Fetco tax deduction proposal gets nod
Ekniti Nitithanprapas, head of the Revenue Department, has initially agreed with the Federation of Thai Capital Market Organizations' (Fetco) proposal for a tax allowance for contributions to a new tax-saving mutual fund, but requires that the fund be for long-term savings to serve older Thais.
Fetco's proposal to double the tax deductible contribution for the new tax-saving fund to 30% of assessable income, up to 250,000 baht, is a good idea to help solve income disparity, he said.
Middle-income earners will benefit more from the proposal, but the fund should be for long-term investment, said Mr Ekniti.
Fetco proposed the new fund, dubbed the Sustainable Equity Fund, to replace the long-term equity fund (LTF) as the tax privileges for LTFs are set to lapse at the end of this year.
The lock-in period for the Sustainable Equity Fund remains unchanged at seven calendar years and the fund must allocate 65% of net asset value in stocks that meet environmental, social, or governance goals, or government infrastructure funds such as the Thailand Future Fund (TFFIF).
Individual taxpayers are allowed to deduct up to 15% of the total annual income, or a maximum of 500,000 baht a year, whichever is lower, for contribution to LTFs. Even though investment in an LTF is locked in for seven years, in practice buyers only need to hold the units for five full calendar years, buying units as the year-end approaches and redeeming them early in the seventh year.
Mr Ekniti said the new fund must not distort the market by only allowing investment in specific stocks.
The Revenue Department is studying a rejig of personal income tax allowances.
There are 11 million personal income tax filers but only 4 million pay tax as the remainder have income below the lowest tax bracket.