Tax-shy rich race clock

Tax-shy rich race clock

New inheritance, gift levy set to bite in 2015

The wealthy are racing against time to find ways to transfer assets to their heirs before the inheritance and gift tax comes into effect.

The new levy is expected to go to the cabinet for approval next month and take effect next year.

Sommai: Seeking tax rate flexibility

The draft will stipulate a minimum rate of 10% to enable future rises without amendment of the law, Finance Minister Sommai Phasee said.

The ministry will start imposing the tax at 10% when at least 50 million baht in assets is passed down.

"The current draft has written the rate in a rigid manner, but we should write the law in a way that allows rate hikes by issuing subordinate legislation," Mr Sommai said.

The inheritance and gift tax is one of several measures sought by the government with the aim of narrowing income disparity.

The Council of State will hand the draft back to the Finance Ministry this month, and the ministry may ask the council to review some issues such as loopholes likely to be used to avoid tax payments.

Preventing the use of nominees to receive inheritance is one such example.

The draft will allow bequest beneficiaries to pay tax in instalments to ease their burden.

Mr Sommai said a land and buildings tax would be the next big push after the inheritance and gift tax.

The land and buildings tax will come into force a year and a half after publication in the Royal Gazette to give the Treasury Department time to assess the value of 23 million land plots to serve as the tax base.

The department so far has appraised 7 million land plots on an individual basis.

The Fiscal Policy Office earlier proposed a ceiling rate of 4% for unused land and land for commercial use.

For unused land, the rate will double every three years but not exceed a maximum level of 4% of appraised value, a Finance Ministry source said earlier.

Maximum rates will be set at 0.5% for agricultural use and 1% for residential use.

When the land and buildings tax takes effect, it will replace the house and land tax and local development tax. Low-priced residences and land are likely to receive a waiver.

Mr Sommai, meanwhile, defended a cash handout of up to 15,000 baht to each rice farmer household as a financial assistance measure, not a populist policy, for shielding families against sinking rice prices.

He said the cash handout for farmers would pump money directly into the economy.

The cash payments, to begin by mid-October, are part of a 364.5-billion-baht stimulus package meant to revitalise the country's economy during the fourth quarter and achieve full-year growth of 2%.

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