AS THE NATIONAL Legislative Assembly prepares for the second and third readings of the inheritance tax bill today, the Finance Ministry is standing firm on a tax threshold of Bt50 million, while a special committee of the NLA and most of the critics of th
Estates worth less than the threshold will be exempt from the inheritance tax.
The tax will come into effect 90 days after it is announced in the Royal Gazette, which likely means some time next year.
Finance Minister Sommai Phasee has said that the five types of assets that would be subject to the inheritance tax were real estate, securities as defined by the Securities and Exchange Commission, deposits or any other assets that beneficiaries have the right to withdraw or claim from financial institutions or individuals, registered vehicles, and financial assets given by decree or ordinance.
“The changes that were made to the bill will be reviewed by society. The reason the ministry has proposed the Bt50-million threshold is that we want to use [tax revenue] from people who have plenty of assets to help manage this country,” Sommai said at the “Sustainable Stock Exchanges Regional Dialogue: Southeast Asia” on Monday.
He also said the taxable assets would be reviewed every five years based on the Consumer Price Index provided by the Commerce Ministry.
Individuals found to have evaded the tax will have to pay double what they should have paid in the first place.
Sirikanya Tansakun, senior analyst at the Thailand Future Foundation, said that while raising the threshold would mean revenue from the tax would be lower, the point of the inheritance tax was not primarily to increase government income.
“This is supposed to be a symbolic move, a first sign that Thailand is now going to tax the wealthy for the first time in history. The expected revenue, even if the threshold is Bt50 million, would only account for 0.2 per cent of the government’s income from tax,” she said.
Sirikanya said small and medium-sized enterprises that rely on passing wealth from generation to generation might be affected if the threshold were kept at Bt50 million, since SMEs need more than one generation to create long-lasting wealth for their families.
Luxmon Attapich, senior country economist at Asian Development Bank, said the tax should be introduced despite the fact that there are ways to hide unregistered assets. More and more people are moving their assets abroad in the global financial market, which leads to high tax-collection costs as international cooperation is required.
“The inheritance tax should be introduced. The country has to try it out, since we need to find out who will truly be affected by it, while the effectiveness of this tax in lowering the level of inequality will be based on how it is implemented,” she said.
Manus Chuasawat, chief of the Bangkok Metropolis Land Office, said in January that many Bangkokians had come to the office to make transfers of land ownership since the beginning of the year, and there were 1,290 land transactions in Bangkok worth Bt14.74 billion in December alone.
“This [transfer spike] is a clear result of the inheritance tax bill,” Manus said.
The possibility of transfer fees doubling was another factor prompting people to make more transactions, he said.