Apisak tries to deflate windfall tax fears

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BANGKOK: Enforcement of the land windfall tax will not be a burden on homeowners but it could marginally hurt property developers’ bottom line, Finance Minister Apisak Tantivorawong said this week, whilst scoffing at developers’ claims that the tax would hit homeowners.


“Saying that the land windfall tax will take a toll on consumers is just an excuse, as property developers’ net profits will take a hit, but they’ve made large profits [from buying land ahead of construction for government infrastructure projects], so the government should charge some levies. So I’m not listening to developers’ requests,” he said.

Mr Apisak said that property developers always purchase land before transport infrastructure development kicks off, allowing them to reap the rewards from rising land prices.

“When land prices rise, they never give discounts to homebuyers,” he said.

The land windfall tax is undergoing a public hearing, which will be completed on June 28.

Mr Apisak earlier said he wanted a draft bill on the tax to be completed this year.

The Finance Ministry plans to impose the tax at 5% of the inflated value of property between pre-contract signing for infrastructure projects and the date when the contract is signed.

The tax would only be paid upon ownership transfer.

It is a common practice in several countries including the UK, Japan, and Australia that proceeds from the land windfall tax be used to fund new infrastructure projects and Thailand will adopt the same practice, Mr Apisak said.

According to a Fiscal Policy Office study prepared for the public hearing, the land windfall tax will be levied on ownership transfers when transport infrastructure projects are under development.

After those transport projects begin operations, those owning land for residential and agricultural purposes will not be liable to pay the tax, while those who have land for commercial use and whose land value is higher than B50 million will be subject to the levy upon ownership transfer.

Only property developers with a project valued at more than B50 million will be taxed in the event that the land is transferred after the infrastructure-related service is launched.

Owners of land located near infrastructure projects that were launched before the law governing the land windfall tax takes effect will be exempt from the levy.

Courtesy: Published at The Phuket News on June 23, 2017 by Bangkok Post

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