No new inheritance tax will be issued soon.

Korn: 'No reason to implement inheritance tax at this time'

Source: Bangkok Post Published: 13/06/2009 

By: WICHIT CHANTANUSORNSIRI  The government has back-pedalled from its previous stance of pursuing a new inheritance tax.

Finance Minister Korn Chatikavanij, speaking before officials at the Judicial Training Institute yesterday, said there was "no reason to implement the tax at the current time"."The Finance Ministry continues to study the issue. But I give greater priority to moving forward with the land and building tax, which is expected to proceed to the cabinet for discussion in August," Mr Korn said.

"As for the inheritance tax, we have no plans for implementation at this time."

Mr Korn said in May that the ministry had already completed preliminary drafts for the two new taxes, a cornerstone of a tax reform plan aimed at encouraging more efficient use of resources as well as reducing social inequality in the country.

The inheritance tax would impose a tax on asset transfers to beneficiaries, and represent a first for the country. The land and building tax meanwhile will impose new annual charges on property, including undeveloped land left fallow by wealthy landlords.

Mr Korn said that if the land and building tax is implemented, an inheritance tax may be superfluous, as assets would be taxed in any case.He added that enforcement of an inheritance tax would be cumbersome, considering the loopholes and tax shelters that would likely be used by the wealthy to minimise their liability. 

"The wealthy certainly have various tactics at hand to evade their tax liability if the inheritance tax was implemented. At the same time, the middle-class and the poor would also be subject to the tax as well," Mr Korn said.

The land tax, meanwhile, would help encourage liquidity in the property markets by forcing landowners to put their assets to use.

Mr Korn, a prominent banker and the wealthiest minister in the cabinet, said his own tax liability would increase by 800,000 baht per year under the land tax.
"The first thing I thought upon hearing this was which plot of land should I sell," he said."And this is the intention of the law - encouraging people to utilise their property assets for the maximum benefit."

Under the draft law proposed by the Fiscal Policy Office, land used for commercial purposes would be subject to a tax of up to 0.5% of the official valuation price, while residential property would be subject to a tax of up to 0.1% and agricultural land taxed at no more than 0.05%.

Undeveloped land would be taxed at up to 0.5% of the valuation price, with tax liability doubled every three years up to a maximum of 2% per year. Local administrations will be responsible for setting actual tax rates in each jurisdiction.