Heirs face 5-35% in tax levies

Heirs face 5-35% in tax levies

Inheritance bill likely to be passed by NLA

Heirs who are not offspring will be levied 5-35% on their personal income tax for all inherited assets, while offspring will be subject to 10% inheritance tax on bequests above 50 million baht and 5% gift tax on bequests above 10 million.

Offspring will be required to pay 10% inheritance tax for assets passed down by deceased donors but levied 5% gift tax if the donor is still alive, Finance Minister Sommai Phasee said.

Each offspring is exempt from both inheritance and gift taxes for assets worth no more than 50 million and 10 million baht, respectively.

For instance, in a case where a deceased donor leaves a legacy of 210 million baht to be shared evenly by three children each receiving 70 million, each child would have to pay 10% inheritance tax of 2 million baht on the 20 million exceeding the limit of 50 million.

If the donor was still alive, each child would have to pay 3 million baht as a 5% gift tax on the 60 million baht exceeding the limit of 10 million.

To prevent tax avoidance, recipients must combine the overall assets transferred to them by living donors in several batches in one year and pay the gift tax for assets exceeding 10 million baht.

A draft bill on the inheritance and gift taxes will be discussed at tomorrow's cabinet meeting, one day ahead of the original schedule.

If the bill is approved, it will be forwarded to the National Legislative Assembly (NLA) for deliberation and take effect nine days after publication in the Royal Gazette.

The taxes are expected to take effect in mid-2015.

Mr Sommai said assets inherited by wives or husbands after their spouse died would be tax-free under the new regulations.

Assets transferred to inheritance trusts will not be liable to inheritance and gift taxes, but any benefit accrued from assets will be subject to personal income tax. Recipients will be subject to inheritance and gift taxes once they receive the legacy.

All assets donated to universities or foundations for charity purposes will be exempt from tax payments.

The Finance Ministry recently said taxable assets included residences, land, vehicles, bonds, equities and deposits at financial institutions, while non-registered assets such as jewellery, amulets and luxury watches were excluded.

The inheritance and gift taxes are the first taxes to be pushed by the present government with the aim of reducing income disparity.

Mr Sommai said it would be difficult for the Finance Ministry to close loopholes used to evade tax payments due to complicated financial innovations, but those who intended to avoid tax payment must be punished in accordance with the law.

He believes the NLA's members will approve the taxes.

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