Amendment of the land and building tax law is meant to enhance both the efficiency of collection and levy an appropriate rate, while the criteria will have to be tightened to close tax loopholes, says finance permanent secretary Lavaron Sangsnit.
According to Mr Lavaron, the land and building tax law, which has been in effect for five years, requires periodic reviews every five years to assess issues encountered in its implementation.
"During the initial phase of implementation, we did not intend to impose overly stringent criteria, especially regarding vacant land, which typically incurs higher tax rates than residential, agricultural or commercial/industrial land," he said.
"However, some owners of vacant land, especially in urban areas, are reluctant to pay higher tax rates and resorted to planting fruit trees such as limes to claim their land as agricultural, which has the lowest tax rate."
Mr Lavaron said planting lime trees on vacant urban land does qualify as agricultural, obligating owners to pay an agricultural land tax rate. Previously such land incurred no tax levy.
He said determining which plots are considered vacant land falls under the jurisdiction of local administrative organisations responsible for collecting land and building taxes.
Vacant land, as defined by law, refers to land that is not utilised to its full potential.
In principle, if a tax of 100 baht is imposed on a plot of land, the owner should derive benefits from the land exceeding 100 baht.
Following this principle, planting lime trees on Silom Road would not be advisable, Mr Lavaron said.
He stressed the need for a gradual tightening of the land and building tax collection criteria in the future, as current levies remain relatively low.
Over time the tax rates should be increased, but the adjustments should be based on appropriate timing and circumstances, said Mr Lavaron.
He said the rates mentioned in the law represent the minimum threshold, allowing local administrative organisations to increase them, but not fall below the legal limit.
The land and building tax replaced the house and land tax and the local development tax, resulting in slightly higher revenue collection, after the period offering deductions lapsed and full rates were enforced, said Mr Lavaron.
The current property tax system is based on land appraisal values multiplied by respective tax rates for each type of land, whereas the house and land tax used annual rental values multiplied by a fixed rate of 12.5%.
He said there may be cases where certain plots, such as department stores, have higher tax levies, while other plots could have lower rates than before.
This system is deemed fairer because it applies the same tax rate to everyone, without relying on the discretion of tax collectors, said Mr Lavaron.