The criteria of the land and building tax regarding farm land must be applied to all farm land on an equal and indiscriminate basis, according to a Finance Ministry source.
The source who requested anonymity said the Bangkok Metropolitan Administration (BMA) earlier consulted with a subcommittee on the land and building tax law in terms of how the BMA should enforce the law in a specific case. This subcommittee is tasked by law to make judgements on aspects of the tax.
The BMA was notified that some plots of land in the heart of Bangkok were not being used and were subject to no tax or low tax under the previous law.
Since the new law was enforced in 2019, owners of such plots planted trees so that they would qualify as farm land under the new law, thereby entitling the owners to a lower tax threshold for agricultural land.
The tax under the new law is on a step-up basis and varies depending upon the type of land in accordance with the rates recommended by the relevant committee under the law.
Vacant land valued at between 50 million baht and 200 million baht has a tax rate of 0.4%.
A tax rate of 0.01% is applied to agricultural land valued at up to 75 million baht, while agricultural land valued between 75-100 million baht is taxed at 0.03%.
A tax rate of 0.1% is applied to land valued at 1 billion baht and above.
The ministry source said if plots meet the official definition of farm land, they must be treated as such, taxed at the appropriate rate. For example, if a plot contains up to 200 banana trees per rai, the plot would meet the official definition of farm land.
On the question of whether certain plots have a high commercial value and should not be developed as farm land, this is the personal decision of the landowner, said the source.
The source said one example is if a landowner does not have sufficient funds at that time to develop the plot commercially.
Provincial local administrations are able to adjust the land and building tax they impose on land, but they must seek permission from the related tax committee and the new rate must not exceed the tax ceiling.
For instance, the ceiling rate for farm land has been capped at 0.15%.
The BMA has the authority to adjust the rate without seeking permission, but the adjusted rate must not exceed the ceiling rate.