Ministry plans to delay collection of property and building taxes

Ministry plans to delay collection of property and building taxes

Land and real estate tax hits businesses

The Ministry of Finance is considering the private sector’s proposal to delay and reduce the collection of property and construction tax as businesses grapple with the double whammy of the impact of the pandemic and the Russian-Ukrainian war, said Minister Arkhom Termpittayapaisith.

In 2020, the government made a 90% reduction in property and construction tax to ease the burden on land and building site owners due to the severe impact of the pandemic.

This tax reduction was in effect from 2020-2021, but the ministry refused to extend it beyond last year.

Mr Arkhom said he had commissioned the Office of Fiscal Policy to conduct an analysis of tax collection after the private sector proposed the tax be delayed and reduced.

Property owners usually have to pay this tax in April.

Some city governments like Bangkok have postponed tax collection from April to July to ease people’s hardship.

A ministry source who spoke on condition of anonymity said the ministry was concerned that a delay or reduction in the tax would affect local government revenue.

Reducing this tax by 90% in 2020-21 has cost local governments more than $30 billion a year in total and the government cannot seek new revenue to make up for the losses.

Although this year landowners have to start paying the full amount again, the Land and Real Estate Tax Law still offers a payment discount this year.

The law came into force in 2020 and offers a tax payment reduction for the first three years of application. This year is the last year the law offers the discount.

As for the tax reduction rules, if property owners are assessed a higher tax than the amount calculated as the previous property tax, they are allowed to pay the previous tax rate.

Any excess amount above the previous tax rate is charged 25% of the excess in 2020, 50% of the excess in 2021 and 75% of the excess in 2022.

For example, in 2020, if taxpayers had to pay 120 baht under the new law but only 100 baht in tax under the old tax system, that means they would pay a total of 105 baht.

This calculation is based on a 100 baht levy under the old tax system, plus 25% of the 20 baht excess, or 5 baht.

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