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Legal Update

New Government Land Value Appraisal For The Years 2008 - 2011

26 February 2007
Mayer Brown JSM Legal Update


The new government land value appraisal, used for calculating taxes and fees for registration of juristic acts and rights to land pursuant to the Land Code, applicable for the next 4 year period (2008-2011) as provided by law, will be adjusted based on marketable reference.

Full Update

Principally, the government land value appraisal ("Land Value Appraisal") is a basic government reference which the government authority (e.g. land official) uses to calculate taxes and fees for registration of juristic acts and rights to land (i.e. sale, purchase, lease, mortgage, etc.) pursuant to the Land Code.

The current Land Value Appraisal is determined by the Treasury Department.  In practice, the Land Department uses such Land Value Appraisal as reference for daily land registrations.

In the past, the Land Value Appraisal was determined by the Land Department but, due to the last bureaucratic reform policy, the Land Department assigned the determination thereof to the Treasury Department in 2002.

As provided by law, the Land Value Appraisal shall be revised every 4 years in order to adjust the same to be as close to marketable value and economic growth as possible.

The current Land Value Appraisal will be valid until the end of 2007, after which the new Land Appraisal value for the years 2008-2011 will replace the same.

Land in each province has different appraisal value determined by various factors i.e. location, proximity to public road or seashore, economic growth etc. In addition, the Land Value Appraisal is classified on both a plot basis and block zone basis.

At present, from public information, the whole areas of land in Bangkok are classified on a plot basis.  For the remaining provinces, the Land Value is classified on both a plot basis and block zone basis depending on the various factors as stated above.

Comments And Observations

It is observed that any changes to the Land Value Appraisal affect real estate transactions directly.

For example, for a sale transaction there are 3 basic kinds of government expenses imposed by the Land Department on the registration as follows:

(1)  Registration fee of 2% of the land appraisal value;
(2)  Stamp duty of 0.5% or specific business tax of 3.3%, as the case maybe, of the land appraisal value or the total purchase price, whichever is higher; and
(3)  Individual withholding income tax calculated based on the land appraisal value or corporate withholding income tax of 1%, as the case may be, of the land appraisal value or the total purchase price, whichever is higher,

(collectively the "Government Expenses").

If the new Land Value is adjusted to increase based on marketable value, it is expected that the Government Expenses will increase.  If it is deemed to be a cost for real estate investment, the purchase price of land will increase as well.

On the other hand, it is further observed that the new Land Value Appraisal may help lift the value of land investment projects.  Real estate investors may use it as reference to determine the purchase price of land.  It will create a positive affect on land investment projects since it reflects the current economic growth in the area where the project is situated.

In addition, the adjustment of the official Land Value Appraisal will stimulate all parties to complete the transfer of land by this year, in order to avoid any additional payment of tax, fee and stamp duty resulting from such adjustment.

For further information, please contact:

Name: Anurag Ramanat
Phone: +66 2 677 7577 x162
Fax: +66 2 677 7599

Name: Theerapon Narmponkrang
Phone: +66 2 677 7555 x188
Fax: +66 2 677 7599

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