Finance Ministry mulls tax incentives for longer-term investment: source

The Finance Ministry will decide on Monday (November 25) on tax incentives for long-term equity investment.
Ministry officials will 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 than 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, 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.
Finance Minister 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 Bt500,000 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 Bt387.9 billion as of October 19, compared to Bt395.7 billion January.
Vorapol Socatiyanurak, former secretary-general of the SEC, has meanwhile 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.