The Revenue Department has warned that heirs receiving a legacy from donors who pass on assets via off-market transfer before inheritance and gift taxes take effect could face a maximum 35% personal income tax rate.
If the affluent transfer shares of non-listed or even listed companies to their beneficiaries outside of the stock exchange before the new taxes come into force, receivers are liable for personal income tax if they earn 4 million baht or more in the year when the received assets are included, director-general Prasong Poontaneat said.
At present, share transfers through the stock market are exempt from tax.
Prasong: Heirs liable one way or another
"I would like to warn those who intentionally avoid the tax payment to study it carefully, because it may not be worth it," Mr Prasong said.
The inheritance and gift taxes won National Legislative Assembly approval last month.
According to the bill, a 10% tax will be levied on bequests exceeding 100 million baht from deceased donors, but if recipients are parents or children they are only required to pay 5% tax, while spouses are exempt.
In the event that donors are still alive when they pass on the assets, beneficiaries are subject to a 5% levy for bequests exceeding 20 million baht, with spouses exempt.
Taxable assets include residences, land, vehicles, bonds, equities and deposits in financial institutions. The bill will take effect 180 days after its publication in the Royal Gazette.
Although the inheritance and gift taxes have yet to be enforced, the rich are reportedly parading to transfer assets to heirs for fear of large tax payments.
For example, Prasert Prasarttong-Osoth, founder and president of Bangkok Dusit Medical Services Plc, transferred 100 million shares to his daughter in April, while L.P.N. Development chief executive Tikhamporn Plengsrisuk transferred 2 million shares each to his two sons in February.
Separately, the Revenue Department yesterday signed a deal to provide internet search of tax records to the Office of the Public Sector Anti-Corruption Commission.
The department has previously offered the service to the Office of the National Anti-Corruption Commission, the Anti-Money Laundering Office and the Department of Special Investigation among others.