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Thai gov’t mulling tax incentives for long-term equity investments

Thai gov’t mulling tax incentives for long-term equity investments

The Thai Ministry of Finance was set to decide on Monday on tax incentives for long-term equity investment.

Ministry officials were set to meet with representatives of the Revenue Department and Securities and Exchange Commission (SEC) to resolve whether to renew incentives for investors in long-term equity funds (LTFs), given that tax deductions under the scheme will cease at the end of the year.

“The Revenue Department and SEC have different ideas about how to promote long-term investment,” an informed source said on condition of anonymity.

The SEC wants to promote more investment in the Stock Exchange of Thailand (SET), while the Revenue Department wants to promote investments extending least 10 years, the source said.

Investors in LTFs are currently required to stay in for at least five years, but the department regards the term as too brief.

Minister of Finance Uttama Savanayana has asked the Fiscal Policy Office to present options, said the source, and it “is likely to agree with the Revenue Department”.

Tax deductions under LTF conditions amount to as much as 15 per cent of income, but are limited to 500,000 baht ($16,500) per individual taxpayer.

Officials will also discuss whether to maintain that limit or halve it.

Critics say the incentives benefit only high-income people, who can afford to invest more.

The net asset value of LTFs was 387.9 billion baht as of October 19, compared to 395.7 billion baht in January.

Meanwhile, former SEC secretary-general Vorapol Socatiyanurak said he agrees that the term of investment should be as much as 10 years, believing it would encourage long-term investment.

The longer period would also encourage people to save for their retirement, something most workers do not do, even as the average age of the population is rapidly rising, Vorapol noted.

A survey by the SET found that 62 per cent of workers age 40-60 established savings plan too late in life to assure them of basic necessities in old age.



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