Monday, December 09, 2019

Market welcomes new tax incentives for long-term investment in mutual funds

Dec 04. 2019
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By The Nation

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The introduction of super savings fund (SSF) with new tax incentives to promote long-term investment met positive responses from analysts yesterday (December 3), despite not being as attractive as the long-term equity fund( LTF) which is due to expire at the end of this year.  

Theeranat Rujimethapass, president of TISCO Asset Management Co, said the SSF was a new product of the Finance Ministry in promoting long-term investment among the middle and low income groups.

“It would not lead to a sudden inflows of fund into the market, it would take time as it is not attractive as LTF,” he said.

Under the SSF, investors must hold their investment units for up to 10 years, compared with 5 years for LTF. Investment in SSF is limited at Bt200,000 a year while the investment limit in LTF was set at Bt500,000.

Young investors may prefer SSF as there is no minimum requirement, nor is annual investment required. Those who invested in retirement mutual fund(RMF) may migrate to SSF, he said.

Investment conditions and tax incentives for RMF and SSF do not differ significantly, those who do not want to make an annual investment would prefer SSF, he added.

The Finance Ministry has revised tax incentives for RMF, limiting total tax deduction to no more than Bt500,000 a year including the tax incentives of SSF and other pensions.

Total tax deduction under the old schemes was capped at Bt1 million.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank said most people would still invest in the new fund since there is not a lot of tax shields available, adding that" people will take whatever tax shield they can get their hands on”.

Analysts at the Stock Exchange of Thailand(SET) said they will calculate the impact of SSF and release the findings.

Earlier, Pakorn Peetathawatchai, president of SET, voiced concerns over liquidity if investors had to hold the investment for up to 10 years.

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