The New Year countdown is nearing for taxpayers. If you are a salary earner, you can save on tax expenses by deducting tax through various investing tools.
Income tax generally will be withheld by your company before it pays your salary. You can deduct the typical tax in the whole amount but not exceeding 300,000 baht a year from the long-term fund investment.
Investing in retirement mutual funds (RMFs) and long-term equity funds (LTFs) is a key choice for tax savings. The twin long-term funds require different conditions for investment, said Umapan Charoenying, the first vice-president for consumer financial advice at Kasikornbank.
For an RMF, the minimum deductible rate is 3% of total personal income a year or not less than 3,000 baht, whichever is lower, while the maximum is 15% but not more than 500,000 baht.
Personal income includes salary, bonuses, fees, commissions, severance pay and investment income.
If an individual pays into a provident fund or the Government Pension Fund (GPF) at work, then the combined amount of tax deducted for RMF and the provident fund or GPF is a maximum of 500,000 baht a year.
Ms Umapan said an RMF requires annual investment until the investor is 55 years old, and you can allocate your portfolio in stocks, bonds or mixed assets. An LTF does not require annual investment.
"You should have idle money for investment in long-term RMFs and LTFs," she said. "Also, you will have higher risk with the LTF, as it allows investment mainly in stocks."
In the case of investment on the Stock Exchange of Thailand (SET), you can also claim tax rebates from dividends.
Life insurance is another instrument allowing tax deduction after a certain period of time. Taxpayers can also claim the expense from mortgage interest at a maximum of 100,000 baht a year.
Tax-free deposits in a 24-month fixed account are another tax-saving method, with a maximum deposit amount of 25,000 baht a month.
A parental-care allowance for your father or mother aged 60 or over is also tax-deductible, as are donations.
Ms Umapan said several promotional packages for tax-related financial products will be available this tax season, with RMFs, LTFs and life insurance in the spotlight.
Promotional campaigns for tax-saving products will appear at SET in the City, a financial fair to be held at Siam Paragon from Nov 22-25.
When investing in tax-saving instruments, you should consider all attendant factors aside from tax purposes including returns, tax implications upon maturity, liquidity, recurring investment needs, tax on income earned, safety and your financial behaviour.
Consumers can shop for such financial products directly at asset management and insurance companies. The products are also available at bank branches under the universal banking concept offering full-range financial services.
Krungsri Asset Management, a unit of Bank of Ayudhya, has introduced a tax-saving campaign for LTFs and RMFs, highlighting tax deductions of up to 1.1 million baht.
Another choice is the KFCash mutual fund, with a maximum value of 13,000 baht, which offers quintuple reward points from Krungsri credit card spending on LTFs and RMFs and a premium value of up to 40,000 baht when applying for a life insurance policy.
Kasikorn Asset Management offers cash back of up to 40% of total investing worth or up to 120,000 baht or a tax deduction of up to 1 million baht for investing in the company's five LTFs or eight RMFs.
Tisco Asset Management has introduced a combo set offering three packages of tax-related financial products.
Its programme covers LTFs, RMFs, life insurance and deposits.
Siam Commercial Bank (SCB) and TMB Bank are luring taxpayers with life insurance policies.
SCB customers applying for life insurance select benefits depending on their requirements, with rewards covering several categories such as petrol, car care and shopping.
At TMB, clients who apply for one of 10 insurance policies under the bank's conditions will receive an electric fan or a microwave oven. The minimum amount of insurance premium is set at 50,000 baht to get the gift.
The state-owned Government Savings Bank is holding a Tax Deduction Festival at its 900 branches nationwide.
Its 11 packages of bundled financial products are highlighted, while tax deductions, life protection and dividends are key benefits of the programme.