Fetco incentive proposals set

Fetco incentive proposals set

Preparations made for new minister

The capital market representative is set to unveil its proposals to Finance Minister Predee Daochai related to investment incentives, long-term savings and capital market development.

A review of the extension of extra units in the unpopular Super Savings Fund (SSFX) and a reduction in the lock-up period are among a series of proposals to the new minister, said Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organizations (Fetco).

Investment flows channelled into the SSFX were less than expected, with total investment of 10 billion baht, Mr Paiboon said.

He said the lock-up period of 10 years may be an obstacle for some investors.

In March, 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 investment units of the SSFX in which 65% of net assets are invested in SET-listed securities.

Investors must have purchased these investment units between April 1 and June 30 and must hold them for at least 10 years.

The main objective of the one-time investment incentive was to shore up equity investment inflows in Thailand's stock market.

The SSF, approved by the cabinet in December 2019, is a new tax-saving fund meant to replace long-term equity funds (LTFs), the tax incentives for which lapsed at the end of last year.

Mr Paiboon said the SSFX units could attract more investment if the lock-up period were reduced to seven years, similar to the period for LTFs.

Fetco previously proposed to former finance minister Uttama Savanayana a 10-year investment extension period for the SSFX from a three-month investment period. That proposal is now up in the air.

Fetco also plans to propose exempting taxes on dividends for more than one year for long-term equity investment.

That move would offer an incentive for long-term investment, Mr Paiboon said.

"China is a model for tax incentives like this and they have been well-received by investors," he said.

A 10% withholding tax is collected on any dividend income that individual investors receive from listed or limited companies.

The same rate is applied on any mutual fund dividend income, or included on dividend income in year-end taxes.

Fetco will propose easing the association's regulations, subject to Commerce Ministry oversight, that bar trade associations from investment in higher-risk securities and permit them to investment only in bank deposits, Mr Paiboon said.

Setting up a mandatory provident fund is another topic for discussion to support long-term savings as Thailand becomes an ageing society, he said.

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