In March 2019, the Thai government introduced the new Land and Building Tax Act B.E. 2562, which has been in effect since January 1, 2020.

The tax will be applied to residential, commercial, agricultural, and unused/vacant properties.

The Act does provide a two-year transition period for property owners to adjust to the new law, during which period they will be subject to a reduced tax rate.

The Act obligates individuals, corporate entities, or any beneficiaries of land or buildings, to pay land and building tax. The new law replaces several legislations which include – the Land Tax of 1932; the Land Development Tax of 1965; the Notification of the National Executive Council No. 156 of 1972; and the Royal Decree Designating the Medium Price of Land for Land Development Tax Assessment of 1986.

The tax applies to residential (including condominiums), commercial, agricultural and unused/vacant real estate.

The law provides for a two-year transitional period during which the owners of real estate will have to adjust to the new law and during this period they will be taxed at a reduced rate.

Previously, real estate tax rates were calculated using the income method.

The tax rates on properties were previously assessed on an income-based method. The Act replaces this method with an assessment based on the property’s appraised value, as determined under the current Land Code.

Through these latest changes, the government hopes to introduce a progressive tax system, encourage landowners to utilize their land, and help reduce the overall tax burden on property owners.  The tax payments will be due in April of every year.

 

Maximum tax rates for land and building tax

The Act sets a ceiling tax rate for the different categories of property

Property type	Tax rate
Commercial (land or property used solely for commercial use and not agricultural or residential purposes)	1.20%
Unused/vacant land (property that is either left vacant or is not reasonably used)	1.20%
Residential (places of dwelling)	0.3%
Agricultural (used for agricultural purposes such as farming, aquaculture, animal domestication)	0.15%

Readers should note that if a property remains vacant for more than three consecutive years, the rate will be increased by 0.3 percent every three years until it reaches a cap of three percent.

Tax exemptions

Property owners can be exempted from the land and building tax if they fall under the following categories:

• Agricultural land worth up to 50 million baht;
• Land or building used for residential purposes and is worth up to 50 million baht (the owner’s name should be on the deed of the property);
• The building is used for residential purposes and is worth up to 10 million baht (the owner’s name should be on the deed of the property); and
• Individual owners of agricultural properties – they will be exempt from land and property tax for the tax period 2020-2023.

Transition period

The Act provides a two-year transition period, starting January 1, 2020, to allow property owners to adjust to the new law. During this period there will be a reduced tax rate

Residential property
Appraised value	Tax rate
0-50 million baht	0.02%
50-75 million baht	0.03%
75-100 million baht	0.05%
Above 100 million baht	0.1%

Commercial Property or Unused/Vacant Property
Appraised value	Tax rate
0-50 million baht	0.3%
50-200 million baht	0.4%
200 million – 1 billion baht	0.5%
1 billion – 5 billion baht	0.6%
Above 5 billion baht	0.7%

Property intended for own residence is subject to tax in the range from 0.02% to 0.1% (depending on the cadastral value of the property).

If real estate is leased out, the tax rate used for commercial purposes is from 0.3% to 0.7%.

If real estate is leased on a monthly basis, the tax rate is from 0.02% as for residential real estate.

If real estate is leased on a daily basis, the tax rate is from 0.3% to 0.7% as for commercial real estate.

Due to the coronavirus pandemic in the world and the economic situation in the country, the government has reduced the new tax rate for land and building for 2020 by 90% and deferred tax payment until September 2020, which significantly reduced the burden on the segment of commercial objects. But in 2021 the standard tax rate will be applied and the term of payment remains as before until the end of April.

Tax reductions

There are further tax deductions in the broad tax deduction clause of the Act. To qualify, property owners should fulfil certain criteria:

 For 50 percent tax reduction

• An inherited property that is used for residential purposes. The owner’s name must be on the deed; or
• Property used for energy infrastructure projects such as a power plant.

 For 90 percent tax reduction

• Land or buildings that are under development for an industrial estate for no longer than three years;
• Land or buildings that are awaiting sale for no longer than two years starting March 2019;
• Land or buildings awaiting sale and is owned by a financial institution. The financial institution must have held the property for no more than five years;
• Land or buildings under development for industrial or residential purposes; or
• Land or buildings under development for an educational institute.

The government is estimated to collect 39.4 billion baht (US$1.2 billion) from land and property tax in 2020.

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