NCPO has tentatively agreed to impose inheritance tax in Thailand
There is currently no inheritance tax in Thailand but recent news is that National Council for Peace and Order (NCPO) has tentatively agreed in principle to impose an inheritance tax to reduce wealth inequities. It has been reported that the Ministry of Finance is looking at a graduated inheritance tax between 5 person and 30 person on the value of the estate. The estate is deemed to include residential property, land, vehicles, equities and bonds, and cash. In addition, the Ministry of Finance is considering a gift tax in the same amount and tax rate. It is important to be aware of Thailand’s inheritance law and its effect on foreign nationals.
See also the drafted law by the Revenue Department for the new inheritance tax in Thailand
What is the current inheritance law?
Under current Thai law, there is no inheritance or gift tax but a person may who receives cash or property as a result of a death may be liable to pay income tax. The beneficiary is not liable for income tax for most movable property. However, the recipient of immovable property such as buildings and land in non-exempted areas will have to pay personal income tax when they sell the property.
Under current Thai inheritance laws, when someone dies without a will, his estate is transferred through the list of statutory heirs. There are six classes of statutory heirs beginning with decedent’s children and ending with aunts and uncles. Spouses are subject to a separate provision of the Estate Planning section of the Thai Civil and Commercial Code.
So what happens if a foreigner has assets in Thailand but lives overseas and has no will?
Under Thai Conflict of Laws, the courts will generally look at where the event giving claim to the action took place. So if the foreigner lived mostly overseas and died overseas, Thai courts will generally defer to the foreign court for jurisdiction and foreign statutes. However if the foreign national resided mostly in Thailand and has strong ties to Thailand, a Thai court may accept jurisdiction over the estate.
What happens if a foreign national inherits property in Thailand?
If a foreign national inherits a condo in Thailand but does not have a long term stay visa in Thailand, the foreign national has to sell the condo. Under section 19/7 of the Condominium Act of 1979, the foreign national has to dispose of the condominium within one year of ownership of the condo. For those who have a right to reside in Thailand, they have to sell the condo within one year of the end of their authorized stay.
If a foreign national receives land as part of a specific gift in a will, that provision is automatically void as against Thai law. If a foreign national receives property as part of a statutory distributions such as a foreign spouse of a Thai national, the foreign national has to sell the land within one year of accepting ownership of the property.
The best solution to ensuring that your family and financial requirements are met is through estate planning. A will tells the world exactly how you want your property is distributed. Trust will protect your property from estate and gift taxes. With the coming changes to the Thai tax laws and property rules, it is imperative to seek the counsel of an experience Thai Estate Planning Attorney. We can help you ensure that your love ones do not have deal with distribution problems and paying bills when you pass away.
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Siam Legal is an international law firm with experienced lawyers, attorneys, and solicitors both in Thailand law and international law. This Thailand law firm offers comprehensive legal services in Thailand to both local and foreign clients for Litigation such as civil & criminal cases, labor disputes, commercial cases, divorce, adoption, extradition, fraud, and drug cases. Other legal expertise of the law firm varied in cases involving corporate law such as company registration & Thailand BOI, family law, property law, and private investigation.