The Tax That Wasn’t: ASEAN and Inherited Wealth

Southeast Asia holds some of the most concentrated private wealth on earth. In Thailand, the richest tenth of the population controls around 65% of the country’s wealth, and roughly four-fifths of titled land sits with the wealthiest 5%.[1][2] Across Asia more broadly, billionaire fortunes have more than doubled over the past decade.[3] And yet the one fiscal instrument built specifically to reach hereditary wealth — the inheritance or estate tax — is the one most ASEAN governments have abolished, never adopted, or written so narrowly that it collects almost nothing. The absence is not an oversight. Across five very different countries, it is a consistent policy choice.

Contents

• The shape of the absence
• What a working inheritance tax looks like
• The same objections, in every capital
• Wealth, capture, and democracy
• Sources

The shape of the absence

Two of the region’s larger economies tax inherited wealth at zero. Malaysia ran an estate duty from 1941 until Mahathir Mohamad’s government scrapped it on 1 November 1991. Over its half-century of life it raised between RM24 million and RM40 million a year — somewhere between 0.04% and 0.5% of total tax collection, a return so thin it barely justified the cost of administering it.[4] That history is the standard argument against bringing it back, and the proposal returns almost every budget season. Consumer groups and opposition figures pitch reintroduction as redistributive justice; each time, warnings about scaring off foreign investment and burdening middle-class families and small businesses bury it.[5] Indonesia, the region’s largest economy, never had an inheritance tax at all. Inherited assets are explicitly excluded from income tax; the only cost on most estates is BPHTB, a regional duty on land and building transfers capped at 5%, with a higher tax-free threshold for inheritances and, in many districts, a 50% discount that drops the effective rate to around 2.5%.[6] The concept is so marginal to public life that when a former child star was charged BPHTB on her late father’s house in 2025, the resulting outcry treated it as a shocking new “inheritance tax” the tax authority then had to explain away.[7]

The three countries that do tax inheritance have each hollowed it out in their own way. Vietnam has no standalone inheritance tax; it treats inheritance as personal income taxed at a flat 10%, but only on value above roughly VND 10 million — about US$400 — and, decisively, it exempts real-estate transfers between spouses, parents and children, grandparents and grandchildren, and siblings.[8] The transfers that actually build family dynasties are precisely the ones carved out. The Philippines once ran a progressive estate tax climbing from 5% to 20%; the 2018 TRAIN law flattened it to a single 6% rate.[9] Compliance has been poor enough that the government has resorted to repeated estate-tax amnesties to coax heirs into settling at all.[10] Thailand is the outlier, and the most revealing case. Its 2015 Inheritance Tax Act was the region’s one genuinely new progressive levy — 5% for ascendants and descendants, 10% for everyone else, on estates above 100 million baht (about US$3 million).[11] In practice it collects between 0.4 and 1.5 billion baht a year against a national tax take north of 2 trillion: a rounding error.[12] The high threshold reaches almost no one, and a parallel gift-tax channel lets parents pass up to 20 million baht a year to children tax-free.[13] Even the World Bank notes the rate is low against regional peers like South Korea, where the top rate hits 50%.[14]

Jurisdiction	Tax on inherited wealth	Headline rate	Practical bite
Malaysia	Abolished 1991	—	None
Indonesia	None (only a property-transfer duty)	BPHTB up to 5%, often ~2.5%	Minimal
Vietnam	Taxed as personal income	10% above ~US$400	Low; close-family property transfers exempt
Philippines	Estate tax	Flat 6% (was 5–20% pre-2018)	Low; weak compliance, repeated amnesties
Thailand	Inheritance tax (2015)	5% / 10% above 100m baht	Symbolic; ~0.4–1.5bn baht a year
Germany	Inheritance tax	7–50% by relationship and value	Real, but heavy business-asset relief
France	Succession tax	5–45% direct line; up to 60% others	Real; ~45% of estates pay something

What a working inheritance tax looks like

Germany and France are useful here not as models to copy but as systems built to collect and fought over in public. Germany taxes heirs progressively from 7% to 50%, scaled by closeness of relationship and size of the transfer, with allowances of €400,000 for children and €500,000 for spouses that have sat unchanged since 2009 — and a running political fight, the SPD and Greens pushing to tax large fortunes harder while the conservatives push for higher allowances.[15] France runs 5% to 45% in the direct line and up to 60% for unrelated heirs, and roughly 45% of estates end up paying something.[17] Neither is a clean redistributive machine. Germany can exempt up to 100% of qualifying business assets if heirs keep the firm and its payroll running, which is how a great deal of dynastic industrial wealth passes nearly untaxed.[16] France’s allowances reset every fifteen years, rewarding families who plan gifts early. The point is not that these taxes are punishing. It is that they are designed to function and are argued about as live questions of fairness and revenue — where the ASEAN versions are mostly designed to look like they exist.

What keeps these systems alive politically is partly an argument that Southeast Asia’s debates rarely make. The case European governments most often advance for taxing inheritance is not that it raises much money — in most countries it raises little — but that a large inherited fortune is, from the heir’s side, an unearned windfall. The wealth was built on public goods the rest of society paid for: the roads and ports that moved the products, the schools that trained the staff, the courts that enforced the contracts, the labour force itself. The person who built it drew on all of that; the children who receive it did nothing to earn it. On that logic, taxing a slice of the transfer is less a penalty than a settling of accounts, and one of the few instruments that slows the hardening of wealth into dynasty. Reviewing its members in 2021, the OECD found exactly this cluster — redistribution, equality of opportunity, and the taxing of unearned windfalls — to be the most common reason member states gave for keeping the tax, well ahead of revenue.[22] The standard rebuttal is that such taxes raise too little to matter and mostly punish thrift and family firms — which is, almost word for word, the objection that has kept inheritance tax off the table across most of ASEAN.

The same objections, in every capital

What stands out across the region is how interchangeable the arguments are, regardless of how different the political systems behind them. Whenever a tax on inherited wealth is floated, the same objections surface: it will frighten off foreign investment, it will crush family-run SMEs and the middle class, it punishes thrift, it is double taxation. Malaysia’s recurring debate is the cleanest specimen — every reintroduction proposal runs into the same wall of investment-and-entrepreneurship warnings and dies there. Thailand passed its tax but set the threshold and gift exemptions high enough to neutralise it. The Philippines kept the tax on the books but flattened the rate and then repeatedly forgave non-payment. The common feature is that the people best positioned to shape how these taxes are designed are, more or less, the people the taxes would fall on: the owners of the conglomerate fortunes and the concentrated landholdings. A tax that does not quite work is the predictable output of that arrangement.

Wealth, capture, and democracy

This is where the absence stops being a technical curiosity. Concentrated wealth does not stay merely economic. Scholars of oligarchy describe a consistent mechanism: the very wealthy convert money into political influence — through lobbying, campaign funding, and direct office-holding — largely in order to defend that wealth, including from taxation.[18] Economic history runs the same direction. Where land and capital are tightly held, elites have both the means and the motive to block reforms that would loosen their grip, from schooling to tax.[19]

Southeast Asia supplies the illustrations. In the Philippines, around 80% of provincial governors now belong to political dynasties, up from 57% in 2004, and dynastic control of the House of Representatives has climbed to roughly two-thirds.[20] The country’s richest man, Manuel Villar, is a former Senate president whose family holds elected office — wealth and power inherited together, in the same household.[21] Thailand pairs some of the most concentrated land and wealth in Asia with one of the region’s most coup-prone modern histories, a polity where economic hierarchy and political instability have long reinforced each other. Inheritance taxation is one of the few standing instruments that acts directly on hereditary advantage, slowing the compounding of wealth into entrenched power from one generation to the next.

None of which makes an inheritance tax a cure. Germany and France tax estates heavily and still have dynastic fortunes and elite capture of their own; a badly built tax mostly generates avoidance and billable hours for lawyers. The honest claim is narrower. A society worried about the link between concentrated wealth and a captured politics has, in inheritance tax, an obvious lever — and most of ASEAN has chosen either not to pull it or to pull it so gently that nothing moves.

That choice is the story. The missing tax is usually explained as a feature of developing economies that cannot afford to deter capital. But the pattern holds across a middle-income country with a brand-new statute, a high-growth manufacturing state, the region’s largest economy, and two countries that actively repealed or flattened what they once had. The common thread is not poverty. It is a settled preference, shared by governments of very different stripes, to leave inherited wealth where it lands. In a region this unequal, deciding that the one tax aimed squarely at inherited advantage is the one not worth collecting is not a neutral act. It is a quiet answer to the question of whose wealth the state is there to protect.

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Sources

1. Prachatai English / World Inequality Lab, on Thailand’s top 10% holding about 65% of wealth (2025).
2. UN Thailand and Laovakul (Thammasat), on roughly 80% of titled land held by the richest 5%; PLOS One survey of Thai wealth concentration.
3. Oxfam, “An Unequal Future”, on the growth of Asian billionaire wealth over 2015–2025.
4. The Star, “Think rationally about inheritance tax”, on Malaysia’s estate duty (1941–1991) and its low revenue yield.
5. Free Malaysia Today and The Star, on recurring reintroduction proposals (Budget 2024/2025) and the objections that defeat them.
6. PwC Worldwide Tax Summaries (Indonesia), on the absence of inheritance/estate/gift tax and the BPHTB land-transfer duty and thresholds.
7. ILA Global Consulting and Adyasta, on the BPHTB inheritance discount and the 2025 public episode over a misunderstood “inheritance tax.”
8. ANT Lawyers and Global Property Guide, on Vietnam’s 10% PIT on inheritance, the ~VND 10 million threshold, and close-family real-estate exemptions.
9. Respicio & Co. and related Philippine tax commentary, on the TRAIN law flattening estate tax from 5–20% to a flat 6% in 2018.
10. PwC Philippines, on the estate tax amnesty and its extensions.
11. PwC Worldwide Tax Summaries (Thailand), on the Inheritance Tax Act 2015, rates, and the 100 million baht threshold.
12. Lexology / PDLegal and Bangkok Post, on annual inheritance-tax collections against Thailand’s overall tax base.
13. HSBC Expat Thailand tax guide, on the gift-tax exemption of up to 20 million baht a year to children.
14. World Bank, Thailand Public Revenue and Spending Assessment, on the inheritance-tax rate relative to international benchmarks.
15. PwC Worldwide Tax Summaries (Germany) and BUSE, on Germany’s 7–50% rates, the €400,000/€500,000 allowances unchanged since 2009, and the reform debate.
16. TaxRep and German tax advisory sources, on relief of up to 100% for qualifying business assets.
17. French Tax Online and Advocate Abroad, on France’s 5–45% direct-line rates, up to 60% for others, and the share of estates that pay.
18. Page and Winters, “Oligarchy in the United States?”, on the mechanisms by which concentrated wealth shapes policy to protect itself.
19. Research on concentration of land ownership (incl. Galor), on landed elites blocking redistributive and educational reform.
20. Data on political families of the Philippines, on the rising dynastic share of governors and House seats.
21. Forbes-based ranking of Southeast Asian net worth, on Manuel Villar; his role as a former Senate president is a matter of public record.
22. OECD (2021), Inheritance Taxation in OECD Countries, Tax Policy Studies No. 28, on equality of opportunity, the taxing of unearned windfalls, and preventing the build-up of dynastic wealth — found to be the most common rationale member states cite for keeping the tax.