LTF tax incentive could be extended

LTF tax incentive could be extended

The tax privilege for long-term equity funds (LTFs) could be renewed if the Revenue Department can show that salary earners invest in them for long-term savings.

However, the lock-up period for investment in LTFs could be longer — seven or even 10 years from five now — if the tax privilege, now due to expire in 2016, is extended, director-general Prasong Poontaneat said yesterday.

Paiboon Nalinthrangkurn, a former chairman of the Federation of Thai
Capital Market Organizations, in July said talks between Fetco and the Finance Ministry over renewing the tax deduction for LTF investment remained inconclusive, making it likely the tax incentive would be scrapped.

The ministry claimed that some LTF holders, in practice, held units for slightly more than three full calender years, as they bought the units as the end of the year approached and redeemed them early in the fifth year.

Taxpayers can deduct contributions of up to 15% of their personal income or 500,000 baht, whichever is lower, for investment in LTFs.

Separately, Mr Prasong addressed the inheritance and gift tax that is expected to be introduced by the new government.

He said heirs could transfer assets passed from donors to inheritance trusts to ease pressure to divest such assets, as trusts would be exempt from the tax.

The tax is under review by the Council of State before being forwarded to the National Legislative Assembly.

According to recent media reports, the Revenue Department intends to impose a 10% inheritance and gift tax on heirs receiving assets worth at least 50 million baht.

Documented assets such as residences, land, vehicles, bonds, equities and deposits at financial institutions would be subject to inheritance and gift taxes, while assets without registration papers such as amulets, gold, antiques and watches would initially enjoy a waiver.

Meanwhile, the Revenue Department estimates it will collect 1.7 trillion baht in revenue this fiscal year, 150 billion lower than the target.

The expected revenue shortfall can be attributed to forgone revenue of 40 billion baht from a recent cut in personal income tax, 10 billion forgone from the reduction of corporation tax and the remaining 100 billion from a decline in revenue collection from value-added tax.

Mr Prasong said the department had approved the extension of a tax exemption for corporate debt restructuring retroactive from 2011 to this year.

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