Min­istry weighs tax on share-sell­ing cap­i­tal gains

The Myanmar Times - - Business -

THE Fi­nance Min­istry is con­sid­er­ing whether a cap­i­tal-gains tax ex­emp­tion given to in­vestors in the Thai stock mar­ket is still es­sen­tial and is set to re­view tax in­cen­tives of­fered to sev­eral sec­tors in­clud­ing farm­ers.

Whether the cur­rent tax in­cen­tives are still cru­cial for the Thai stock mar­ket is one of three ini­tia­tives to be weighed by the Fi­nance Min­istry in amend­ing the Rev­enue Code, which is ex­pected to be con­cluded in the next two months, said Som­chai Su­j­japongse, per­ma­nent sec­re­tary for fi­nance. The other two are govern­ment rev­enue and fair­ness to tax­pay­ers, he said.

Cap­i­tal gains from sell­ing shares of a Thai stock are tax-ex­empt, which has at­tracted in­vestors to the Thai bourse. The Stock Ex­change of Thai­land (SET) started pay­ing cor­po­rate in­come tax last year, show­ing its in­ten­tion to avoid be­ing con­sid­ered a tax shel­ter, as some have dubbed the ex­change since it was in­cor­po­rated in April 1975.

Mr Som­chai as­signed Lavaron Saengsanit, an in­spec­tor-gen­eral, to col­lab­o­rate with the Rev­enue De­part­ment in re­form­ing tax­a­tion.

Apart from tax in­cen­tives in the eq­uity mar­kets, tax priv­i­leges to other seg­ments, such as farm­ers will also be con­sid­ered, he said.

Pat­tera Dilokrungthi­rapop, chair­woman of the As­so­ci­a­tion of Se­cu­ri­ties Com­pa­nies, said the Fi­nance Min­istry should weigh the com­pet­i­tive­ness of Thai­land’s cap­i­tal mar­ket against its re­gional peers, as the ma­jor­ity of them also do not im­pose a cap­i­tal-gains tax.

The Fi­nance Min­istry should con­sider whether any new mea­sure is in line with in­ter­na­tional prac­tice, said Pai­boon Nalinthrangkurn, chief ex­ec­u­tive of Tisco Se­cu­ri­ties and director of the Fed­er­a­tion of Thai Cap­i­tal Mar­ket Or­ga­ni­za­tions. Most cap­i­tal mar­kets in Asia-Pa­cific do not im­ple­ment a cap­i­tal-gains tax, he said.

There is suf­fi­cient tax col­lec­tion such as the div­i­dend tax or tax­ing prof­its from the SET, said Mr Pai­boon.

“The Fi­nance Min­istry should think about keep­ing to in­ter­na­tional prac­tices to main­tain the do­mes­tic stock mar­ket’s com­pet­i­tive­ness in the long run as an ef­fec­tive fund-rais­ing source for the pri­vate sec­tor,” he said.

“There is in­tense com­pe­ti­tion among the global cap­i­tal mar­kets. If it be­comes in­con­ve­nient to in­vest here, in­vestors have many other op­tions.”

The min­istry also has to de­cide whether other in­cen­tives linked with long-term in­vest­ment in the cap­i­tal mar­ket, such as tax re­bates for longterm eq­uity funds and re­tire­ment mu­tual funds, will be an­nulled, Mr Pai­boon said.

In re­lated news, Mr Som­chai said the land and build­ings tax is ex­pected to take ef­fect in 2019.

Even though the cabi­net ap­proved a bill on the land and build­ings tax in March, the much-awaited bill is still stuck in de­lib­er­a­tion in the Na­tional Leg­isla­tive Assem­bly (NLA) as law­mak­ers have ques­tioned whether a 50-mil­lion-baht ceil­ing for the tax ex­emp­tion for first homes is too much and should be low­ered to widen the num­ber of tax­pay­ers.

Some NLA mem­bers thought the ceil­ing is un­fair be­cause those who own more than one res­i­dence are sub­ject to the tax even if their homes’ com­bined value is less than the 50-mil­lion-baht thresh­old for the first home.

The NLA’s com­mit­tee on the land and build­ings tax has pro­posed to lower the max­i­mum tax ex­emp­tion for first homes to 20 mil­lion baht from 50 mil­lion, and the Fi­nance Min­istry has agreed the thresh­old re­duc­tion will in­crease num­ber of the po­ten­tial tax­pay­ers.

The min­istry re­cently said firsthome and farm­land own­ers who will be ex­empt from the tax ac­counted for 90% of to­tal land own­ers un­der the 50-mil­lion-baht ceil­ing tax ex­emp­tion. The min­istry’s re­cent sur­vey also found only 8,556 res­i­dences and farm­land, or 0.04%, val­ued at more than 50 mil­lion baht.

Photo: The Bangkok Post

Fi­nance Min­istry is also con­sid­er­ing tax priv­i­leges to other seg­ments, such as farm­ers.

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