KBank Private Banking (KPB), Thailand's first family wealth management advisory service provider, recently hosted the Family Wealth Planning Outlook 2023 seminar, entitled “Be Prepared for Tax and Regulatory Changes – Impacts on Your Family Wealth". KPB indicated that the exchange of international tax-related information and the land and building tax in 2023 will mark a turning point for family wealth management. Customers are advised to devise a plan for family wealth management in order to be well-prepared for regulatory changes and potential risks incurred from higher tax burdens.
Mr. Perapat Reinprayoon, Managing Director, Wealth Planning and Non Capital Market Head, Private Banking Group of KBank, said, “Thailand will implement the policy for exchanging tax-related information with other jurisdictions under the Common Reporting Standard (CRS) in the third quarter of 2023. In September, the Revenue Department will begin to exchange related information with tax authorities in other countries. Subsequently, exchange of information between tax authorities will take place every June. The new system – which will involve automatic exchange of information every year readily prompted high net worth individual customers to show increased interest in family wealth planning.
The Common Reporting Standard (CRS) under the Emergency Decree on Exchange of Information in Compliance with International Agreements on Taxation B.E. 2566 (2023) has established conditions for reporting as follows:
Reporting persons include: 1. Financial institutions under the Financial Institution Business Act; 2. Securities companies per the securities and exchange law; 3. State-owned financial institutions established by specific laws; 4. Persons who have received the life insurance business permit per the life insurance law; 5. Derivatives business operators under the futures contract law; 6. Trustees of the parties under the escrow law; 7. Credit card business operators per the Declaration of the Revolutionary Council; and 8. Trustees under the trust for transactions in the capital market law.
Reportable accounts include: 1. Deposit account; 2. Custodian account; 3. Investment account; 4. Life insurance policy.
Reportable information includes: 1. Name-surname, address and tax ID number; 2. Date of birth and place of birth (for individuals); 3. Account number; 4. Account balance or cash value in the insurance policy, interest received or other benefits / balance or account value as of calendar year-end.
"KBank Private Banking views that the enforcement of CRS, whether it is the exchange of tax information between the Thai Revenue Department and the U.S. Government (FATCA) or other countries, is unlikely to affect investment abroad, but it is necessary to focus on holistic tax planning, including personal and corporate income taxes for families having businesses or trusts abroad, including taxes on their inheritances. In the future, KBank Private Banking expects that tax collection will gradually become more stringent due to the digital transactions while actual cash transactions decline. Additionally, future taxation will be based on AI to improve tax collection and allow governments to gain easier access to financial sources of taxpayers. KBank Private Banking, therefore, is urging high net worth individual (HNWI) clients to pay more attention to family wealth planning and brace for the tax risk in the future," Mr. Perapat said.
Mrs. Korakoch Atthasakulchai, Chief - Non Capital Market Solution, Private Banking Group of KBank, said that the government has collected land and building tax for four years, but land owners are still confused due to yearly regulatory changes. In 2023, the tax calculation will be affected by the new assessed land prices for 2023-2026 set by the Treasury Department. Based on this, land where appraisal prices remain unchanged equals to 50 percent, while for 39 percent of land the appraisal prices have increased, and for 11 percent the prices have decreased. Land appraisal prices that have risen substantially are for land in areas where appraisal prices and market prices are significantly different.
“KBank Private Banking views that the land tax tends to increase in line with higher tax base and tax rates, while tax reduction for land use has decreased. Thus, KBank Private Banking recommends that rather than leaving land idle, land owners consider land use for: 1) commercial development to generate income; 2) agricultural purposes to enjoy a lower tax rate; and 3) public benefit, through collaboration with state agencies, to get a tax exemption. In addition, KBank Private Banking also provides advisory services, and arranges land loans for investment as offered via KBank for opportunities to earn returns. Investments recommended by KBank Private Banking are expected to generate higher and sufficient returns for payments of interest burden and land and building tax. However, for real estate investment, land owners and property developers need to consider several factors while being adaptive to the market. It is not different from investment in other assets that offer attractive returns while posing potential risks. Investors are advised to review their present circumstances or consult with investment experts in order to create growth of existing assets, while not falling into an investment trap", Mrs. Korakoch concluded.
For more information, please visit the KBank Private Banking website at https://kbank.co/3ETkS5v