Assets Exemption from Land and Building Tax
The new Land and Building Tax Act B.E. 2562 (2019) (the “Act”) has come into effect since March 13, 2019. Section 8 of the Act specifies the properties that will be exempted from the land and building tax payment. On January 10th, 2023, the Cabinet approved a draft ministerial regulation specifying a property exempted from land and building tax (no. [unidentified]) B.E. 2565 (2022) (“Draft Ministerial Regulation”) as proposed by the Ministry of Finance (“Ministry”). This article provides an example of the property owned by a state enterprise approved for tax payment exemption by way of issuing of the ministerial regulation under Section 8 (12) of the Act.
Dhanarak Assets Development Co., Ltd. (“DAD”) is a state enterprise owned by the Ministry and tasked with managing and maintaining the government’s real estate. Established in 2004, it serves two main purposes: to manage government assets in accordance with governmental policies and to construct and operate the Bangkok Changwattana Government Building Complex as a new type of government building. DAD earns rental revenue from leasing DAD’s lands and buildings located in the Government Complex Commemorating His Majesty The King’s 80th Birthday Anniversary, 5th December, B.E. 2550 (2007) (“Government Complex”) to various government agencies for use as offices.
Previously, DAD had enjoyed a tax reduction of 90%, but the tax reduction measure applicable to DAD ceased to be enforced. As a result, DAD lands and buildings are not currently exempted from the collection of land and building tax under the Act.
Therefore, in this regard, the Ministry proposed this Draft Ministerial Regulation by virtue of the Land and Buildings Tax Act to the Cabinet for its approval and the Draft Ministerial Regulation shall come into force backdated from January 1st, 2023 onwards.
This Draft Ministerial Regulation proposes a land and building tax exemption for DAD’s lands and buildings located in the Government Complex, which was constructed using the fund from securitization funding, only for the lands and buildings leased by the Treasury Department to provide office places and public utilities for various government agencies. According to the Draft Ministerial Regulation, the said public utilities shall refer to Building A, Building B, the Administrative Court Buildings, sewage disposal buildings, waste yards, security engineering buildings, parking buildings and also the areas within Building A, Building B and Administrative Court Buildings using for electrical systems, plumbing systems, engineering systems, fire protection systems, security systems, maintenance systems, air conditioning, and ventilation systems, wastewater treatment systems, garbage disposal systems, telecommunication systems, internal transportation systems, buildings, toilets, parking places and corridors within the buildings which are not used for benefit.