Guidelines for Handling the Issues Related to the Land and Building Taxes Imposed on the Housing Development Projects: A Case Study of Land and Houses Public Company Limited

Abstract

Land and building in the housing estate are subjected to the Land and Building tax. Although the Land and Building Tax Law clearly specifies the tax rates for the land and building those are the sale units as well as tax exemption for the land plots those have been specified as required facilities of the housing estate as prescribed by the Land Allocation Law, the tax payment information and tax rates of some types of the lands and buildings or areas in the housing estate are still unclear which creates uncertainty and confusion to the taxpayers. Hence, this study gathered the details of the land and building tax imposed on each property of the housing estate as well as the issues related to the land and building collection and causes of the issues in order to analyze and understand the right approaches to handle with the issues for the benefits of the housing estate developers.

            The study found that the unclear legislation has created different interpretation and determination made by the authorities, due to the lack of specific principle to rely on, which causes some confusion to the developer who is a taxpayer. The issue affects the budget planning of the developer by forcing the developer to unavoidably include the highest possible tax expenses in the budget planning and, consequently, increase the cost of the project. The study also found that, in fact, the law has very clear objective. Therefore, the correct understanding of the true intention of the law is necessary for the authorities responsible for tax collection. Hence, in order to create the correct understanding for the officers responsible for tax evaluation and the taxpayers, the writer recommends to specifically stipulate the tax details and tax rates imposed on the lands and buildings in the housing estate in the subordinate legislation. Moreover, the study also found that the increasing of land and building tax expenses significantly have negative effect the unsuccessful projects. Whereas the tax expenses directly impact the operation budgeting and, consequently, affect the potential in business operation of the developer. The writer recommends that the government should assist the unsuccessful housing estate by providing step-by-step tax discount as a tax relief measure, instead of 90% tax discount for the first 3 years after obtaining a Land Allocation License as well as having the tax discount rate and discount period to align with the size of the project. Moreover, the developers should have clear awareness and in-depth understanding in the markets they are going to develop the project in order to be able to create the projects those suit with the demand of such markets.