The land and buildings tax set for Jan 1, 2019 is likely to be enforced behind schedule because of the time-consuming approval process, says an informed source at the Finance Ministry.
Even in the best-case scenario that the National Legislative Assembly (NLA) passes the second and third readings in July, plus two months awaiting publication in the Royal Gazette, the ministry must spend up to 120 days to draft organic laws before local administrative officials can start the process of surveying land and buildings, the source said.
Assuming that the Finance Ministry takes 120 days to complete the organic laws and local administrative organisations' surveying takes two months, the land and buildings tax will be ready next March at the earliest, the source said.
The draft bill on the land and buildings tax is stuck in the scrutiny process of the NLA's standing committee after passing a first reading in March 2017. The standing committee has extended the scrutiny process for a seventh time, which will lapse at the end of July.
The source said it remains uncertain if the standing committee can even finish its work in July.
Deputy Finance Minister Wisudhi Srisuphan said recently that Prime Minister Prayut Chan-o-cha wanted lawmakers to pass a draft bill on the land and buildings tax under his regime and that the law's enforcement would remain on schedule. His remarks came after some local media reported that the draft bill's implementation would be put off to 2020.
The law has been at the top of the government's to-do list and is expected to increase tax revenue for local administrations.
Organic laws will stipulate real tax rates, exemptions and tax alleviation at the enforcement stage, the source said.
The new property tax replaces the house and land tax and the local development tax, both criticised for being regressive and based on outdated appraisal prices.
The NLA committee watered down the new property tax rates proposed by the Finance Ministry. It agreed to call for a ceiling tax rate for homes of 0.3%, down from 0.5% proposed by the Finance Ministry; an agricultural use rate of 0.15%, down from 0.2%; and other use and undeveloped land at 1.2%, down from 2%.
The NLA's version proposes to trim the exemption ceiling for first homes to 20 million baht from 50 million proposed by the Finance Ministry.
The proposal requires owners of first homes appraised at 20-50 million baht 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 50-75 million baht, 0.05% for those more than 75-100 million, and 0.1% for houses appraised at more than 100 million.
Second homes will be taxed at 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.