Reprieve for developers' land banks
The Finance Ministry is likely to set a one- or two-year grace period for imposing the land and buildings tax on land banks held by property developers.
This is based on the fact that it takes less than a year to get approval from authorities to develop property projects and not exceeding two years to secure environmental impact assessment approval for condominium projects, Deputy Finance Minister Wisut Srisuphan said.
The grace period is essential for developers that need to hold large land banks to develop projects, he said.
The move aims to avoid adding more costs to developers who could pass on such costs to homebuyers.
However, the grace period should not be too long as developers typically do not want to hold land banks for a long time for fear of higher costs.
Without the grace period, land banks held by developers could be subject to a tax of a maximum 4% of the appraisal price of vacant land.
The new bill, expected to go before the cabinet this month, sets maximum rates of 0.5% on land for agricultural use, 1% on land for residential use and 4% on land for commercial use.
Unused or vacant land would be charged at a progressive rate every three years but not exceeding a maximum level of 4% of appraised value.
The land and buildings tax is the second after the inheritance tax to be pushed by the government as it tries to narrow economic inequality.
The new property tax will come into force after the Treasury Department has completed its assessment of 30 million land plots nationwide. So far, 7.8 million land plots have been assessed.
The new assessment values will serve as the basis for the land and buildings tax, with the law likely to take effect some time in 2016.
The bill also offers land and building tax exemption to property valued at no more than 1 million baht, meaning that those who possess property valued at 1 million or lower are not liable for tax while those who own property worth more than 1 million baht are taxed only on the portion that exceeds 1 million.