The Ministry is considering delaying the collection of the land and building tax

The Ministry is considering delaying the collection of the land and building tax

Land and building tax hits companies

The Finance Ministry is studying the private sector’s proposal to delay and reduce the collection of land and construction tax as companies struggle with the double whammy of the impact of the pandemic and the Russo-Ukrainian war, says Minister Arkhum Termbitayabaisith.

In 2020, the government issued a 90% reduction in the land and building tax to ease the burden on land owners and construction sites due to the serious impact of the epidemic.

This tax cut was in effect from 2020 to 21, but the ministry refused to extend it last year.

Arkhum said he commissioned the Financial Policy Bureau to conduct an analysis of tax collection after the private sector suggested the tax should be deferred and lowered.

Land owners usually have to pay this tax in April.

Some city administrations such as Bangkok have postponed tax collection from April to July to ease people’s suffering.

A source in the ministry, who asked not to be named, said that the ministry fears that delaying or reducing this tax will affect the revenues of local administrations.

Reducing this tax by 90% during 2020-2021 costs local administrations more than 30 billion annually in total and the government cannot look for new revenue to make up for the losses.

Although this year land owners must resume paying the full amount, the Land and Building Tax Act still offers a payment discount this year.

The law went into effect in 2020 and offers a tax deduction for the first three years of implementation. This year is the last year the law introduces the discount.

Regarding the tax deduction rules, if the tax on landowners is assessed higher than the amount calculated under the previous land tax, they are allowed to pay the previous tax rate.

Any amount in excess of the previous tax rate is charged 25% of the increase in 2020, 50% of the increase in 2021, and 75% of the increase in 2022.

For example, in 2020, if taxpayers had to pay 120 baht under the new law but only 100 baht as tax under the old tax system, then they would pay a total of 105 baht.

This calculation is based on the 100 baht tax under the old tax system, plus 25% of the excess 20 baht, i.e. 5 baht.