By The Nation
The Cabinet approved the Finance Ministry’s proposal on the new tax scheme, Finance Minister Uttama Savanayana said after a Cabinet meeting on Tuesday.
Individual investors have to hold their units for 10 years and when they sell they are exempted from personal income tax.
The SSF will replace the long-term equity fund (LTF), which is due to expire by the end of this year.
For the SSF, tax deductions will increase up to 30 per cent of personal income but are limited to Bt200,000 a year. Individuals will get total tax deductions of not more than Bt500,000 a year, including from retirement mutual funds (RMF), provident fund, insurance policies and other types of pension funds.
The ministry does not require a minimum investment or that the investment should be made every year.
Tax deductions will be applied between 2020 and 2024, after that the Finance Ministry will review the deductions, he said.
Tax deductions for existing RMF is also revised, said Uttama.
These deductions will increase from 15 per cent of income to 30 per cent. But total tax privileges will be limited to Bt500,000 a year, including tax deductions from SSF and other types of pension funds. A minimum investment is not required. Investors however have to invest every year. But if they do not make an investment one year, their tax deductions rights for the following years of investment will remain.
“The new tax deduction scheme has been designed to support middle and lower income groups, giving them more investment and savings opportunities,” said Uttama.
He said that although tax deductions for LTF will expire in the next few weeks, investors will still get personal income tax exemptions when they sell their LTFs.
The total amount of new tax deductions is less than the former LTF and RMF – investors could get up to Bt500,000 for LTF, while the old RMF and other pension funds limited investment to Bt500,000. These old schemes have been criticised as benefiting rich people the most.