August 04, 2014 01:00 By SOMLUCK SRIMALEE THE NATION 2,637 Viewed
THREE PROPERTY associations will propose that the Finance Ministry revise all current taxes and fees in the property sector to match the Land and Construction Act, which is being considered by the National Council for Peace and Order (NCPO).
The Thai Real Estate Association, Housing Business Association and Thai Condominium Association plan to send a draft of their proposals to the ministry today.
Last month, the ministry proposed to the NCPO two acts to cover inheritance tax and a land and construction tax. The stated aim of this legislation is fairness for Thai society. Similar bills have been proposed before but previous elected governments failed to make pass such laws because of opposition from wealthy landlords.
“If the Finance Ministry wants a law governing land and construction tax, it has to revise other fees and taxes that landowners, property developers and home-buyers currently have to pay. That would ensure fairness for all of parties,” said Thai Condominium Association president Prasert Taedullayasatit, who is also managing director for condominiums at Pruksa Real Estate.
At present, when people buy a home, they have to pay a transfer fee of 2 per cent of the asset’s appraised value and a 1-per-cent mortgage fee, while property firms have to pay a 3.3-per-cent special business tax.
Meanwhile, when people sell a home they have owned for less than five years, they also have to pay the special business tax of 3.3 per cent, and must add the revenue from the sale to their personal income for tax purposes. If they have owned the home for more than five years they can avoid the special business tax, but still must declare the sale revenue as personal income.
Prasert argued that if a land and construction tax were added to these existing costs, it would be unfair to homeowners. His association is therefore urging that the transfer and mortgage fees be reduced if the new tax becomes a reality. It also wants either a cut in the special business tax from 3.3 per cent or adjustments to the requirement for home-sale revenue to be included as personal income for tax purposes.
This would reduce costs for homebuyers and owners. It would also help drive the property market, for both new and resale homes, in a sustainable way, he said.
Housing Business Association president Atip Bichanond said his group was proposing exemption from the land and construction tax for homes with appraised asset value of not over Bt1 million or land not over 50 square wah (200 square metres). This would be fair for low-income people.
“We don’t know if the draft of this act has such an exemption, but we will propose it again anyway,” Atip said.
Kittipol Pramote na Ayudhya, director of the Thai Real Estate Association, said the land and construction tax could result in fairness for society. However, the tax has to be fair for lower-income people and also have a clear system for considering who has to pay it and who does not.