Inheritance tax takes effect in January

Inheritance tax takes effect in January

<i>Originally published on 8 Aug 2015</i><p> The inheritance and gift taxes will take effect in January next year after the laws were published in the <i>Royal Gazette</i> on Wednesday.

For inherited assets, the tax is charged on beneficiaries. The rates are 5% of the amount above 100 million baht for descendants, and 10% of the same base for others.

For gifts of which tax is currently zero, the rate is 5% of the portion above 20 million baht when the beneficiaries are descendants. For non-descendant beneficiaries, the same rate applies but is calculated from the portion above 10 million baht.

The beneficiaries will have declare the assets within 150 days after they have received them.

Five types of assets are taxed: houses and land; bank deposits; shares and debentures; automobiles; and other assets as defined by royal decrees to be issued later.

All taxable assets will be valuated collectively even though they may not be received at the same time.

To minimise officials' discretion, the Lands Department's appraised prices are used in the case of land. For equities, the prices to be used are those on the dates the beneficiaries received them.

Maj Gen Sansern Kaewkamnerd, a deputy spokesperson of the Prime Minister's Office, said on Saturday the passage of the laws was a crucial step forward for the country.

"They give billionaires incentives to donate more to charities and public causes and to accumulate fewer assets for their children.

"At the same time, they encourage their descendants to prove their potential rather than wait to inherit wealth from their parents," he said.

"We believe the laws will help reduce the income gap and bolster state revenue," he said.

Up until this week, the two taxes were the most difficult to ram through Parliament for all governments due to vested interests of the elite in high positions.

Even the versions that became laws now were considerably watered down from the ones proposed by Finance Minister Sommai Phasee, which set the tax-free threshold at 50 million baht for the inheritance tax.

He had said the tax would amount to nothing if the threshold was any higher.

Supporters of a higher threshold argued it might cause many people who lacked cash but were rich in land, like farmers, to lose their properties since they had no money to pay the tax.

They also claimed the threshold could be adjusted later to suit a changing situation in the future and the law served as a good start.

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