The Finance Ministry has set the exemption limit on the land and buildings tax at 50% of the appraised value up to 1 million baht to alleviate the burden for low-income earners.
The draft, due to go before the cabinet this month, has set maximum rates at 0.5% for agricultural land, 1% for residential use and 4% for land for commercial use and unused or vacant land. However, the effective rates for the new tax might be lower than the maximum rate, Deputy Finance Minister Wisudhi Srisuphan said yesterday.
It could take four years for the land and buildings tax to reach the Finance Ministry's required rate, a ministry source said without elaborating on the level.
Unused or vacant land will be charged at a progressive rate every three years, not exceeding 4% of the appraised value, the source said, adding that the ministry was likely to set a five-year grace period for the tax to be levied on land banks held by developers.
The tax waiver will encourage all property owners and landlords to enter the tax system, Mr Wisudhi said.
The land and buildings tax is part of the government's agenda to reduce economic inequality, improve land distribution and improve the use of land.
The source expects the new tax to come into force in 2017, with rates in the early stages not exceeding the current rate of the local development tax.
Before the land and buildings tax takes effect, the Interior Ministry will update the median prices used as a base for the local development tax's calculation, the source said. The current tax is based on median prices from appraisals from 1978-81, which are far lower than present market value.