The new Land and Building Tax Act B.E. 2562 (2019) (“Tax Act”), which took effect on March 13th, 2019, granted local government authorities the right to collect taxes on land and buildings from individuals and companies who own or have possessory, or usage rights to immovable assets (i.e. land and buildings, including condominiums) in Thailand.
On May 29th, 2020, two sets of criteria for categorizing residential and agricultural property under the Tax Act were promulgated in the Government Gazette.
On June 10th, 2020, a Royal Decree was granted to reduce the land and building tax by 90% of the amount calculated under the Tax Act. The discount is only effective for tax payments due in 2020.
Criteria for Residential and Agricultural Property
The two new notifications published on May 29th, 2020 outline the criteria for residential and agricultural property in order to ascertain tax rates on land and buildings which fall under one of the two categories.
Residential property
The utilization of residential property designates land or buildings used for residential purposes, including land and buildings for residential purposes which are undergoing construction or alteration. The notification specifies the following exceptions:
1. Land or buildings under the Land Development Act B.E. 2543 (2000) or the Condominium Act B.E. 2551 (2008) which are under development or have completed construction, but are not yet sold.
2. Hotels under the Hotel Act B.E. 2547 (2004).
3. Land or buildings which provide temporary accommodation for travelers or any other persons in exchange for compensation. This excludes accommodation services provided for monthly compensation or homestay arrangements.
“Homestay” refers to a place for temporary accommodation, with no more than four rooms for a maximum of twenty people. The owner of homestay accommodations lives in the same facilities and operates the business for supplemental income.
4. Land or buildings awaiting sale by: financial institutions, specialized financial institutions established by a specific law, public financial institutions, and asset management companies.
Agricultural property
The utilization of agricultural property designates the following:
1. The use of land or buildings for “agriculture,” as defined in the regulations of the Committee on Agriculture and Cooperative Development Policy Planning on Farmer Registration (2017), for the purpose of consumption, distribution, or use in farms, but excluding aquaculture and weaving.
2. Adjoining land or buildings utilized for agriculture purposes; however, the adjoining land must not be more than half of the total area that is used for agriculture, with the exception of aquaculture.
The utilization of agricultural property also includes break periods when agricultural land or buildings are undergoing the following activities:
1. The rehabilitation of agricultural land and buildings;
2. Break periods during production season;
3. Disease prevention.
The utilization of agricultural property must also abide by the minimum rate of agricultural operation per rai, requirements for stall or greenhouse utilization, land utilization, and the utilization characteristics specified in the list attached to the notification, which covers plant and animal species and uses of land and buildings.
Adjoining land
Under the two notifications on agricultural and residential property, if agricultural land and adjoining residential land overlap, the overlapping areas will be considered as land utilized for agricultural purposes.
Reduction of Land and Building Tax
On June 10th, 2020, the Royal Decree to reduce taxes for certain types of land and buildings, BE 2563 (2020) ( the “Decree”) was granted to reduce the land and building tax by 90 percent of the amount calculated in accordance with the Land and Building Tax Act. The purpose of the tax reduction is to help mitigate the economic impact of COVID-19 on property owners. As such, the discount is only effective for the tax payments due in 2020. The Decree came into force on June 11th, 2020.
The 90 percent tax reduction applies to the four types of land and buildings specified in the Tax Act:
1. Land and buildings for agricultural use;
2. Residential use;
3. Commercial use;
4. Land and buildings that are vacant or unused.
Tax reductions granted under the Decree will not affect the tax exemptions granted under Section 96 and Section 97 under the Tax Act, which provide exemptions to owners (natural persons) of agricultural property for the first three years, and reductions to taxpayers who meet certain conditions.
The timeline extensions for the Tax Act announced by the Ministry of the Interior in December of 2019 remain unchanged. Tax assessment letters will be issued to taxpayers by the end of June, while the land and building tax payment deadline is August 31st, 2020.
Government Gazette
Page 18, Book 134, Special Section 126 Ngor, May 29,2020
Announcement of the Ministry of Finance and the Ministry of Interior
Criteria for the utilization of property for residential purposes
By virtue of Section 6 Paragraph 1 and Section 37 Paragraph 3 of the Land and Buildings Tax Act BE 2562 (2019), the Minister of Finance and the Interior Minister hereby issue the announcement as follows:
Article 1: This notification shall come into effect from the date of publication in the Government Gazette onwards.
Article 2: In this announcement,
“Building” means houses, buildings, apartments, rafts, or any other structure that is used by a person for residential purposes.
“Homestay” means a place for temporary accommodation that the owner has adapted to no more than four rooms with services and facilities provided to a maximum of twenty people. The accommodation is shared with the owner and it is characterized as a business operation for supplemental income.
Article 3: The utilization of residential property shall mean the use of land or buildings for residential purposes, including land or buildings that continue to be used, with the following exceptions:
1. Land or buildings of entrepreneurs under the Land Development Act BE 2543 (2000) which are under development or have completed construction but are not yet sold.
2. Land or buildings of entrepreneurs under the Condominium Act BE 2551 (2008) which are under development or have completed construction but are not yet sold;
3. Hotels under the Hotel Act BE 2547 (2004).
4. Land or buildings serving as temporary accommodation for travelers or any other persons provided in exchange for compensation. This excludes accommodation services provided for monthly compensation or homestay arrangements.
5. Land or buildings awaiting sale by the following agencies:
a. Financial institutions under the law on financial institution businesses,
b. Specialized financial institutions established by a specific law,
c. Public financial institutions under the law on public financial institutions,
d. Asset management companies under the law on asset management companies.
Article 4: The utilization of residential property in accordance with Article 3 shall include the periods during the construction or alteration of buildings on land intended for residential purposes.
Article 5: In the case that residential land under this announcement overlaps with adjoining land for agricultural purposes, under the announcement of the Ministry of Finance and the Ministry of Interior on the Criteria for the Utilization of Agricultural Property, the overlapping land shall be deemed as agricultural land and governed by said announcement.
Government Gazette
Page 20, Book 137, Special Section 126 Ngor, May 29,2020
Announcement of the Ministry of Finance and the Ministry of Interior
Criteria for the utilization of property for agricultural purposes
By virtue of Section 6 Paragraph 1 and Section 37 Paragraph 3 of the Land and Buildings Tax Act BE 2562 (2019), the Minister of Finance and the Interior Minister hereby issue the announcement as follows:
Article 1: This notification shall come into effect from the date of publication in the Government Gazette onwards.
Article 2: The utilization of agricultural property means the use of land or buildings for “agriculture,” as defined in the regulations of the Committee on Agriculture and Cooperative Development Policy Planning on Farmer Registration (2017) and as amended, for the purpose of consumption, distribution, or use in farms, but not including aquaculture and weaving.
The utilization of agricultural property under Paragraph 1 shall also include adjoining land or buildings utilized for agriculture purposes. However, the adjoining land must not be more than half of the total area that is used for agriculture, with the exception of aquaculture.
Article 3: If agricultural land under this announcement overlaps with adjoining residential land according to the announcement of the Ministry of Finance and the Ministry of Interior on criteria for utilization for residential purposes, the overlapping areas shall be used for agricultural purposes.
Article 4: The utilization for agricultural purposes in accordance with Article 2 of this notification shall include a break period for the rehabilitation of agricultural land and buildings, a break period during production season, and for disease prevention.
Article 5: The utilization for agricultural purposes in accordance with Article 2 which contains plant and animal species or uses of land or buildings as specified in the list attached to this announcement shall comply with the minimum rate for agricultural operation per rai, stall or greenhouse utilization, land utilization, and the utilization characteristics specified in the attachment.
Government Gazette
Page 1, Book 137, Section 42 Kor, June 10, 2020
Reduce taxes for certain types of land and buildings
His Majesty King Vajiralongkorn has deemed it appropriate to reduce taxes for certain types of land and buildings. By virtue of the provisions under Section 175 of the Constitution of the Kingdom of Thailand and Section 55 of the Land and Buildings Tax Act B.E. 2562 (2019), His Majesty has graciously granted the Royal Decree as follows:
Article 1: This Royal Decree is called the “Royal Decree to reduce taxes for certain types of land and buildings, BE 2563 (2020).”
Article 2: This Royal Decree shall come into effect from the day following the date of its publication in the Government Gazette.
Article 3: The amount of tax shall be reduced at the rate of 90% (ninety percent) of the amount of tax calculated under Section 42 or Section 95, as the case may be, for tax collection of the tax year B.E. 2563 (2020) for the land or buildings as follows:
(1) Land or buildings that are used for agricultural purposes;
(2) Land or buildings that are used for residential purposes;
(3) Land or buildings that are used for purposes other than (1) and (2);
(4) Land or buildings that are vacant or not being properly utilized.
Article 4: The reduction of the amount of tax under Article 3 does not affect the right to alleviate tax burden under Section 96 and Section 97 of the Land and Buildings Tax Act BE 2562 (2019).
Article 5: The Minister of Finance and the Minister of Interior shall be in charge of this Royal Decree.