Tax Reform in Thailand: Key Proposals and Their Potential Influence on Real Estate

Finance Minister Pichai Chunhavanitchir presented plans to change the country’s tax system. These initiatives are currently under discussion.

Key Ideas for Reform:

1. Reduction of Corporate Tax:
   • A proposal to lower the rate from 20% to 15%.
2. Reduction of Personal Income Tax (PIT):
   • A consideration is to decrease the maximum rate from 35% to 15% to attract skilled professionals and talents from around the world.
3. Increase in VAT:
   • The current reduced rate is 7%, one of the lowest in the world.
   • A possible increase to 10% (the official basic rate) or more to boost budget revenues following international standards (15–25%).

The Minister emphasized that the proposals require a comprehensive analysis of their impact on the economy and the population. Decisions will only be made after a thorough examination of all advantages and disadvantages.

Changes in Social Security:

Alongside the tax reform, changes to the social insurance system are also under consideration:

• Current System:
  • The salary ceiling for calculating contributions to the Social Security Fund is 15,000 baht.
  • The contribution rate is 5%, with a maximum of 750 baht per month.
• Planned Changes:
  • 2026: Increase the ceiling to 17,500 baht, with a maximum contribution of 875 baht.
  • 2029: Increase the ceiling to 20,000 baht, with a maximum contribution of 1,000 baht.
  • 2032: Increase the ceiling to 23,000 baht, with a maximum contribution of 1,150 baht.

These changes will allow for an increase in social benefits, including pensions, maternity benefits, disability benefits, and unemployment benefits.

Key potential influences on the Thai real estate market

1. Increased Investment Appeal: A reduction in corporate tax rates could attract more businesses and investors to Thailand, potentially leading to increased demand for commercial and residential properties. As businesses grow, their employees might also seek housing, driving up prices and development projects in key areas.
2. Enhanced Consumer Spending Power: Lowering personal income tax rates may increase disposable income for individuals, allowing more people to afford housing or invest in real estate. This could stimulate demand across various segments of the real estate market, including luxury, mid-range, and affordable housing.
3. Improved Social Security Benefits: Changes to the social security system that enhance benefits such as pensions and unemployment support could increase consumer confidence. As residents feel more secure financially, they may be more inclined to invest in homeownership or make improvements to existing properties.
4. Increased Construction Activity: With the potential for increased VAT and a boost in public services from enhanced tax revenues, there may be more funding available for infrastructure projects. Improved infrastructure can lead to higher property values and encourage new residential and commercial development in previously underdeveloped areas.
5. Attraction of Skilled Professionals: If the proposed personal income tax cuts effectively attract skilled professionals from around the world, this influx could lead to a higher demand for rental properties and luxury homes in urban centers. The resulting competition in the housing market often results in rising property prices and influences the overall market dynamics.

These influences highlight how changes in tax policy and social security can interconnect with the real estate sector, shaping trends and opportunities within the market in Thailand. Interested in buying real estate in Thailand? Contact CondoDee Realty for a free consultation Mobile/WhatsApp: +66621899659 Email: win@condodee.com Web: www.condodee.com