The Finance Ministry hopes to impose an inheritance tax of 5-30% of asset value on bequest beneficiaries, and a draft proposal now with the Council of State pushes the long-awaited tax a step closer to implementation.
Prasong: Fair taxation the objective
Revenue Department director-general Prasong Poontaneat said assets such as residences, land, vehicles, bonds and equities that carried documents would immediately be subject to the inheritance tax, while those without registration papers such as amulets and watches would initially enjoy a waiver.
After approval by the Council of State, the draft will be forwarded to the cabinet and the National Legislative Assembly for final deliberation, he said.
The National Council for Peace and Order recently agreed in principle with the tax. An inheritance tax, land and building tax and negative income tax have been proposed by the Finance Ministry to satisfy the junta's request for taxes that narrow income disparities, foster fairness and generate state revenue.
Like the land and building tax, the inheritance tax is not a new idea, having been discussed for a long time but never realised.
Mr Prasong said the inheritance tax was aimed largely at treating all taxpayers fairly and bridging wealth inequalities by redistributing incomes of the rich to the poor, while filling government coffers was not the main objective.
"We won't set any tax revenue collection targets for the inheritance tax since we don't know when assets will be inherited," he said.
Mr Prasong admitted asset mobility was on the rise but said it would not be a loophole to be used to avoid inheritance tax here.
Holders of assets abroad will have to pay tax to the relevant country, while cash and securities along with profits must eventually be transferred back to Thailand, he said.
Meanwhile, a source familiar with the matter agreed the inheritance tax might not help to generate more revenue for the government.
The cost of collecting the tax payments might be on a par with the revenue to be contributed from the levy, said the source.
It could also help to narrow the wealth gap, as the rich, who benefit more from the country's development than do low-income earners, should be liable to higher tax payments.
However, the source believes the inheritance tax could discourage the practice of savings, which might have implications in the future if Thailand ever requires a high rate of savings in domestic markets to help finance public investment in national development.