Govt defends ending SET shares tax waiver

Govt defends ending SET shares tax waiver

The government has defended its decision to impose taxes on the Stock Exchange of Thailand's (SET) share sales, insisting it was a well-thought-out plan, while denying it is making an exception for big traders.

Government spokesman Anucha Burapachaisri said on Saturday the Finance Ministry had considered ending the tax waiver carefully after having taken up the issue with the SET and the Federation of Thai Capital Market Organizations.

He also dismissed news reports which claimed that major traders will continue to enjoy the tax waiver privilege.

"The tax won't be collected straight away. There's still time for the stock market to adjust to it," Mr Anucha said.

The change scrapping the tax waiver has yet to be vetted by the Council of State, the government's legal arm.

Even after the draft law is passed by parliament and published in the Royal Gazette, it will not come into effect for another three months.

The spokesman added the government will not introduce capital gains tax on stock sales as it is a complex and unpopular system.

Mr Anucha said yesterday many Asian countries also collect a tax on share sales, mostly at higher rates. According to him, Hong Kong charges a 0.38% rate, Malaysia 0.29% and Singapore 0.20%.

His explanation came after Finance Minister Arkhom Termpittayapaisith said on Friday that ending the waiver for the financial transaction tax would not affect stock trading, but should ensure more fairness in the tax system.

On Tuesday the cabinet approved a draft law to slap a financial transaction tax on individual stock investors' share sales, ending more than 30 years of waivers.

The financial transaction tax on share sales by individual investors trading on the SET has been on the books for more than 30 years, but the government has consistently waived it to support market development. However, the SET has come a long way since, with a market capitalisation of around 20 trillion baht, up from around 900 billion baht in 1991, observers say.

Tax collection comes under the Revenue Department's regulations, which require a payment of a 0.1% specific business tax on security trades and a related local tax of 10% of the specific business tax, bringing the total financial transaction tax to 0.11% per share sold.

Mr Arkhom denied the decision would have a negative impact on the local bourse as the change has been flagged since last year. He said the Revenue Department will impose the tax next year. The department said the financial transaction tax would result in higher overall costs to stock investors of 0.22%.

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