DEVELOPERS ASSURED ON REVAMP

       The Finance Ministry has assured land developers they will not face an unreasonably high tax burden under a planned property tax revamp.
       The ministry is revamping the property-tax structure in an effort to plug legal loopholes that allow owners of some lands and buildings to escape paying taxes.
       An informed source at the Finance Ministry involved in drawing up the new property-tax rules said provisions in the latest draft reflected advice from parties likely to be affected by the new measures.
       One is that the ministry will offer a tax grace period, probably of two to five years, to land developers who accumulate plots for development. This land would be subjected to a tax rate of up to 0.5 percent of the land price and would double every three years if the land is left undeveloped.
       Also, newly built homes awaiting buyers would be taxed at the same rate as residential units; no more than 0.1 percent per year.
       Moreover, land and buildings used for many purposes - business, farming and residential, for example - would see each portion taxed accordingly, leading to payment of several tax rates by one landowner. Land used solely for farming would be taxed at no more than 0.05 per cent, the source said.
       In addition, residential units worth less than Bt500,000 may be tax-exempt altogether.
       Land developers have raised concerns that the revised property taxes would increase their business costs and adversely affect the property industry as a whole.
       Some local governments may need to set up funds to buy land or provide loans or other financial support to those who can't afford to pay the newly required taxes, the source said. The central government is unlikely to set up such a fund, since property tax will be collected and managed by the local governments. However, this issue has not been finalised.
       Finance Ministry officials expect to finalise drafting the new property tax rules by the end of this month, before submitting them to Finance Minister Korn Chatikavanij and the Cabinet, according to the source. If approved by the Cabinet, the bill will be considered by Parliament. If Parliament approves the bill, the ministry plans to enforce the new tax laws within two years.
       Under the new tax rules, residence owners would pay up to 0.1 percent of the land price. Rates could vary depending on the local administration's rules. Land used for agricultural purposes would be taxed at no more than 0.05 percent. Undeveloped land would be subject to a high tax rate of 0.5 per cent, to be doubled every three years.
       Also on the horizon are a 2-percent transfer fee on property changing hands; progressive rates of income tax; a 1.5-percent stamp duty; and a 3.3-percent specific business tax that are currently exempted under the government's economic stimulus package. Homebuyers and land developers have expressed fears that the tax-code revisions would add to an already-high tax burden.