On 10 July 2018, the Cabinet approved the principle of Real Estate Windfall Tax Bill (the Bill). Once it passes another round of public hearings, the Bill will be reviewed by the Council of State and proposed to the National Legislative Assembly for further approval.

This Bill aims to tax commercial developments such as condominiums and department stores located near new infrastructure projects.

New infrastructure projects include high-speed railways, dual railways, and electric train stations, as well as airports, seaports, and tollways that are completed after the Bill is promulgated.

1. What are the taxable properties?

Under the Bill, the new windfall tax will be imposed on the land and condominium units, including unsold condominium units, that are located within a radius of five kilometers from the new infrastructure projects and have a value exceeding THB 50 million.

However, residential condominium units and land used for agricultural or residential purposes are exempt from the windfall tax.

2. Who are the taxable persons?

The taxable persons are the owners of taxable land or condominium units, including the persons who possess and use government land for a commercial purpose. The real estate developers that own land or condominium units waiting to be sold are also taxable persons.

3. What are the taxable events?

According to the publicly available information, the windfall tax will be triggered, and the owners or possessors will be liable to pay tax under the following circumstances:

  1. when there is a transfer of land or condominium unit ownership while the new infrastructure project is under construction (tax is imposed every time the ownership is transferred); and
  2. when the new infrastructure project is completed (tax is imposed only once upon the completion of the project).

4. What are the tax base and tax rate?

The tax base is the increased value of the property due to the infrastructure project. The increased value of the property is calculated from the difference between the official appraisal prices of the property on the date of project commencement and the date of project completion.

However, if the infrastructure project is already under construction when the Bill becomes effective, the increased value accumulated prior to the effective date will not be taxable, and the tax base will instead be calculated from the difference between the official appraisal prices of the property on the date of promulgation and the date of project completion.

In the case of newly-built condominiums for which the increased value cannot be calculated, the tax base or the increased value will be deemed 20 percent of the official appraisal value of that condominium unit according to the Bill.

The above tax base will be subject to windfall tax not exceeding 5 percent. The actual tax rate will be set out later under the Royal Decree.

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