FPO: Prime city plot iffy for farm tax rate
An empty plot of prime Bangkok real estate on Ratchadaphisek Road, recently turned into a lime farm to avoid the highest land and buildings tax bracket, is likely subject to the tax rate for vacant land, says the chief of the Fiscal Policy Office (FPO).
The owner of the controversial plot, based on an initial estimate, is required to pay 2 million baht a year if the land is considered for agricultural purposes under the land and building tax. That levy jumps to 20 million baht if it is classified as vacant land, said Lavaron Sangsnit, the FPO's director-general.
The plot was charged 100,000 baht a year under the house and land tax and the local development tax, which were replaced this year by the land and buildings tax.
The land and buildings law stipulates that empty land and plots not used in an appropriate manner will be taxed at the rate for vacant land.
Whether the use of high-priced land for low benefit is appropriate is a question that needs to be considered, Mr Lavaron said, adding that the FPO plans to set clear criteria on the issue.
According to the land and buildings tax, which took effect at the start of this year, land for agricultural purposes with appraisal prices of up to 75 million baht are levied 0.01%, more than 75-100 million baht is taxed at 0.03%, more than 100-500 million baht at 0.05%, more than 500 million-1 billion baht at 0.07% and more than 1 billion baht at 0.1%.
For vacant land, a tax rate of 0.3% is applied and will increase by 0.3 percentage points every three years, up to a cap of 3%.
Mr Lavaron said the land and buildings tax adds costs to those who own land for speculative purposes and compels them to use the land to benefit the economy.
He dismissed a local media report that department stores would benefit from the new property tax because they are subject to lower tax bills, saying the tax calculation in the report was based only on buildings and did not take into account the tax imposed on land.
The land and buildings tax is expected to contribute steadier income to local administrative organisations, he said.