Agriculture Ministry to define farmland use for tax

Agriculture Ministry to define farmland use for tax

The Agriculture and Cooperatives Ministry is expected to take charge of outlining criteria for farmland use to prevent owners of undeveloped land from claiming agricultural purposes to understate their tax bills when the new land and buildings tax is enforced.

The ministry will set the criteria for how many trees or crops are required to be grown in a specific space to be considered farmland, which is subject to the lowest rate of the land and buildings tax, said Deputy Finance Minister Wisudhi Srisuphan.

The National Legislative Committee (NLA) standing committee has already reached an agreement in principle on the draft bill of the land and buildings tax, leaving only details such as the definition of farmland undecided. The bill will be forwarded soon for second and third readings.

Mr Wisudhi said the standing committee agreed to slash the exemption ceiling for first homes to 20 million baht from 50 million as proposed by the Finance Ministry. The bill has been stuck in NLA deliberation for months, with the waiver at the centre of the debate.

The standing committee's proposal has watered down the new property tax rates proposed by the Finance Ministry. The NLA's proposal calls for a ceiling rate for homes at 0.3%, down from the initial 0.5%; an agricultural use rate of 0.15%, down from 0.2%; and a rate for other uses and undeveloped land at 1.2%, down from 2%.

According to the committee's proposal, owners of first homes appraised at over 20 million to 50 million baht are required to pay a property tax rate of 0.02%, or 200 baht for every million baht that exceeds the exemption threshold, and 0.03% for houses valued over 50 million to 75 million baht, 0.05% for those more than 75 million to 100 million, and 0.1% for houses appraised at more than 100 million.

Second-home owners will be taxed 0.02% for property with appraisal value of up to 50 million baht, 0.03% for 50-75 million, 0.05% for 75-100 million and 0.1% for more than 100 million.

Agricultural land with appraisal value up to 50 million baht will be tax-exempt, 50-75 million will be taxed 0.01%, 75-100 million at 0.03%, 100-500 million at 0.05%, over 500 million to 1 billion at 0.07% and above 1 billion at 0.1%.

But the tax brackets for values of over 50 million baht and 50-75 million will be applied to individual farmers, while agricultural firms that hold land worth up to 100 million baht will be levied 0.03%.

For vacant land, undeveloped land with appraisal prices of up to 50 million will be charged at 0.3%, 50-200 million at 0.4%, 200 million to 1 billion at 0.5%, 1-5 billion at 0.6% and over 5 billion at 0.7%.

The new property tax, which will replace the outdated house and land tax and the local development tax, is expected to come into force on Jan 1, 2019.

Mr Wisudhi said landlords who grow orchids at full scale on available land could come under the rate for farmland use, even if their land is in the heart of the capital.

Income from crops and trees will not be used to compute the land and buildings tax, as estimates may be overstated, so land use will determine calculations instead.

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