A bubble in the Thailand property market is less likely to happen now thanks to the land windfall tax that will allow real estate developers to be more cautious in assessing market demand, reports local media. Companies will still need to be careful in ensuring the value of total unsold residential units doesn’t exceed THB50 million because that is where tax liabilities take effect.
The new tax will see those who own land within a radius of 5 kilometers from a high-speed, double-track or electric trains station, the off-ramp of an expressway, airports or ports charged with the land windfall tax. The Fiscal Policy Office is working on the specifics of the tax on with a draft bill proposing 5 percent of the inflated price being considered.
Landlords whose land value is inflated will be hit with the land windfall tax when ownership is transferred between the time the transport infrastructure project’s contract is signed until the project is finished, says a Finance Ministry source to the Bangkok Post.
Residential and agricultural landowners within the tax radius will not be liable to pay the tax once the transport projects start running. However, property developers with leftover units valued over THB50 million will be taxed if land ownership is transferred after the nearby infrastructure project has been launched.
Owners of land near infrastructure projects launched before the land windfall tax takes effect will not have to pay. Also exempt from the tax would be landlords who take over plots for which the tax has already been paid to avoid double payments on a single land plot.
Meanwhile, developers working on more than 1 project in the same area are expected to have a reduced tax for the 2nd or 3rd project as the government looks to create a fair payment system.
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