The establishment of the Thailand ESG Fund (TESG) is expected by early December and investors will be able to deduct their investment from personal income for the 2023 tax year, the Securities and Exchange Commission announced on Wednesday.
Environmental, social and governance (ESG) investing refers to a set of standards for a company’s behaviour, used by socially conscious investors to screen potential investments.
SEC secretary-general Pornanong Budsaratragoon said the Capital Market Supervisory Board (CMSB) early this week approved the principles for amending the governing regulations to support the establishment of the TESG Fund, in line with the government’s policy direction.
The cabinet on Tuesday approved the TESG Fund, a long-term saving fund proposed by the Finance Ministry that offers tax benefit for investors. TESG Fund will focus on investment in businesses contributing to the sustainable development of the country.
“This approach uses mutual funds as a vehicle to achieve the national strategic goals related to sustainability and support long-term savings through investment in the capital market. The SEC is in the process of stipulating regulations in support of TESG Fund,” Ms Pornanong said.
The amended regulations are expected to be published in the Royall Gazette early next month and asset management companies have already submitted draft documentation for the establishment of TESG Fund for the SEC’s consideration, she said.
“Once the proposed amendments take effect, the SEC will approve the establishment of TESG Fund by early December and ensure that investors will be able to benefit from the fund’s tax privileges within the tax year 2023.”
Investors in TESG Fund can deduct their investment amounts for tax purposes, up to a maximum of 30% of assessable income, specifically not exceeding 100,000 baht, for the tax year in which the investment is made.
Additionally, the capital gains or returns obtained from the redemption of investment units will be exempted from tax calculations. This exemption applies only when the investment meets the conditions specified by the Revenue Department. In addition, investors must hold the investment units of TESG Fund for a minimum of eight years from the date of purchase.
The CMSB has approved the principles for TESG Fund to invest in the assets owned by issuers in the Thai public sectors or businesses established under Thai law. The fund can invest in stocks listed on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (MAI) that have been selected by the SET as outstanding in terms of green and ESG criteria.
The second group they can invest in are stocks listed on both markets that disclose information on greenhouse gas GHG emissions, management plans, and targets to achieve Thailand's goals for reducing GHG emissions. Thirdly, they can invest in debt securities that meet the regulations for offering of sustainability-related bonds and digital tokens for fundraising related to sustainability that comply with the same standards as the sustainability-related bonds, according to the SEC.
The fund's endorsement reflects the government's recognition of the importance of savings and investments for individuals to build long-term financial well-being, Ms Pornanong said.