Windfall Tax : Fair Treatment for All Taxpayers


by Panisa Suwanmatajarn and Onnicha Khongthon

A draft Tax Payment from the Benefit of Development of Sate’s Infrastructures on Transportation Act B.E. …. (the “Draft Act”) had been proposed by the Ministry of Finance to the Cabinet and that it was approved by the Cabinet in principle on 10 July 2018. This Draft Act has been initiated under the reasons that the government has invested in many projects for developing infrastructure on transportation such as high-speed train projects, double-track railway projects, mass rapid transit projects, airport projects and expressway projects . Once such projects have been initiated and commenced constructing until completion, the prices of land and condominium units located around those areas will be increased. For the fairness treatment among the tax payers, the Ministry of Finance then proposed the Draft Act for collecting tax from the land or condominium unit owners or condominium developers receiving such benefit from the increased value of such lands and condominium units. Those collected tax will be used for development of infrastructure of the country in the future.

The significant provisions stated in the Draft Act are as details below:

1. The taxpayers are all individuals or juristic persons who own or possess the lands which belong to the state or condominium units for commercial purposes with the value more than 50 million Baht and the condominium developers who sell their condominium unit projects located around the infrastructure projects . However, lands and condominium units for the residential and agricultural purposes will be exempted from this tax payment.

2. The infrastructure projects under this Draft Act means high-speed trains, double-track railways, mass rapid transit sea and river ports, airports and express ways and other projects specified in the ministerial regulations. Those projects have to be under construction while or after the Draft Act become enforced.

3. The tax collection will be divided into 2 categories which are (i) during the construction period, all owners of land and condominium unit developers have to pay the tax during the time of transfer of ownership or (ii) in case that the construction has already been completed for construction or the land has already been used for commercialization, the tax will be payable in case that the lands and condominium units with the value more than 50 million Baht are still being used for commercial purposes.

4. The areas which are subject to the tax collection will be within 5 Kilometers from each infrastructure projects. Details of the same will be announced later by the tax committee appointed under this Draft Act.

5. The Department of Land and local administrative organizations of the areas where the projects are located will be in charge of the tax collection..

6. The tax rate will be calculated on case by case basis, but not more than 5% of tax base which will be announced in the royal decree.

At this stage, the Draft Act will be submitted to the Office of the Council of State for consideration and revision. Then, the Draft Act will be resubmitted to the Cabinet for reconfirmation. After that , the Draft Act will be submitted to the Coordination Committee of the National Legislative Assembly for consideration and approval before publishing into the Royal Gazette and become enforced to be the law. The Ministry of Finance expects that such Draft Act may come into effective next year

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