In this article, we’re going to equip you with a short and easy explanation regarding how Inheritance Tax works in Thailand. Who is a taxpayer, tax rate, when to pay and penalty.
Firstly, in B.E. 2476 (1933) Thailand had the first Inheritance Tax Act. But it was cancelled 11 years later because the amount of the taxation budget was not worth the amount of tax received. Then in 2558 (2015) the Thai government issued the new Inheritance Tax Act B.E. 2558. It effectives from 1st of February 2559 (2016). But, in conclusion it doesn’t mean all inheritors have to pay the inheritance tax.
Who is not the taxpayer under Inheritance Tax?
1) An inheritor who receives an inheritance of the deceased (DE CUJUS) who died before the 1st of February B.E. 2559.
2) A lawful spouse of the deceased.
A lawful spouse means a legal marriage according to the law of the country of the marriage. The marriage in Thailand must register with the Family Department. When the marriage is made abroad it must be in accordance with the law of such a country. In option, the marriage between a Thai and a Foreigner made abroad may register the marriage at the Thai Royal Consulate of such country. In accordance with Section 1457 and 1459 of Civil and Commercial Code, Section 3 of ITLA and Section 19 and 20 of the Conflict of Laws Act B.E. 2481 (1938).
Does another always have to pay Inheritance law?
No, it does not. An inheritor who received an inheritance not more than 100 million THB does not have to pay inheritance tax. According to Section 12 of ITLA.
Who is the taxpayer under Inheritance Tax law?
A person liable to pay tax under the inheritance tax law is a person who contains the following 3 facts:
1- a person who his/her Deceased died from the 1st of February B.E. 2559.
2- a person is not a legal spouse of the deceased.
3- a person received an inheritance of more than 100 million THB.
Inheritance means real estate, share in mutual fund/stock market, saving or register vehicle etc. It is no matter you are Thai, foreigner, a natural person, a juristic person, a full of age, a legal incompetence (a minor, virtual incompetent person etc.), either you are a heir at law or a heir at will accordance to Section 3, 11, 12 and 14 of ITLA (see also a legal incompetence person at Section 7).
What is the Inheritance Tax Rate?
There are 2 tax rates, 5% or 10 % of the received amount of inheritance. 5% tax rate applies to an inheritor who is an ascendant or a descendant, 10% tax rate applies to another inheritor according to Section 16 of ITLA.
When to pay and what is the penalty of this law?
150 days from the date of receipt of the inheritance. Inheritance taxpayers must apply to the revenue department to pay his inheritance tax. If not, punishable by 1 time tax penalty of the received amount of inheritance. And/or the maximum criminal fine of 500,000THB.
If the inheritance taxpayer applies false or incomplete information. punishable of the 0.5 time tax penalty of the complete or the true amount of inheritance. And/or imprisonment for not more than 1 year shall be applied according section 29, 33 and 37 of ITLA.
If a taxpayer does not agree with the amount of tax. He or she has a right to appeal within 30 days from the date of receiving the assessable Income. But, during the appeal procedure, he or she still has to pay this tax. Except there is a permission to not pay, according to section 27 and 28 of ITLA.
Inheritance tax is acceptable tax avoidance. If you are a taxpayer under Inheritance Tax Law. It is a good idea for tax planning that you can decide how to exercise your right to your property.
Akenarin Thongplod, Thai Barrister at Law, Thai Attorney at law and Notarial Services Attorney.