Tax waiver set to boost startup funding

Tax waiver set to boost startup funding

Suphachai: Move to woo more funds
Suphachai: Move to woo more funds

The government's recent approval of a capital gains tax waiver for startup investors is expected to drive funding for local startups up to 320 billion baht over four years and create more than 400,000 jobs, says the Digital Council of Thailand (DCT).

The cabinet last week approved a royal decree aimed at waiving capital gains tax for investment in startups associated with 12 targeted industries, including smart electronics, quality tourism, food processing and robotics.

DCT president Suphachai Chearavanont said the move is expected to create an economic impact of 790 billion baht by 2026.

"This tax incentive will draw more funding for local startups," Mr Suphachai said.

"By 2026, the measure is expected to increase the funding for startups to reach 320 billion baht and create more than 400,000 jobs either through direct or indirect employment, which would help strengthen the country's economic system," he said.

According to the legislation, income tax associated with profits from the sale of startup shares will be waived for both individuals and juristic persons.

Local and foreign corporate venture capital (CVC) funds and foreign private equity trusts (PE trusts) will see income tax waived for profits derived from the sale of shares in local startups.

Investors will see income tax waived for profits from the sale of shares in Thai CVC funds and Thai PE trusts, both of which invest in local startups.

Startups linked with targeted industries must be certified by designated organisations, such as the National Innovation Agency and National Science and Technology Development Agency.

These startups must have at least 80% of their earnings derived from the targeted industries while the investors subject to the capital gain tax waiver must hold shares in startups or trusts' units for at least 24 months before selling them.

Local CVC funds and PE trusts involved in the legislation must have funds of at least 20 million baht and be registered with the Securities and Exchange Commission.

The income tax waiver incentive lasts until June 2032 once the legislation is published in the Royal Gazette.

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