Land wind­fall tax gets re­view af­ter hear­ings

FPO to clar­ify pol­icy on loss-mak­ing as­sets

Bangkok Post - - BUSINESS - WICHIT CHANTANUSORNSIRI

The Fis­cal Pol­icy Of­fice (FPO) will con­sider whether non-per­form­ing as­sets (NPAs) sold by fi­nan­cial in­sti­tu­tions at a loss should be sub­ject to a planned land wind­fall tax in cases where as­set prices are in­flated by in­fra­struc­ture de­vel­op­ment.

The re­view comes af­ter opin­ions were ex­pressed at pub­lic hear­ings that res­i­dences and fi­nan­cial in­sti­tu­tions’ NPAs sold at a loss should not be li­able for the land wind­fall tax, ac­cord­ing to an FPO doc­u­ment.

Al­though prices of fi­nan­cial in­sti­tu­tions’ NPAs would be boosted by trans­port in­fra­struc­ture projects, they would still be sold at a loss, the doc­u­ment said, not­ing that the FPO will mull whether the as­set sales will be sub­ject to the land wind­fall tax.

The doc­u­ment was a re­sult of two pub­lic hear­ings on the land wind­fall tax ear­lier this year.

Ac­cord­ing to the draft bill on the land wind­fall tax, those li­able for the tax must own land within a ra­dius of 2.5 kilo­me­tres of a sta­tion serv­ing high-speed, dou­ble­track or elec­tric trains, or the on- or of­framp of an ex­press­way. Those who own plots 5km from build­ing-re­stricted zones like air­ports and ports would also be re­quired to pay the tax.

Land­lords whose land value is in­flated would be charged the land wind­fall tax every time own­er­ship is trans­ferred from the time when the trans­port in­fra­struc­ture project’s con­tract is signed un­til the project’s com­ple­tion.

Once trans­port projects be­gin op­er­a­tions, those own­ing land for res­i­den­tial and agri­cul­tural pur­poses would not be li­able to pay the tax, while those who have land for com­mer­cial use and whose land value is higher than 50 mil­lion baht would be sub­ject to the tax upon own­er­ship trans­fer.

Only prop­erty de­vel­op­ers with a project value of more than 50 mil­lion baht would be taxed in the event that land own­er­ship was trans­ferred af­ter the launch of an in­fra­struc­ture project.

But a one-time tax would be ap­plied to cases where land own­er­ship is trans­ferred af­ter a trans­port in­fra­struc­ture project starts. That means other land­lords on plots for which the tax has been paid would no longer be sub­ject to the tax.

Own­ers of land near in­fra­struc­ture projects launched be­fore the law gov­ern­ing land wind­fall tax takes ef­fect would be ex­empt from the new tax.

The ap­pli­ca­ble tax rate, which is flat, could be lower than a max­i­mum 5% of the in­flated price.

The FPO doc­u­ment said i ncome con­trib­uted by the land wind­fall tax would go to the govern­ment’s cof­fers, though peo­ple at the pub­lic hear­ings had pro­posed to use in­come from the wind­fall tax to give dis­counts to trans­port in­fra­struc­ture projects.

The FPO has set sev­eral bases to be used in com­put­ing the land wind­fall tax, in­clud­ing prop­erty value at the date when the law comes into force or the land own­er­ship is changed, to bet­ter re­flect the in­flated price and be fairer to tax­pay­ers.

The bill is un­der the FPO’s draft­ing process, with an ad­di­tional 11 or­ganic laws still to be is­sued.

PORNPROM SATRABHAYA

Elec­tric train lines are a mag­net for prop­erty de­vel­op­ment, boost­ing prices of nearby land.

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