Landlords who lock in bumper profits from selling land near transport infrastructure projects can be exempt from the land windfall tax if they buy and sell the same plot during the same four-year implementation period of the Treasury Department’s land appraisal prices, says a tax expert at the Fiscal Policy Office (FPO).

Given that the Treasury Department’s land appraisal prices, which change every four years, will be used to compute the land windfall tax, landlords will have no tax liabilities if they buy and sell such land in the four-year period, said Choompol Suwanakijboriharn, senior expert on tax policy, during a public hearing on the draft bill.

The land windfall tax is a new property levy charged to landlords whose land value is inflated from transport infrastructure projects. The ceiling for the tax is 5% of the inflated value of property from infrastructure projects and the effective rate will be fixed later in organic laws.

The draft bill states those liable for the tax must own land within a radius of five kilometres of a station serving highspeed, double-track or electric trains, or the on- or off-ramp of an expressway. Those who own plots 5km from building-restricted zones like airports and ports will also be required to pay the tax.

Landlords whose land value is inflated will be charged the land windfall tax every time ownership is transferred — from the time when the transport infrastructure project’s contract is signed, until the project’s completion.

If transport infrastructure projects begin before the land windfall tax is enforced and are under construction during the land sales, the land windfall tax will be based on the difference between the current land appraisal prices and land value before the tax goes into effect.

For condos whose ownership has been transferred, the land windfall tax calculation base will be the gap between the market price and appraisal value on the date when the tax is implemented. If construction of a condo project has just finished, the tax bill will be 20% of the unit price multiplied by the tax rate.

After transport projects begin operations, those owning land for residential and agricultural purposes will not be liable for the land windfall tax, while those who have land for commercial use and whose land value is higher than 50 million baht will be subject to the tax upon ownership transfer.

Only property developers with a project value of more than 50 million baht will also be taxed in the event that the land ownership is transferred after the infrastructure project’s service is launched, with a onetime only tax being applied. That means other landlords on a plot for which the tax has been paid will no longer be subject to the tax.

Atip Bijanonda, president of the Housing Business Association, said the government can isolate the land-price effects on infrastructure projects from development done by the private sector, as the land windfall tax assumes the entirely inflated price results from infrastructure development.

Prasert Taedullayasatit, president of the Thai Condominium Association, urged the government to study the overall property tax environment before implementing the land windfall tax, as buyers and sellers are subject to many taxes related to real estate transactions, including a 3.3% specific business tax, a 2% ownership transfer fee and a 1% mortgage fee.

“The land and buildings tax is yet another property tax that will come into effect in the coming year,” he said.