Building Tax and Property Tax in Thailand

The implementation of Thailand’s Building Tax and property tax law in 2020 has had a significant impact on all real estate owners in Phuket and across the country. The main goals of this law mainly were to reduce income inequality, increase tax revenue, and establish a more streamlined approach to collecting taxes on immovable property.

Some of the key changes introduced under this law include:

Standardized Calculation: The previous method of calculating property tax based on assessed rental value determined at the local level has been replaced. This new calculation method is based on the value of the buildings and land as determined by the treasury department. This method is actually providing a more consistent and transparent approach.

Inclusion of Residential Properties: Residential properties, which were previously exempt from annual property taxes, are now subject to taxation. This expansion of the tax base has significantly increased the potential revenue generated through property taxes.

Sliding Scale Rates: The flat rate of 12.5% per year has been replaced with a sliding scale that changes depending on the usage of the property. This ensures that the tax burden is directly related to the property’s purpose and value.

Tax Collection Responsibility: The responsibility for collecting the property tax lies with the sub-district administration, known as the tambon, in each jurisdiction.

Appraisal Values: The appraisal values used for calculating property taxes align with those used for transfer fees and taxes at the local land office. These values are regularly updated to reflect real property values as determined by the treasury department. This is stated under the Property Appraisal Act (2019). This adjustment is expected to result in appraisal values that more accurately reflect the current market value of properties.

Overall, the Land and Building Tax law in Thailand aims to create a fairer and more efficient system of property taxation. By standardizing calculations, expanding the tax base, implementing sliding scale rates, and updating appraisal values, the government seeks to promote income equality and enhance tax revenue while ensuring that property owners contribute their share based on the value of their assets.

The Land and Building Tax in Thailand applies to various types of properties, including land, buildings, and condominium units. However, there are certain exemptions in place for specific property categories. Here are some key points regarding taxable properties and exemptions under the law:

1. Taxable Properties: The Land and Building Tax covers land, buildings, and condominium units. These categories are subject to taxation based on their assessed value.
2. Exemptions for Specific Properties: Certain properties are exempt from the Land and Building Tax. This includes properties owned by the government, properties used by foreign governments (such as embassies and consulates), and properties used for religious purposes, and some others. These exempt properties are not subject to taxation.
3. Residential Property Tax Exemptions: There are tax exemptions available for residential property owners based on the value of the property. The specific exemptions are as follows:
   a. For individuals who own both the land and buildings, residential properties valued under 50 million baht are exempt from taxation.
   b. For individuals who own only the building and not the land (including condominiums), residential properties valued under 10 million baht are exempt from taxation.
4. Exemption Applicable to Primary Residence: It’s important to note that the tax exemption for residential properties applies only to the owner’s primary residence. Any other property other than the primary home is not eligible for the tax exemption. Second homes are or any additional properties are subject to taxation based on their assessed value.

It is advisable to consult with a tax professional or relevant authorities to ensure accurate understanding and compliance with the Land and Building Tax regulations and any applicable exemptions.

The Land and Building Tax in Thailand uses different tax rates based on the usage of the property. The rates are divided into four main categories, each with its respective ceiling rate as of 2020:

• Agricultural Properties: Properties primarily used for agricultural purposes fall under this category. The tax rate for agricultural properties is 0.15% of the assessed value.
• Residential Properties: Properties used for residential purposes, including condos, apartments, and houses, are acknowledged as residential properties. The residential properties tax rate is 0.30% of the assessed value of the property.
• Properties not used for Residential or Agriculture: This category encompasses properties that are utilized for commercial, industrial, or other non-agricultural and non-residential purposes. The tax rate for properties that not used for residential or agriculture is 1.20% of the assessed value of the property.
• Vacant Properties: Vacant or unutilized properties, regardless of their intended purpose, fall under this category. The initial tax rate for vacant properties is also 1.20% of the assessed value. That being said, additionally the tax rate increases by 0.3% every three years, up to a maximum of 3%.

It’s important to note that these rates are the maximum rates, and the actual tax amount may different based on the assessed value of the property. The assessed value is determined by the treasury department based on the Property Appraisal Act.

It is always a good idea to consult with a tax professional or refer to the official guidelines and regulations provided by the relevant authorities in Thailand to get accurate and up-to-date information on tax rates and any potential revisions.