The new bill on land and property tax in Thailand is aimed at helping property owners make better use of their real estate and properties, especially if they own land and property which is currently not in use. Some fear that the new proposals would see land grab opportunities where unused pieces of land would be leased to farmers for agriculture, particularly given the Thai government’s current drive to increase crop growth and to increase the amount of alternative energy sources.

In particular, residential owners believe that the Land and Construction Tax Bill may mean that Thai property owners will no longer see a tax exemption that they currently enjoy under current tax laws. Thailand property owners also believe that there may be an increase in property taxes as the current amount of tax collected through property is less than 10% of the total Thai government budget and it is believed that officials think property is an easy way to boost tax revenues.

There are plenty of other questions and issues which have Thai property owners worried. Apartment owners are currently unclear as to whether the new property proposals would have any affect on them. There are also queries as to how real estate and properties will be valued under any new tax laws, particularly if the real estate is split into part residential and part agricultural. If the law is not written clearly, there are concerns that some property owners will declare their real estate as different usage purposes or will deliberately split their land up to ensure they lower their property tax bill.

The law, will, however clear up some problems in the current system for example the way that the term ‘construction’ is defined. At present, the law is fairly unclear as to what the term construction defines and has led to the Thai Tax Court considering small buildings such as telephone booths as a construction.

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Thailand is famed for it’s food, culture and beaches, making the country a tourist magnet. The cost of living is so low that it is a popular destination for many European tourists as well as backpackers from around the World. Offering some of the most stunning scenery in the World, buying property in Thailand could be a great move and investment.

Because Thailand is so popular, it has become one of the World’s major tourism hotspots. If you choose to invest in Thailand, buying properties near one of the hotspots in the country could prove a wise investment as the tourist trade is year-round and there is excellent rental potential. Coupled with a growing economy, in the long-term, you could see huge return on your real estate investment.

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Critics of the proposal have claimed that the changes were a political move by the post-coup government and were proprosed because they would hurt the ousted prime minister Thaksin Shinawatra. Shinawatra was ousted from office in September 2006. The military justified the take over saying that he had been using his political position to enrich his business empire – the largest example being his sale of $1.9 billion Shin Corp shares to Singapore’s Temasek Holdings. If the proposed changes went ahead, Temasek would have to restructure the deal or sell some of their shares on.

Foreign investors said the propsed changes to the law are unclear and that any changes would undermine their confidence in Thailand. Predictable regulations are liked because investors can make investment plans. Uncertainty causes unrest and potentially could mean many foreign investors losing interest in investing in the country. The change is also sending confused signals as to whether Thailand is trying to move towards market liberalisation or highly-regulate market conditions.

The government has tried to calm fears by saying that many companies would be exempt from the new rules anyway – in particular exporters and manufacturers, however this could be bad news for foreign property investors as they were not mentioned and may be affected by the proposal.

Even so, foreign investors have refused to be reassured and are beginning to worry about more future, abrupt changes. In mid-December, the Bank of Thailand imposed some draconian capital controls. This created a huge stock market crash and forced a backtrack on some of their changes.

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