The new inheritance tax regime in Thailand

The Inheritance Tax Act B.E. 2558 (2015) (“ITA”) took effect on 1st of February 2016. It stipulates the following:

Inheritance Tax

a. Tax Base

The inheritance tax base shall be calculated from the inheritance that an inheritor received from each testator, whether it is received once or several times, above 100 Million THB. (Section 12, ITA). The value of the inheritance subject to tax means the value of the asset received as an inheritance, offset by the liabilities inherited.

The tax is levied on inheritors who are:

• Thai individuals or Thai juristic persons or foreign individuals who are resident in Thailand according to the immigration law, who inherit assets located in Thailand and outside the country.
• Foreign individuals or foreign juristic persons that inherit assets located in Thailand. (Section 11, ITA)
• The spouse of the testator is exempted from inheritance tax. (Section 3(2), ITA)
• Foreigners who are resident in Thailand shall be liable to pay Inheritance Tax on the portion that exceeds 100 million THB, calculated from the inherited assets in Thailand and foreign countries. Foreigners who are non-residents in Thailand shall be liable to pay Inheritance Tax on the portion that exceeds 100 million THB, calculated from only the inherited assets in Thailand.
• The inheritance tax applies to registered assets, including residential properties, land, vehicles, bonds, equities, and deposits at financial institutions. (Section 14, ITA)

b. Tax Rate

• 5% of the Tax Base, for inheritors who are descendants or ascendants
• 10% of the Tax Base, for inheritors who are not descendants or ascendants (Section 16, ITA)

c. Inheritance Tax Declaration

The person liable to pay inheritance tax shall file the “Inheritance Tax Return (Filing)” within 150 days commencing from the date of receiving the inheritance in total amount exceeding 100 Million THB. (Section 17, ITA)

Penalty

• Whoever fails to file a declaration of inherited assets without good reason shall be liable to a fine not exceeding 500,000 THB. (Section 33, ITA)
• Whoever destroys, moves, or transfers any of the inherited assets shall be liable to imprisonment for not exceeding 2 years and a fine of up to 400,000 THB. (Section 35, ITA)
• Whoever files or reports false information or avoids or tries to avoid tax payment shall be liable to imprisonment for not exceeding 1 year or a fine of not exceeding 200,000 THB or both. (Section 37 (1), (2), ITA)

Gift Tax

• To counter possible avoidance of the new inheritance tax, a gift tax was also introduced by way of amending the types of tax-exempt income in the Thai Revenue Code.
• For gifts, the tax rate is 5% of the portion above 20 million THB per tax year when the beneficiaries are descendants. For non-descendant beneficiaries, the tax rate is 5% of the portion above 10 million THB per tax year.

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