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Thailand Mulls New Inheritance, Property Taxes

by Mary Swire,

22 August 2014

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.

According to Thailand's Ministry of Finance (MOF), the NCPO Chief wants the new tax system "to be a mechanism for fairness and income generation for local communities." It has been estimated that the reforms will increase tax revenue by more than THB100bn (USD3.1bn) through increased taxes on the wealthiest individuals, "to help reduce the Government's budget to finance local communities, resulting in the availability of more funds to develop the country as a whole and decrease social inequality."

It is reported that the MOF is looking to introduce a graduated tax of between 5 percent and 30 percent on the value of bequests to beneficiaries of registered assets, such as residential property, land, vehicles, bonds and equities, in addition to cash. The MOF has not given an indication of future expected revenue, but concerns are being expressed, as they were when such a tax was previously considered, that it might discourage savings in the country.

There are few details, as yet, on the land and buildings tax, which has also been looked at by previous Governments, but which it has now been decided should be imposed. In particular, its threshold and other exemptions are still being debated, as is its eventual annual rate based on appraised property values.

It is also expected that the reforms will include tax cuts for those with the lowest incomes. The Ministry of Finance has conducted a public survey and found that 80 percent of people interviewed agreed with a negative income tax, where people earning below a certain amount receive supplemental tax refunds from the Government instead of paying taxes.

The Revenue Department is drafting the tax reform bill for submission to the new interim civilian Government, which is currently being formed, before it is then to be reviewed by the National Legislative Assembly.

TAGS: individuals | inheritance tax | tax | property tax | Thailand | ministry of finance | tax authority | tax breaks | tax reform | individual income tax

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