Tag Archive: inheritance

  1. The new inheritance tax regime in Thailand

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

    1. Inheritance Tax

    a. Tax Base

    The inheritance tax base shall be calculated from the inheritance, which 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:

    1. Thai individuals or Thai juristic persons or foreign individuals who are resident in Thailand according to the immigration law, which inheriting assets located in Thailand and outside the country.

    2. Foreign individuals or foreign juristic persons, which 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 in the portion which exceed 100 million THB, calculated from the inherited assets in Thailand and foreign countries. Foreigner who are non-resident in Thailand, shall be liable to pay Inheritance Tax in the portion which exceed 100 million THB, calculated from only inheriting asset in Thailand.

    The inheritance tax applies to registered assets, including residential properties, land, vehicles, bonds, equities, and deposits at financial institutions. (Section 14, ITA)

    Inheritance Tax Thailand

    b. Tax Rate

    5% of the Tax Base, for inheritors who are descendant or ascendant

    10% of the Tax Base, for inheritors who are not descendant or ascendant (Section 16, ITA)

    c. Inheritance Tax Declaration

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

    2. Penalty

    Whoever fail 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 destroy, move or transfer 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 file or report a false information or avoid or try to avoid the 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)

    3. Gift Tax

    To counter possible avoidance of the new inheritance tax, 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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  2. Inheritance tax to affect four assets from February onwards

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    According to a report by the Nation, property, stocks, automobiles and cash are the four assets that will become subject to inheritance tax effective on February 1.

     

    Please find more information about this news at the Nation under the following link: http://www.nationmultimedia.com/business/Inheritance-tax-to-affect-four-assets-on-February-30276825.html

  3. New Inheritance Tax Law in Thailand

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    Following the examples of many countries in the world, Thai legislators have now passed a new law introducing inheritance tax in Thailand.

    The new Inheritance Tax Act B.E. 2558 (2015) (“ITA”) was published in the Royal Gazette on 5th of August 2015 and will take effect on 1st of February 2016.

    Please see the following information on the new stipulations below:

    gavel testament document and bags with dollar sign

     

    1.Tax Base (Section 12, ITA):

    The inheritance tax base shall be calculated on the basis of the value of the estate that an heir receives by way of inheritance, whether it is one inheritance or many. The tax-free threshold is 100 Million THB, any exceeding amount is subject to inheritance tax according to the stipulations detailed below.

    The tax is levied on heirs who are:

    (a) Thai individuals or Thai juristic persons or foreign individuals who are resident in Thailand according to the immigration law, which are inheriting assets located in Thailand and/or outside the country.

    Residency in Thailand:

    Based on the verbal information we have obtained from the Revenue Department and Immigration Department, foreigners who are resident in Thailand means aliens who are allowed to take residence in the Kingdom by the Immigration Commission and by the Approval of the Minister according to Chapter 5, Immigration Act B.E. 2522. Such foreigner shall receive a “Residence Certificate” which is of permanent validity (so-called “Permanent Residency”). The foreigners who are granted to stay temporarily (non-immigrant visa, tourist visa, visa exemption and other temporary permissions of stay) are not deemed as Thai resident according to the Immigration Act.

    (b) Foreign individuals or foreign juristic persons, which are inheriting assets located or situated in Thailand (Section 11, ITA).

    The spouse of the deceased is exempted from inheritance tax (Section 3(2), ITA).

    The inheritance tax applies to registered assets, including residential properties, land, vehicles, bonds, equities, and deposits at financial institutions (Section 14, ITA).

     

    2. Tax Rate (Section 16, ITA):

    The tax rates are:

    5% of the Tax Base, for inheritors who are descendant or ascendant

    10% of the Tax Base, for inheritors who are not descendant or ascendant

     

    3. Inheritance Tax Return:

    The taxable person shall file an “Inheritance Tax Return (Filing)” within 150 days commencing from the date of receiving the inheritance in a total amount of exceeding 100 million THB (Section 17, ITA).

     

    4. Penalties

     

    Whoever fails to file a tax return regarding the inheritance of 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 file or report a false information or avoid or try to avoid the tax payment shall be liable to imprisonment for not exceeding one year or a fine of not exceeding 200,000 THB or both. (Section 37 (1), (2), ITA)

     

    5. Gift Tax

    To counter possible avoidance of the new inheritance tax, the gift tax was also introduced by way of amending the types of tax-exempt income in the Thai Revenue Code and will be effective on the same date as the Inheritance Tax Act.

    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.

     

    6. Conclusion

    With the new laws on inheritance taxation, the previously military and now civilian Thai government holds true to its promise to take steps to increase wealth equality by redistributing income from the rich to the poor.

    It will be interesting to assess the effectiveness of the new law once it comes into force early next year.

     

     

  4. New Inheritance Tax and Property Tax in Thailand?

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    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.

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