Capital market representatives have received approval from the Finance Ministry for a tax-deductible equity investment incentive through the Super Savings Fund (SSF) mechanism, aiming to stabilise a shell-shocked market.
Yesterday the cabinet approved a raft of measures, including allowing investors to receive an additional tax privilege of 200,000 baht of annual income, separate from the tax-deductible amount applied to retirement-related funds, for SSF units where 65% of net assets are invested in SET-listed securities.
Investors must purchase these investment units between April 1 and June 30 and hold them for at least 10 years.
"We asked the Finance Ministry to help support the stock market as there are many negative factors affecting investor sentiment," said Paiboon Nalinthrangkurn, chairman of the Federation of the Thai Capital Market Organizations (Fetco).
"The April-June period is projected to be when the epidemic will peak, effectively putting pressure on market sentiment throughout the first half."
Inflows worth 100 billion baht moving into Thailand's stock market could materialise if around 500,000 investors invest in the special SSF units at 200,000 baht each, said Mr Paiboon.
On Dec 3, the cabinet approved SSFs as a new tax-saving fund to replace long-term equity funds (LTFs), whose tax incentive lapsed at year-end 2019.
Investments in SSF units are tax-deductible for up to 30% of a buyer's taxable income, but not more than 200,000 baht.
When combined with investments in other retirement funds such as RMFs, provident funds, the Government Pension Fund, the National Savings Fund or premiums for pension life insurance policies, the total tax-deductible amount must not exceed 500,000 baht a year.
Unlike LTFs, which only apply for investment in Thai stocks, SSFs are applicable for all types of securities.
Mr Paiboon said Fetco will propose another incentive to the Finance Ministry should this one-time investment scheme fail to rev up investor interest.
A second proposal to the Finance Ministry offers a tax deduction for investors in equities, holding them at least two years. This will attract more investment inflows to counter bearish stock market conditions, he said.
The investor confidence index for the three months through May fell 11.5% to 64.4, down from February's 72.8, and remains in bearish territory for a second straight month. The domestic economic growth outlook and tourism performance are the main impediments for confidence, said Fetco.