Two new notifications pertaining to the Land and Building Tax Act B.E. 2562 (2019) were published in the Government Gazette on May 29, 2020, detailing the criteria for classifying property utilization as residential or agricultural in order to determine the tax rates for these property types.

Residential Property

Under the Notification of the Ministry of Finance and Ministry of Interior Re: Criteria for the Utilization of Residential Property B.E. 2563 (2020), utilization of residential property refers to the use of land, or buildings and adjoining areas, for residential purposes, with the following exceptions:

• Developers’ land or buildings under the Land Development Act B.E. 2543 (2000) or the Condominium Act (No. 4) B.E. 2551 (2008) that are still under development or are completed but not yet sold;
• Hotels under the Hotel Act B.E. 2547 (2004), as well as land or buildings that provide accommodation services for remuneration (but excluding “provision of accommodation services for monthly remuneration” or “homestay arrangements” for supplemental income, which are temporary accommodations offering no more than four rooms for a maximum of twenty guests, sharing facilities in the same building with the owner); and,
• Immovable properties (land or buildings) awaiting sale by financial institutions, special financial institutions established by a specific law, public financial institutions, or asset management companies, under the respective relevant laws.

The utilization of residential property also includes periods of construction or alteration of buildings located on residential land (other than the exceptions listed above).

Agricultural Property

Under the Notification of the Ministry of Finance and the Ministry of Interior Re: Criteria for the Utilization of Agricultural Property B.E. 2536 (2020), utilization of land or buildings for agriculture (termed “agricultural operation”) consists of the use of land or buildings for the purpose of exploitation, distribution, or use in farms, but does not include aquaculture or weaving. It also covers adjoining land or buildings used for agricultural operations, provided the adjoining area is not more than half of the total area of the agriculture operation (again not including aquaculture). If adjoining areas under the notifications regarding residential and agricultural land usage overlap, the overlapping area will be deemed an adjoining area for agricultural purposes.

The utilization classification will also cover periods of agricultural land being left fallow or unused for rehabilitation of the land or buildings, disease prevention, or breaks during the production season. The utilization must also comply with legal minimum rates of agricultural operation per rai, stall or house area requirements, land utilization rate requirements, and utilization characteristics that are specified in lists attached to the notification.

The new criteria above can have a substantial impact on the tax valuation of land for the purposes of the new Land and Building Tax, and real estate owners should ensure that they understand these criteria to avoid any miscalculation of the amounts owed.