The Revenue Department is poised to amend the law to allow the use of market prices in assessing income tax payments, aiming to plug a loophole by which property owners avoid paying larger tax bills.

The amendment is vital because the Treasury Department's property appraisals open up opportunities for business operators to cheat, said Revenue Department director-general Prasong Poontaneat.

Once the law is amended, the tax-collecting agency can use either the Treasury Department's appraisal price or the market price -- whichever is higher -- in assessing tax, he said.

For example, a property developer buys land at a price of 100 million baht -- the same amount as the Treasury Department's appraisal price -- but both buyer and seller state in the contract that the land is bought for 500 million baht.

In this case, the Revenue Department loses the opportunity to charge a higher tax on the land seller because the tax is based on the appraisal price and not the market price. At the same time, the property developer books the market price on the balance sheet, showing a lower profit, and the corporate income tax becomes lower than it should be.

The Revenue Code's Section 65 bis (4) already authorises revenue officials to use market prices in tax assessments for asset transactions (in case the selling price is unreasonably low), but real estate transactions are not included.

Mr Prasong said the amendment must be approved by the cabinet and the National Legislative Assembly.

Closing loopholes used for tax evasion and seeking new sources of tax income are high on the Finance Ministry's agenda, as the country needs greater revenue to finance infrastructure megaprojects.

The Fiscal Policy Office recently estimated that the government's revenue collection would fall 50 billion baht short of the target, down from 100-150 billion baht forecast earlier, after the Finance Ministry asked state enterprises to contribute an additional 60 billion baht.

The government gathered 1.63 trillion baht in revenue during the October-to-June period, or 65.5 billion baht below target.

In the meantime, the Revenue Department has issued a ministerial regulation to maintain the rights of landlords in filing tax returns for income derived from rentals on an average basis for 30 years in case they fail to file form Por Ngor Dor 93 by December.

Previously, landlords were required to file tax claims by December if they wanted to pay tax based on the 30-year duration.

Otherwise, they had to pay personal income tax based on the lump sum and were subject to a high bracket.