The lock-up period for a new type of tax-saving fund meant to replace long-term equity funds (LTFs) after the tax incentive lapses at year-end will be set at 10-15 years, says a source at the Finance Ministry.
The long lock-up period is aimed at supporting the new generation in saving for retirement, while retirement mutual funds (RMFs), another type of tax-saving fund, are different because RMFs require unit holders to redeem only when they retire, the source said.
LTFs' lock-up period is set at seven calendar years.
The source said the new tax-saving fund's ceiling contribution entitled to a personal income tax deduction will rise to 30% of annual income, not exceeding 500,000 baht. The tax-deductible amount, however, must also count in the RMF's contribution.
Individual taxpayers are allowed to deduct up to 15% of total annual income, or a maximum of 500,000 baht a year, whichever is lower, for contribution to LTFs.
They are also permitted to separately deduct contributions to RMFs worth up to 500,000 baht but no more than 15% of annual taxable income. But the 500,000-baht RMF contribution cap must include contributions to provident funds and pension insurance.
The source said the new tax-saving fund's investment policy will not require allocating money to state infrastructure projects.
Meanwhile, Finance Minister Uttama Savanayana said the new type of mutual fund to replace LTFs will be decided by next week.
Mr Uttama plans to meet with the Federation of Thai Capital Market Organizations (Fetco) to discuss the new tax-saving fund, with the appointment postponed to next week from Nov 21, but the process remains on track, he said.
Fetco earlier urged the government to allow contributions to a new type of mutual fund to be tax-deductible after the tax privilege for LTFs expires at the end of this year, hoping to encourage long-term investment and help stabilise the stock market.
The combined net asset value of LTFs amounts to 300 billion baht.