The new Thai Property Tax Law, also known as "Act on Land and Building Tax B.E." is currently awaiting proposal to the cabinet for their consideration. After this new legislation has been announced, it will replace the existing Act on House and Land Tax B.E. 2475 and the Act on Local Property Tax B.E.2508. The Act on Local Property Tax is currently a calculation of tax based on the property valuations set in the years 1978-1981. As a result, the tax burden is relatively low and this has caused and encouraged property speculation. Additionally, the rate of tax is unfairly imposed as a regressive rate ; the higher the price of the property, the lower the amount of tax payable.

The Act on House and Land Tax calculation is based on rental values, not the capital value of the property and many claim that the tax rate imposed is relatively high. Also, the tax base is very limited since there is an exemption for private residences for personal use and unused buildings.

Under the new legislation the tax base will expand overall and property tax collections are therefore expected to be higher. This should encourage land utilisation and development and help reduce property speculation, as any landowner the land would be liable to pay higher taxes.

The local administrations will be authorised to collect the land and building taxes in their jurisdiction and to used these taxes as revenue to develop their community. The person who are obliged to pay the new Property Tax are the owners of the land and buildings and persons who occupy or utilise land or building owned by government authorities.

The ceiling of new tax rate will be set at 0.1 percent of the property appraisal price. The local administration are authorised to determine one tax rate to be applied to all property in their community, taking into consideration the revenue demand for local development and the tax burdens of the local people. Accordingly, the rates determined might differ  among the local administrative authorities.

To encourage land utilisation and development, the draft new legislation provides that the tax be payable at a progressive rate. As such, undevelopped or unutilised land would be liable to pay double taxes.

A tax reduction or exemption might be given to people over 60 years old, who  have insufficient income, and in cases of forces major such as storm, flood and fire, which deteriorates and causes damage to the property.

Taxpayers will be allowed to pay their taxes in instalments, which shall be made in equal amount, according to the conditions and procedures to be prescribed in the Ministerial Regulations issued by virtue of this new Act.

"The tax rate will depend on the needs of the local community, as determined by the local administrations," Ms. Kesara Summacarava of law firm Johnson Stokes & Master says. "This mean that rates could vary from area to area. Also, although the proposed rate in the draft Act has a ceiling of 0.1 percent, it is possible that the Cabinet could alter this rate during their considerations,"

(Thailand Property Report : source)