The policies of Taxation in Thailand extend to a great range of subjection. Apart from the regular personal and corporate income tax regimes, even inheritance and gifts are taxable. Let us know about that in detail.
Inheritance Tax
Thailand’s Inheritance Tax Act went into force on February 1, 2016. The act does not apply to an inheritance received by the owner’s spouse or to an inheritance received by the owner before the act takes effect.
The following people will have to pay the tax if they receive an inheritance:
1. A person having Thai nationality under the following classifications:
(1) a legal entity under Thai law governance;
(2) a foreign legal entity with more than 50% share of Thai nationality of the share capital at the time of receiving the right of inheritance; and
(3) a foreign legal entity where the management holds more than 50% of persons of Thai nationality. This applies regardless of the location of the property making up the inheritance.
2. A Non-Thai person with a Permanent Residence in Thailand under Thai Immigration Law. Again, this is regardless of the location of the property.
3. A person or international organization to which Thailand has an obligation under the United Nations or under international law. Moreover, it can be in accordance with a treaty or agreement between Thailand and another country.
The following persons are exempt from the tax:
- A person who inherits property from the owner with the owner’s statement that the inheritance is for religious or educational reasons, or for the public benefit.
- A legal entity and governmental organization for religious, educational, or public purposes.
- A person or international organization to which Thailand has an obligation under the United Nations or under international law. Furthermore, it can be in accordance with a treaty or agreement between Thailand and another country.
The following assets are liable for taxation on inheritance:
- Immovable property like land and buildings including apartments and condominiums;
- Securities under the relevant governing laws of International and Business Security Acts of Thailand;
- Money that has been deposited, or other forms of money, where the owner of the inheritance has the right to withdraw it or claim it from the financial institution or person receiving the deposit;
- Movable property like a registered vehicle; and
- Other assets with a Royal Decree specification.
The portion or whole of the inherited assets with a value exceeding THB 100 million is liable for taxation. Furthermore, this is irrespective of location or installment of receipt of the assets through inheritance.
For this inheritance tax, the value of the inheritance subject to tax means the value of the asset received as an inheritance is offset by the liabilities thereby. The tax rate is 10% of the value of the inheritance subject to tax. However, if the recipient is a descendant or ancestor of the owner of the inheritance, the rate is 5%.
Gift Tax
On August 5, 2015, there was a declaration of new regulation on Gift Tax as part of Personal Income Tax. Furthermore, it went into force on February 1, 2016.
The tax on the transfer of property is known as gift tax. During this exchange, the person receiving the value may receive less or nothing at all. If the contributor wants this transfer to be a gift, the tax applies. The gift tax applies to any type of property that is given as a gift.
Do you know what is considered a gift? The majority of individuals are unaware of the parameters that qualify it as a gift. A gift is any property or money given to another person without the expectation of receiving something in return. If you sell something for a lower price or give someone an interest-free loan, this is also considered a gift.
For Personal Income Tax purposes, the following items will be taxable:
- Immovable property or rights of occupation of immovable property granted without compensation to a legitimate son or daughter (but not an adopted child) in that calendar year, with a value exceeding THB 20 million;
- The gifts in the form of cash, shares, and other property, with the following exceptions:
- Gifts from an ancestor, descendant, or spouse that do not exceed THB 20 million in value for the current calendar year;
- Gifts received under moral responsibility or in a ceremony or on special occasions in line with established tradition from a person. However, the person should not be an ancestor, descendant, or spouse, with a value of less than THB 10 million in the calendar year; and
- Gifts received for religious, educational, and public expenditure.
A taxpayer can elect to pay a 5% tax on the taxable component of their income rather than including it in their net taxable income at the end of the year. Individuals and juristic persons are subject to the gift tax. In addition, it is imposed on non-Thai citizens who live in Thailand. According to Thailand Immigration Law, non-Thai citizens must be accepted as residents for Gift Tax imposition.
The Bottomline
Are you looking for a law firm that can assist you with the notion of gift tax? Are you having problems deciding what constitutes a gift? We can assist you with classification along with all services for taxation in Thailand at Konrad Legal. Impositions of taxes were there for Regular income a few years ago, but gifts were not. However, as of February 1, 2016, a new regulation went into effect. The tax was levied on gifts as well, according to this regulation.
You may have a similar dilemma in regard to Inheritance Tax as well. Konrad Legal provides a comprehensive variety of legal and tax planning services. Tax preparation is a complex and difficult undertaking that necessitates the assistance of professionals. Our professionals have extensive expertise and knowledge of both new and ancient legislation and the practice of taxation in Thailand. We guide you through the gift tax process and attempt to make it as simple as possible for you.
Simply mail us your query at [email protected] and a specialist of taxation in Thailand will be responding to you immediately.
