A recent publication in the Royal Gazette that has been announced and published on 18 March 2023, and come into effect on 19 March 2023 regarding a tax reduction for land and buildings, including farmland, residential land, commercial land, and vacant land. This tax deduction aims to mitigate the economic impact of the COVID-19 pandemic by providing relief to property owners.
In practice, some plots of land that were already entitled to a 50 per cent tax deduction under the previous decree, which came into enforce on 1 January 2020, would now benefit from this recent measure by enjoying a 15 per cent tax deduction on top of the 50 per cent tax cut. However, this additional benefit of 15 per cent on top of the tax reduction would not apply to housing development projects such as zoo, school, amusement park etc., as those projects are already entitled to a 90 per cent tax cut for a maximum period of three years.
Currently, the tax base in Thailand is on the step-up rates, which depends on the value of land and construction. For instance, a tax ceiling on farmland is 0.15 per cent but the effective rate is 0.0.1 to 0.1 per cent. However, the landowner may be exempted from the tax if they own the land individually and the price of the land does not exceed 50 million baht. Although the tax ceiling for commercial and industrial land is 1.2 percent, the effective tax rate is typically only 0.3 to 0.7 percent.
This reduction in taxes is expected to alleviate the financial burden for both property owners and business sectors.