A company which has sold or rented assets to a property fund will now have to pay the local land and building tax on the rentals, a court has set a precedent on Tuesday.
The Supreme Court's Tax Division on Tuesday rejected the claim made by Bangkok Airways Plc (BA), the operator of Samui international airport and Bangkok Airways, for a 119-million-baht refund of the land and building tax it had paid Koh Samui municipality over four years.
The ruling has set a precedent and BA will have to pay 1.16 billion baht of the tax over the 30-year lease term.
To raise funds for its operation, BA set up the Samui Airport Property Fund (SPF) in 2006 and leased the facility as SPF's underlying asset for 30 years for rentals of 9.3 billion baht in total.
The court decided that the rentals were considered part of BA's income since it charged the fund at 310 million baht a year. Based on the amount, the land and building tax BA had to pay the municipality was 38 million baht.
Earlier, BA filed a lawsuit with the Central Tax Court, challenging the tax estimated by the municipal office in Surat Thani province on the rentals from 2007-10.
The Central Tax Court ruled in favour of the airline but the Supreme Court's Tax Division disagreed.
Last Friday, the Supreme Court also ruled in favour of the municipal office's collection of the tax for the 2011 rentals. The airline earlier complained that the tax should be estimated only at 1.3 million baht.
Koh Samui mayor Ramnetr Jaikwang said the rulings on both cases should allow other local administrative organisations to collect the building and land tax from the lease of assets to property funds.
BA later stated that the case would have no impact on its operating results because the tax had already been paid and recorded in its financial statements.
BA shares rose 3% to 25.75 baht in trade worth 640.5 million baht on Tuesday compared to a 1.26% rise of the broad SET index.