Wiroj Lakkhanaadisorn, deputy leader of the People's Party, sparked public interest over gift tax after accusing Prime Minister Paetongtarn Shinawatra of avoiding payments amounting to 218.7 million baht during the first day of the censure debate.
According to Mr Wiroj, parents can transfer assets worth up to 20 million baht tax-free annually to their children. Instead of relying on this exemption, Ms Paetongtarn allegedly opted for a different approach to avoid the payment.
What is a gift tax?
Gift tax is imposed on assets transferred to or received from children, spouses, relatives or other living individuals. It was aimed at preventing the avoidance of inheritance tax when it was brought in on Feb 1, 2016.
Who are classified as ascendants and descendants?
Ascendants are fathers, mothers, grandfathers, grandmothers, great-grandfathers and great-grandmothers on both the paternal and maternal sides.
Descendants are children (including legally adopted and illegitimate children legally recognised by their fathers), grandchildren, and great-grandchildren.
Who is responsible for paying?
For immovable assets, the tax burden falls on individuals who transfer ownership of the assets. This applies to parents who transfer assets to their legitimate children but does not extend to adopted children.
For movable assets, recipients who receive assets as a form of support or gift from their ascendants, descendants or spouses are liable for gift tax only on the portion exceeding 20 million baht per tax year. If assets are received as a form of support due to obligation or a form of a gift from anyone other than ascendants, descendants and spouses, the gift tax is applied to the portion exceeding 10 million baht per tax year.
What are the gift tax rates?
For immovable assets, givers pay a 5% tax on the portion that exceeds 20 million baht at the land office during ownership transfer. The givers, however, may include this portion in their income tax.
For movable assets, recipients pay a 5% tax on the portion that exceeds 20 million baht or 10 million baht, depending on the relationship with givers. The recipients may include this portion in their income tax.
*For other cases not covered by these, recipients are subject to personal income tax at a progressive rate ranging from 5% to 35%, depending on their income.
