Haris & Associates Phuket Thailand Legal Blog

This government initiative will pump up housing transfers

The cabinet approved three tax packages yesterday aiming at reviving the flagging property sector, stimulating start-ups and rebuilding investor confidence.

Finance Minister Apisak Tantivorawong said the property stimulus covered both financial and fiscal measures such as cuts in the housing transfer and mortgage fees for homes priced below 3 million baht and tax deductions.

In order to facilitate low- and middle-income earners accessing mortgage funding, state-owned GH Bank will now be allowed to extend loans equalling half of applicants’ salaries, up from 30%, in a scheme worth 10 billion baht.

Applicants must apply within a year from next Monday.

Term loans should not exceed 30 years, with prospective applicants primarily those earning 30,000 baht a month or less.

Mr Apisak said the fiscal measures included cuts in the housing transfer and mortgage fees to 0.01% for six months for homes priced 3 million baht or less, down from 2% and 1%, respectively.

The reductions will take effect this month for both new and second-hand homes.

The cabinet also approved a proposal to allow first-time buyers purchasing a home worth 3 million baht or less by Dec 31, 2016 to deduct 20% of the value of the homes from their annual taxable personal income. The deduction will be divided in equal amounts over a five-year period.

Deputy Prime Minister Somkid Jatustipitak said the cabinet approved exemption from corporate income tax and dividend tax for 10 years for venture capital to promote start-ups.

It also decided to keep the corporate income tax at 20% permanently to instil confidence among investors, with Mr Somkid saying the move will maintain Thailand’s competitiveness.

Malaysia and China charge a 25% rate for corporate income tax, Vietnam 22% and Singapore 17%.

Suphin Mechuchep, managing director of property consultancy JLL Thailand, welcomed the measures, saying for the short term they would benefit Thailand’s housing sector, particularly Bangkok’s softening condominium market.

“Though the proposed measures are unlikely to boost new demand in the residential market, it should help incentivise homebuyers to accelerate the home transfer process,” she said, referring to completed housing estates and condos with backlogged units ready for transfer as well as residential projects close to completion.

“The policies represent a safe step towards helping the residential sector. Increased transfer activity should build developers’ financial strength, enabling new investment and helping Thai growth,” she said.

Source: http://www.bangkokpost.com/business/finance/728640/property-measures-pass