Firms rush to beat tax incentive deadline

By Somluck Srimalee
The Nation
Published on August 21, 2008

Developers offer builders bonuses, tweak processes to speed up construction

Property companies have to speed up their construction processes for lowrise and highrise residential projects so that they can deliver the units to customers before the government's taxincen¬tive package expires on March 28 next year, a survey by The Nation con¬ducted earlier this week revealed.

Sansiri president Srettha Thavisin said the company has to speed up its construction processes, especially for detachedhousing projects, based on expectations that it will have the proj¬ects ready for delivery to customers before March 28 next year, the date of expiry of the taxincentive package for the property sector.

"We have to promise bonuses to our contractors so that they complete construction of our projects well before the deadline because that will help us deliver the residential projects to our customers on time," he said.

The company's construction processes for detached houses takes an average of eight months, Srettha said. If construction of projects, which are in the presale stage now, does not start, delivery of units to the customer before the tax incentive expires will not be possible.

"We don't know whether the gov¬ernment will extend the taxincentive deadline. If the government is con¬sidering an extension of this pro¬gramme, we hope it announce it this year. This will help save us money, which would otherwise go to our con¬tractors to speed up the construction and beat the deadline," he said.

The government announced tax incentives for the property industry, effective March 29 this year. The package includes reductions in spe¬cial business tax from 3.3 per cent to 0.11 per cent, transfer fee from 2 per cent to 0.01 per cent and mortgageregistration fee from 1 per cent to 0.01 per cent.

Preuksa Real Estate chief operat¬ing officer Prasert Taedullayasatit said the company has succeeded in devel¬oping a process that brings down the time to build detached houses and townhouses from an average of six to eight months to just 110 days. As a result, the company will be able to boost its sales from the second half of the year to the first quarter of next year and deliver residential projects to its customers before the taxincentive package expires.

"The tax incentive will reduce our customers' expense by about 3 per cent, while our business' taxbased expense will also be reduced 4 per cent. Our customers will be able to allocate a lower budget for buying a house," he said.

LPN Development managing director Opas Sripayak said that the company's main product is condo¬miniums and it is difficult speeding up the construction of this class of projects. However, the company has tried to speed up construction of proj¬ects currently under construction, which could give the company the opportunity to have units ready for delivery before the taxincentive package expires.

The company also has found a way to help its customers get mortgageloan approvals, which would in turn reduce the rejection rate when the projects are completed and ready for delivery.

This is part of the company's efforts to help its customers avail of the tax incentive, because LPN Development understands it will also gain through these efforts, he said.

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Firms rush to beat tax incentive deadline

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