Plans to reform Thailand’s tax system, including the introduction of inheritance and property taxes, have been approved by the Chief of the military-led National Council for Peace and Order (NCPO), Gen.Prayuth Chan-ocha.
The proposed reforms would raise revenue by increasing taxes primarily on the wealthy. Thailand’s Ministry of Finance (MOF) has said Chan-ocha wants the new tax system “to be a mechanism for fairness and income generation for local communities.” Estimates project the new taxes could generate as much as US$3.1 billion.
The approved tax reforms are not completely new to the Thai government. Proposals for inheritance and property taxes have been around during Thailand’s numerous administrations in the last decade, but never gained the necessary support for implementation.
The inheritance tax will reportedly levy taxes of five to 30 percent of all domestic assets passed down to heirs, such as real estate, automobiles, stocks and bonds. Certain assets can be moved or already exist overseas, however, raising concerns over potential loopholes. Some believe an inheritance tax will also discourage Thais from saving income within the country.
Thailand is not the first ASEAN nation to implement an inheritance tax. Singapore and the Philippines have implemented inheritance taxes, and other Asian adopters include China, Taiwan, South Korea, Japan and India.
There are few details, as yet, on the land and buildings tax. An old tax bill proposal from a prior administration suggests a maximum tax of 0.5 percent of the value of properties that exist for commercial use, as much as 0.1 percent for private residences and no more than 0.05 percent on land used for agriculture. Temples, palaces and public areas would be exempt. Other sources say the new land and building tax rates will range from 0.05-2 percent and take into account land purposes and improvements made to it. Exemptions, such as for residences of lower appraised property values, are still being determined.
It is also expected that the reforms will include specific tax cuts for those with the lowest incomes, detailed of which are yet to be specified.
The Revenue Department is drafting the tax reform bill for submission to the new interim civilian Government, before it is then to be reviewed by the National Legislative Assembly.