Tax Relief

Thailand’s newest corporate tax break to cut back working prices

  • The Thai government has issued its latest tax break package to help businesses affected by the pandemic.
  • This latest package includes a 90 percent reduction in property and building taxes for 2021 as well as the extension of the registration period for personal, VAT and withholding taxes.
  • The reduction in property and building tax applies to agricultural, residential, commercial and building land.

On January 26, 2021, the Thai government released its latest corporate tax break package as it continues to offer initiatives to mitigate the economic impact caused by the pandemic.

This latest package offers a reduction in property taxes, real estate transaction fees, and an extension of the filing deadline for Income Tax (PIT), Value Added Tax (VAT) and Withholding Tax (WHT).

Thailand has launched a number of incentives to support businesses, households, workers and the financial services sector throughout 2020. In April last year, the government released its largest stimulus package, valued at $ 58 billion, equivalent to 10 percent of GDP.

In the package, known as Phase 3, commercial banks were provided with USD 15 billion to provide loans to SMEs in the form of low-interest loans. An additional $ 30 billion was provided in financial support for farmers and $ 18 billion for temporary workers, contract workers and the self-employed. This includes providing monthly handouts for 5,000 baht ($ 154) for six months.

In addition, the Board of Investment (BOI) – the main agency for promoting foreign investment in Thailand – has actively sought to encourage more foreign investment through tax cuts and holidays for selected BOI projects.

At the end of 2020, the BOI made corporate tax deductions (CIT) available for large projects and for companies looking to incorporate digital technologies into their business.

The reduction of property and building tax

The government will provide a 90 percent reduction in property tax in 2021, which will cover the following property categories:

  • Agricultural;
  • Residential;
  • Commercially; and
  • Empty land.

Tax payments are due in April of each year at the following applicable rates:

If a property remains vacant for more than three consecutive years, the rate is increased by 0.3 percent every three years until an upper limit of three percent is reached.

The new Thai Land and Building Law was enacted in 2019 and came into force in January 2020. Before this law, tax rates on land and real estate were valued using an income-related method and based on the value of the property.

The law provides for a two-year transition period starting January 1, 2020 to help owners adapt to the new law. During this transition period, the tax rate was further reduced, as shown in the following tables.

Residential Property Thailand Tax

Agricultural property

Unused Property Tax Thailand

So if a residential property were valued at five million baht ($ 166,610) in 2021, the tax for those entitled would be calculated as follows:

Tax rate of 5 million baht ($ 166,610) x 0.02 percent = 1,000 baht ($ 33.32).

1,000 baht x 90 percent tax reduction = 900 baht ($ 29.98).

The final tax is 100 baht ($ 3.33).

The reduction in real estate transaction fees

To help sell real estate in the country, the government has cut property transfer registration fees from 2 percent to 0.01 percent and mortgage registration fees from 1 percent to 0.01 percent.

This tax reduction applies to the following property categories:

  • Condominium Registered Under 3 Million Baht (US $ 100,014); and
  • Land with buildings, semi-detached houses, single-family houses or commercial buildings that are sold by an authorized land developer.

This incentive is valid from January 12th to December 31st, 2021.

Extension of the electronic tax return

The government has extended the deadline for PIT returns from March 31 to June 30, 2021. In addition, the deadline for WHT and VAT payments has been extended from February to June 2021 to the last day of each month.

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