Land windfall tax gets review after hearings
FPO to clarify policy on loss-making assets
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.
Electric train lines are a magnet for property development, boosting prices of nearby land.