Assets to be inherited from donors while they are still alive are likely to be subject to a gift tax as part of the Finance Ministry's inheritance tax proposals, according to a ministry source.
However, it remains unclear whether it would be the benefactor or the beneficiary who would be taxed if the proposal, which is pending review by the Council of State, goes through, the source said.
The value of assets and the tax rate for the gift tax could possibly be levied at the same amount and rate as inheritance tax. The source said the Revenue Department would impose a 10% inheritance tax on heirs receiving assets worth at least 50 million baht.
The idea of a gift tax has been floated to close any loopholes. At present, assets given by parents to their children are tax-exempt regardless of whether the parents are still alive.
Documented assets such as residences, land, vehicles, bonds, equities and deposits at financial institutions would be subject to inheritance and gift taxes, while assets without registration papers such as amulets, gold, antiques and watches would initially enjoy a waiver.
Japan charges gift tax on parents who pass on assets worth at least 4 million yen (1.23 million baht) to their children.
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.
After approval by the Council of State, the draft on inheritance tax and gift tax will be forwarded to the cabinet and the National Legislative Assembly in order for final deliberation.
The source said assets under inheritance trusts will be exempted from the tax as they will be eventually taxed when assets are transferred to heirs.
However, any return from assets in inheritance trusts is already subject to personal income tax.
Revenue Department director-general Prasong Poontaneat recently 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, not to line state coffers.