The Building and Land Tax Act B.E. 2562 came into effect on January 1, 2020, in lieu of the House and Building Tax Act B.E. 2475 and the Local Development Tax Act B.E. 2508 to stimulate the use of land and buildings. It is a good idea to know how it works.
Who is the Taxpayer?
These taxes refer to the tax levied on buildings and land continuously used. Whether renting, leasing, conducting business and/or providing services (i.e., dormitories, schools, banks, hospitals, etc.), the building and land owner is liable for building and land tax when utilising such buildings or land. This means buildings and land for residency have no liability for payment under this law.
How to make payment and when?
Building and land tax is a local tax payable to the district office, municipality, or “local administrative” where the building or land is located. The building and land tax is collected on an annual basis.
If the building and land were utilised in the previous year. The taxpayer shall file a tax return between January and February of each year. For example, if the owner rents a home between September and November 2020, a total of 3 months, the owner shall file the building and land tax return between January and February 2021.
Some local authorities provide the taxpayer with an option for services that allow the taxpayer to file the tax return by post, e-filing, Line, or WhatsApp. For more information, you may contact the local administrative office where your building and/or house are located.
Tax Rate and Calculation
The current tax rate is 12.5% per annual fee, but the formula for the calculations is different for the two main types of use. Examples of the calculations are as follows:
If the building or land is rented for a resident or dormitory, the formula (rental per month) x (number of months in use) x (12.5%) = tax payable.
For example, in 2020, the rent of 10,000 baht per month for 9 months would be 10,000 x 9 x 12.5% = tax payable of 11,250 baht.
If the building or land is used for another business, the formula (area in square metres x location rate) x (number of months in use) x (12.5%) = tax payable
The location rate is due to the assessment of each local administration, which is different for each location.
For example, a 150 square meters office has been operating throughout the year. Let’s say that the location rate at 100 baht per square meter would be (150 x 100) x (12) x (12.5%) = 22,500 tax payable.
Tax Collection Procedure
There are five steps to tax collection.
Step 1: The local administrative “Announcement of the Appraised Value of the Building and Land Tax Rate” and other necessary information
Step 2: The local administrative agency “notifies the taxpayer of the tax assessment by sending tax assessment forms to the taxpayer.”
Step 3: “The taxpayer pays tax’ if the taxpayer is unable to pay the tax at one time. The taxpayers shall pay in instalments for a maximum of three instalments.
Step 4: If there is an outstanding tax, the local administration will serve a “warning letter to pay taxes to the taxpayer.”
Step 5: When a taxpayer has received a warning but the tax is still outstanding, the local administration will notify the land department that there is an outstanding tax.
- Failing to submit the tax return ‘Por Ror Dor 2 form’ within February of each year shall result in a fine of 200 baht. And shall be charged for the building and land tax retrospectively based on the number of years of failure for not more than 10 years.
- Submitting a false tax return, ‘Por Ror Dor 2 form,” to avoid tax shall be punished with imprisonment for 6 months, up to a 500 baht fine, or both. And shall be charged for the building and land tax retrospectively based on the number of years since submitting the false tax return, not more than 5 years.
- Late payment more than 30 days from the date of receiving the tax assessment notice (Por.Ror.Dor.8 form) shall be subject to a penalty at the following rate: Not more than 1 month 2.5% of outstanding tax, over 1 month, 5% of tax assessment, over 2 months, 7.5% of tax assessment, over 3 months, 10% of tax assessment, and over 4 months, the building or land shall be seized or sold by auction without a court judgement.
Purchasing or investing in real estate, such as houses, condominiums, or land and house, the purchaser shall be considered for tax payment. For more information about these taxes, you may contact the local administrative office where the building and/or house are located. If you need a lawyer, you may contact our real estate lawyers for assistance.