help the government generate revenue to offset massive investment.¬
The government’s transport infrastructure projects range from double-track rails, high-speed rail network, the mass-transit system, expressways, special tollways, ports and airports, he said.¬
The Treasury Department has been tasked with evaluating land prices over the country, while land price valuations will be revised every four years.¬
The Treasury Department’s land price valuations will¬ be used to calculate the inflated prices of the land adjacent to the state projects.¬
“The new tax will be charged only once the owners sell their land after the state projects nearby begin construction,” he said.¬
For other types of properties such as shophouses, townhouses or condominiums, only the inflated land prices will be charged, he said.¬
The bill categorises state projects into two types — those built before the law takes effect, such as mass transit; and future projects to be built after the law comes into¬ force, such as the high-speed train or double-track train projects.¬
In the under-construction project group, the tax base is calculated from the difference between valuations on the date the land is transferred and on the effective date of the law.¬
The tax collection for land will be conducted by the Land Department while the Local Administrative Organisation is required to collect tax from property projects that are completed.¬
For condos, the tax base will be the difference between sale prices and valuations on the effective date of the law. For new or under-construction units, the valuations will¬ be 20% of the average valuation of condos in the same area.¬
During the construction period of a state project, the tax levied on the inflated prices will be applied every time the land or condo units change hands.¬
For land or condos near a state project completed before the law takes effect, the tax will apply only to commercial sales worth 50 million baht or more based on the¬ valuation differences on the date the project is completed and on the effective date of the law.¬
After the state projects are completed, land sales will be taxed only once.¬
In the meantime, Pornchai Thiraveja, deputy spokesman of the Finance Ministry, said the land windfall tax is aimed at creating tax payment fairness.¬
He said the Finance Ministry will form a committee led by permanent secretary Prasong Poontaneat to set the exact distance between transport infrastructure projects¬ and land that is subject to the new property tax.¬