The National Legislative Assembly has recently passed a draft Land and Building Act (“Draft Act”), which is currently pending for endorsing by the King and publishing in the Royal Gazette. The Draft Act will reform present tax structure for land and building. New tax rates and their calculations under the Draft Act will become effective on 1 January 2020.
Currently, there are 2 main legislations governing the land and building tax, i.e. the Building and Land Tax Act B.E. 2475 (“Building and Land Tax Act”) and Local Maintenance Tax Act B.E. 2508 (“Local Maintenance Tax Act”). The land and/or building which is utilized for purposes other than residence will be subjected to the Building and Land Tax Act and that the owner is bound to pay 12.5% of its annual income from such utilization of land and/or building to the relevant authority. Besides, a piece of land which has no building is subjected to the Local Maintenance Tax Act. The tax rate will be in small amount but varied depending on the area where the land is located. After the Draft Act becomes enforced, the new tax rate and its calculation will be in place of those Building and Land Tax Act and Local Maintenance Tax Act.
According to the Draft Act, there are 4 main types of land and building, i.e. i. agriculture ii. residence iii. other uses and iv. vacant land and building, which the owners of land and/or building are obliged to pay the tax on such land and/or building once a year. The Draft Act provides the ceiling tax rates for utilization of land and/or building for agricultural purpose at the rate of 0.15% of its appraisal value; residence purpose at the rate of 0.3%; other uses purpose at the rate of 0.2%; and vacant land and building at the rate of 0.2%. However, for the first two years starting from 1 January 2020 of tax collection under the Draft Act, the applicable tax rates are as follows:
| Types | Applicable Tax Rates (%) | Appraisal Value (Million Baht) |
| 1.) Agricultural land and building | 0.01 | ≥75 |
| 0.03 | >75 to 100 | |
| 0.05 | >100 to 500 | |
| 0.07 | >500 to 1,000 | |
| 0.10 | >1,000 | |
| 2.) A person owns land and building and has his name on the house registration | 0.03 | ≥25 |
| 0.05 | >25 to 50 | |
| 0.10 | >50 | |
| 3.) A person owns only building and has his name on the house registration | 0.02 | ≥40 |
| 0.03 | >40 to 65 | |
| 0.05 | >65 to 90 | |
| 0.10 | >90 | |
| 4.) Residence land and building other than 2.) and 3.) | 0.02 | ≥50 |
| 0.03 | >50 to 75 | |
| 0.05 | >75 to 100 | |
| 0.10 | >100 | |
| 5.) Other uses and vacant land and building | 0.30 | ≥50 |
| 0.40 | >50 to 200 | |
| 0.50 | >200 to 1,000 | |
| 0.60 | >1,000 to 5,000 | |
| 0.70 | >5,000 |
The land owners should study and prepare themselves for such new applicable tax rates and their calculations before those have become enforced.
Author:Panisa Suwanmatajarn and Jin Sukme