The Finance Ministry is considering amending tax laws on income from foreign investments to lure Thais to repatriate funds and lift domestic investment.
Speaking at the 33rd anniversary event of One Asset Management yesterday, Finance Minister Pichai Chunhavajira noted Thais earning income from abroad are currently required to pay income tax when bringing those funds into the country.
He said he is reviewing this law to encourage more Thais to repatriate their earnings.
He said many Thais invest abroad and when those earnings are repatriated, they are subject to taxation.
"The taxation of foreign income brought into the country was amended to align with OECD regulations," said Mr Pichai.
The Revenue Department is responsible for collecting income tax on foreign earnings brought into Thailand, and it previously created a rule stating if a Thai taxpayer brought foreign investment income into the country within the same tax year it was earned, it is subject to income tax.
However, if taxpayers transferred the money in a subsequent tax year, it would not be taxed.
This loophole allowed businesses with foreign income to avoid taxes by delaying fund transfers to the following year.
However, last year the department amended this regulation, making foreign income taxable regardless of when it is brought into Thailand.
Regarding market stabilisation measures, which are partly influenced by selling pressure from long-term equity funds (LTF) that matured, Mr Pichai said the ministry is considering establishing a Thai ESG fund to accommodate investors holding LTF units.
This ESG fund would allow investors to continue holding the units instead of selling them.
New investments in the Thai ESG fund would still qualify for tax deductions, helping to slow mass outflows from LTFs, he said.
The holding period for ESG investments is expected to be around five years, though the ministry is still reviewing the details, said Mr Pichai.
In addition, he said the ministry is considering the issuance of tokenised bonds to make government bond trading more accessible to retail investors.
These tokens would allow trading in fractional units through a digital platform, instead of the traditional over-the-counter method.
For fiscal 2025, Mr Pichai said the ministry may introduce a sandbox initiative, issuing about 5 billion baht in tokenised bonds.
The government needs to issue bonds to address budget deficits and refinancing, so this initiative would be a step towards modernising bond trading, he said.
Asadej Kongsiri, president of the Stock Exchange of Thailand, said he supports the ministry's plan to issue LTF2, a fund investing in the Thai stock market.
Details are likely to be finalised within the next few weeks, said Mr Asadej.