The Finance Ministry remains undecided on a new investment fund that provides income tax savings, as proposed by the Federation of Thai Capital Market Organizations (Fetco).
Finance Minister Uttama Savanayana requested more time to study whether tax incentives for contribution to a new type of long-term fund will be granted, said Fetco chairman Paiboon Nalinthrangkurn.
The new fund has been dubbed the Sustainable Equity Fund, which is meant to replace the long-term equity fund (LTF), as its tax privilege is set to lapse at the end of this year.
The ministry is concerned high-income earners reap larger benefits from LTF investment than low-income earners, so Fetco proposed lowering the ceiling tax deduction for the new fund to 30% of annual income, not exceeding 250,000 baht, he said.
The lock-in period for the Sustainable Equity Fund remains unchanged at seven calendar years.
LTFs were set up in 2004 to promote long-term savings and add volume to the Thai bourse.
At that time, investors were allowed to deduct up to 15% of their total annual income, or a maximum of 500,000 baht a year, whichever is lower.
Capital gains from the redemption of units are also exempt from tax.
The cabinet in late 2015 approved an extension of tax incentives for LTFs for three years from 2016 to revive waning stock market sentiment and boost domestic savings, but the lock-up period was lengthened to seven from five calendar years.
Mr Paiboon said the Sustainable Equity Fund must allocate 65% of net asset value in stocks that meet environmental, social, or governance goals, or government infrastructure funds such as Thailand Future Fund (TFFIF).
The combined net asset value of LTFs amount to around 300 billion baht at the moment.
He proposed to Mr Uttama that Fetco can play a role in promoting foreigners to invest in Thailand and the establishment of a business sector network to encourage the private sector to account for social impact when making investment decisions.
The Fiscal Policy Office said earlier if the Sustainable Equity Fund can address income inequality and become a fundraising source for infrastructure investments or small and medium-sized enterprises, it will support extending tax benefits for such investment.