The new inheritance tax regime in Thailand

The Inheritance Tax Act B.E. 2558 (2015) (“ITA”) took effect on 1^st 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)

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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