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The Inheritance Tax Act is for those who are dealing with an Estate. The winding up of an estate is explained elsewhere on this website. In this part of the law it deals with the taxation on a deceased estate. When an expat dies in Thailand, be this in Bangkok, Pattaya or Isaan you will need to know the law. The first part covers inheritance, the filing of estate duties as well as assessing the taxes. There are also appeals as well as penalties and surcharges. Likewise also see the article on probate lawyers.
You can also find a number of other articles that we wrote on the topic. These are some of the topics which we have written about. You will note that we have covered the Thai Will and Testament as well as the Drafting a Will and the Thai living will and the article on the Last Will in Thailand which covers the rest.
You will note that in 2015 the Revenue Department became responsible for collecting taxes under this Act.
Minor children who inherit money from an estate the legal guardian or caretake or parent has to pay this for them. Minor here is anyone who is legally a minor as well as those who are mentally incapable, or partially incapable.
If a person who has to follow a deadline for filing tax returns, making appeals, or paying taxes can’t do so because of an important reason or because they’re not in Thailand, the Director-General can allow more time. Likewise if there are many people who can’t meet their deadlines. This due to a general problem. Then the Director-General can announce a time extension until the issue is resolved. When an extension is given. You will note that this then becomes the new official deadline under this law. Likewise the rules for extending deadlines will be set by the Minister and published in the Government Gazette.
Any documents that need to be sent to someone under this law should be delivered by registered mail (so it can be tracked) or handed over by a revenue official at the person’s home, office, or place of residence during the daytime or their office hours. Likewise should the person not be available. Then the documents can be signed for by another adult at the house or office. Additionally should the documents can’t be delivered, or if the person has left Thailand.
Likewise, the documents can be posted at a noticeable spot at their home or office. (Note that this similar to the legal concept as the domicilium citandi et executandi. This, or a brief notice can be published in a local newspaper. These documents can also be delivered by other methods. These methods have to be approved by the Director-General. Once these steps are followed. Then, the documents are considered received.
Under this section, the land official registers property rights related to real estate inherited by someone. Likewise, they must then also notify the Revenue Department according to the rules set by the Cabinet.
People who have received an inheritance and need to pay taxes under this law include:
• Thai citizens.
• Non-Thai citizens who have a home in Thailand according to immigration laws.
• Non-Thai citizens who inherit property that is located in Thailand.
Likewise should a registered company or organization receive an inheritance. If it is considered to have Thai nationality if it is registered in Thailand. This set up by Thai laws (See: business registration in Thailand). This or has more than half of its shares owned by Thai people or has more than half of its management team made up of Thai citizens.
Additionally for the third group (non-Thai citizens inheriting property in Thailand). In this case, if the property was in Thailand when the person died. Then it is considered to be in Thailand even if it has changed form, and the inheritor still has to pay taxes.
The government may reduce or exempt taxes for people covered under agreements to avoid double taxation between Thailand and other countries.
Should someone who inherits more than 100 million Baht from one person (either all at once or over several times), Likewise they must pay taxes on the amount over 100 million Baht.
The value of the inheritance means all the assets received. This minus any debts taken on from the inheritance. This value is reviewed every five years, taking into account inflation or changes in the cost of living, and new values will be set by official government orders.
The rule in Section 12 (taxes on amounts over 100 million Baht) does not apply to:
• People inheriting from someone who wanted the inheritance to be used for religious, educational, or public benefit purposes.
• Government agencies and organizations whose purpose is religious, educational, or for public benefit.
• People or international organizations that have agreements with Thailand or the United Nations, or other international laws or agreements, as listed in a specific government regulation.
Inheritances that are subject to tax include the following assets:
• Real estate (like land and buildings).
• Stocks and other securities under securities and exchange laws.
• Bank deposits or other similar types of money that can be withdrawn
• Registered vehicles (like cars or motorcycles).
• Financial assets specified by government orders.
For Thai citizens and non-Thai residents (Sections 11(1) and 11(2)), taxes are paid on assets located both in and outside Thailand. For non-Thai citizens who inherit property in Thailand (Section 11(3)), taxes are paid only on assets located in Thailand. Details about assets in Thailand will be defined by specific regulations.
The value of inherited assets is based on their price or worth on the day they are inherited. Likewise also see the article on winding up an estate in Thailand. These assets are calculated as follows:
• If we look at real estate. Then the capital value is appraised for registration fees under the Land Code. This will be minus any third-party rights.
• Likewise for stocks listed on the Stock Exchange of Thailand. Then the price at the closing time of the stock exchange is used. This on the inheritance date will be used.
• In addition for other cases. There will be a method specified in the regulations.
• Additionally if there are foreign currency. Then this will need to be converted to Thai Baht. Likewise the exchange rate will be provided by the Revenue Department.
Importantly, people who need to pay tax will do so at a rate. There is 10% on the part of the inheritance that exceeds 100 million Baht. This as per Section 12 of the Act. However, if the person inheriting is a parent or child of the deceased, they will pay tax at a rate of 5%.
You will need to settle the inheritance tax within 150 days after receiving the inheritance. The tax forms will need to be completed.
Once a tax official receives your tax return, they will send it to an assessment official. The assessment official has one year to complete the tax assessment from the date you file the tax return. If you owe more tax and pay it within the allowed time, you won’t face any penalties unless you left something out of the tax return or provided false information.
The Director-General can extend the one-year assessment period for a good reason, but the total time for assessment cannot exceed three years.
If the person who owes the taxes dies before the 150-day deadline mentioned in Section 17. Then, their estate administrator must settle their taxes. This along with a surcharge, within 150 days of being appointed. However, no penalty will be charged. Likewise the surcharge is calculated from the day after the 150-day deadline until the tax is fully paid.
Should the person die after the deadline without filing the tax return, the administrator must file it and pay the tax within 150 days of appointment. Likewise, including a penalty equal to the amount of tax due. If the tax return is filed late, the penalty is doubled. Likewise you will note that the surcharge is only calculated from the last day of the deadline until it is paid in full. Lastly the surcharge amount cannot exceed the amount of tax owed.
Lastly, any heir entitled to the inheritance. They can also handle these tasks within the given timeframe.
If no administrator is appointed within 180 days after someone who owes tax dies. Then the heirs entitled to the inheritance must take care of the tax return and payment duties, just like in Section 18. The heir has 150 days to do this after the 180-day period ends.
If there are multiple heirs, they must choose one among them to handle the tax duties. If they can’t agree, any heir can ask the court to appoint an administrator. If no one files a tax return or pays the tax after the 180 days plus 150 days, a tax official can assess the tax owed.
If you don’t file a tax return within the required time, a tax official can assess the tax you owe. This assessment can be done within ten years from the last day you were supposed to file the tax return.
For Sections 17-20 and 24, a tax official can summon you, your representative, or others involved to provide information and submit documents or other evidence. You’ll be given at least seven days from receiving the summons to comply.
After a tax official assesses your taxes, they will notify you in writing. You must pay the tax, along with any penalties or surcharges, within 30 days of receiving the notification. You can appeal the tax assessment if you disagree with it.
You can pay your taxes in installments over a period of up to five years, according to rules set in Royal Decrees. If you pay the full amount according to these rules, you won’t have to pay a surcharge. However, if you take more than two years to pay, a partial surcharge might be applied.
If you paid taxes that you didn’t owe or paid more than necessary, you can get a refund. You must request the refund with the necessary documents within five years of fully paying the tax. You can do this at any Area Revenue Branch Office.
A tax official will review your request within 150 days and inform you within 15 days of completing the review. If a refund is due, the Revenue Department will pay it within 30 days of the review completion. No interest can be claimed on the refunded tax.
If you don’t pay the taxes you owe on time, the unpaid amount is considered tax arrears. The Director-General has the authority to seize, attach, and sell your assets at auction to recover the tax owed, without needing a court order. This authority can be delegated to other revenue officials.
The auction proceeds will first cover any fees and expenses from the seizure and sale, then the tax arrears. Any leftover money will be returned to the asset owner.
For this process, authorized officials can summon you or others to provide information, documents, or other evidence needed to collect the tax arrears. A minimum of seven days must be provided for compliance with the summons or order.
If you disagree with the tax assessment, you can appeal the decision. You must file your appeal with the Commission of Appeal within 30 days of getting the assessment notification. The appeal should be submitted in the form and location specified by the Director-General and announced in the Government Gazette.
The Commission of Appeal is made up of:
• The Director-General of the Revenue Department or their representative, who acts as Chairperson.
• A representative from the Office of the Attorney General.
• A representative from the Department of Provincial Administration.
The Commission will review and make a decision on your appeal within 180 days of receiving it. This period can be extended by up to 90 days with the Director-General’s approval. If the Commission does not reach a decision within this time frame, you can take your case to the Tax Court. You must file the lawsuit within 180 days of the end of this period.
Once the Commission makes a decision, they will inform you in writing within 15 days. If you’re not happy with the Commission’s decision, you can take your case to the Tax Court within 180 days from when you receive the decision.
Filing an appeal doesn’t stop you from having to pay the tax, unless the Director-General allows you to wait for the appeal decision. In this case, you must pay the tax within 30 days after receiving the appeal decision or final judgment.
If the appeal decision says you owe more tax, you must pay the additional amount within the same 30-day period. If the appeal decision or final judgment reduces the amount of tax you owe or says you don’t owe any tax, the Revenue Department will refund the overpaid amount within 30 days of the decision or judgment.
The Chairperson of the Commission of Appeal has the same authority as an assessment official when it comes to making decisions during the appeal process.
Chapter V: Penalties and Surcharges
If you are responsible for paying tax and you don’t follow the rules, you might face penalties. Here’s how penalties work:
Missing the Deadline: If you don’t file your tax return on time, you’ll be penalized an amount equal to the tax you owe.
Incomplete or False Returns: If you submit a tax return that’s incomplete or contains false information, leading to less tax being paid than required, you’ll be penalized an amount equal to half of the extra tax you should have paid.
The DG, with the Minister’s approval. He can decide to reduce or remove any penalties. This will be done according to rules and conditions published in the Government Gazette. Likewise these rules will explain when and why penalties might be reduced or waived. This taking into account whether you acted in good faith and had a genuine need for the reduction.
If you don’t pay your tax in full by the deadline, you’ll be charged an extra fee (surcharge) of 1.5% per month or part of a month on the unpaid amount, in addition to the tax you owe.
Likewise should you be granted extra time to pay your tax and you pay it within this extended period. The surcharge will then be reduced to 0.75% per month or part of a month.
You will note that the surcharge is calculated from the day after the deadline for filing your tax return until you pay the tax. Likewise, note that the total surcharge cannot be more than the amount of tax you owe.
Note that the penalties as well as the surcharges are considered part of the tax you owe.
If you don’t file a tax return as required by Section 17 and don’t have a valid reason for the delay, you could face a fine of up to 500,000 Baht.
If you ignore a summons or order, or fail to answer questions from an assessment official (under Section 21), the Chairperson of the Commission of Appeal (under Section 28), or an authorized person (under Section 25), you might face:
– Up to one month in prison, or
– A fine up to 20,000 Baht, or
– Both prison and a fine.
Under this Section should you destroy, remove, even hide, or transfer property that has been seized or attached under Section 25, you could face the following penalties:
• – You can get up to two years in prison, or
• – You will receive a fine up to 400,000 Baht, or
• – Both the prison sentence and a fine.
Likewise should the offender be a company. Then the managing director, manager, or representative involved in the act can also face the same penalties.
If an official who is supposed to execute this Act discloses confidential information about a taxpayer or related persons without proper authority, they could face:
• – Up to one year in prison, or
• – A fine up to 200,000 Baht, or
• – Both prison and a fine.
This does not apply if the information is shared with assessment officials under the Revenue Code for their duties.
If you:
• 1. Knowingly provide false information, statements, or evidence to evade tax,
• 2. Use false statements, fraud, or deceit to evade tax,
• 3. Help or encourage someone else to commit the above acts,
You could face:
– Up to one year in prison, or
– A fine up to 200,000 Baht, or
– Both prison and a fine.
The Director-General can settle offenses under Sections 33, 34, and 37. If you pay the fine within the period specified, you won’t face further prosecution for that offense.
If the Director-General decides not to settle or if you don’t agree to the settlement or fail to pay the fine on time, prosecution will proceed, and other settlements under different laws won’t be possible.
