Most individual investors will not be affected by the Finance Ministry's plan to slap a tax on share sales from the Stock Exchange of Thailand (SET), says Revenue Department director-general Ekniti Nitithanprapas.
Last week Finance Minister Arkhom Termpittayapaisith said the ministry might finally end the waiver for a financial transaction tax in 2022 to generate additional revenue. The financial transaction tax has been on the books since 1991, but has always been waived.
Mr Ekniti said 80-90% of stock investors would not be affected by this tax.
He said the department was studying a plan to implement this tax, based on the principle it would not impact small investors. The ministry expects to propose to the cabinet ending the tax waiver.
Mr Ekniti said the department is considering the value of the share sales to be exempted from the tax. It could be either a monthly limit of 1 million baht or 3 million baht.
He said 80% of SET stock investors sell shares valued at less than 1 million baht monthly, while around 90% of total investors sell shares worth less than 2.5 million baht monthly.
The financial transaction tax is 0.1% and would be applied to the amount exceeding the sales value limit, said Mr Ekniti. For example, if the sales value exceeds the limit by 1,000 baht, only that 1,000 baht is taxed, creating a tax bill of only one baht. If the sales value limit is exceeded by 1 million baht, the tax is 1,000 baht.
He said in addition to the 0.1% transaction tax, investors are also subject to a related local tax.
Investors subject to the tax must pay a total of 0.11% of the share sale, said Mr Ekniti.
The financial transaction tax is expected to generate an additional 15-20 billion baht for the state coffers per year, he said.
Mr Ekniti said the tax would not affect the trading volume of the local bourse.
He said the Hong Kong stock exchange imposed a financial transaction tax last year. The tax affected trading volumes in the city for only a short period, then normal trading resumed.
Mr Ekniti said the timing of the tax implementation depends on the stock market situation.
Once the ministry approves the tax implementation, it is estimated to take a couple of months to complete the linkage of stock trading data between the SET and the department to facilitate the tax collection.
Mr Ekniti said some people recommended the department collect a capital gains tax on the share sales in addition to the financial transaction tax, as happens in many countries. But the department decided a capital gains tax could adversely affect stock investors, he said.