TAKING STOCK

The Finance Ministry is mulling a tax on share sales by individual investors on the Thai bourse as it is desperate for revenue.

A plan to introduce a tax on the sale of shares by individual investors on the local bourse is part of the Finance Ministry’s tax reform agenda, says Revenue Department director-general Ekniti Nitithanprapas.

He said the plan is being studied and there is no timetable for its implementation.

A financial transaction tax is already part of the law, but has been waived since 1991.

According to Reuters, the government is considering ending the tax waiver on share sales by individual investors on the Stock Exchange of Thailand (SET) to generate additional revenue, said three sources familiar with the matter.

A tax of 0.11% on equities sales would apply to investors with a volume of more than 1 million baht per month, a source said.

Paiboon Nalinthrangkurn, chairman of the Federation of Thailand Capital Market Organizations (Fetco), disagrees with the idea for several reasons.

He said unlike developed markets such as the US, the Thai bourse is still developing and needs to maintain its competitiveness among regional markets that don’t charge a tax on share sales.

Charging a tax will greatly diminish the Thai market’s competitiveness and dissuade many retail investors, especially foreigners, from investing in the Thai bourse because to higher costs, said Mr Paiboon.

Moreover, fund outflows will decrease liquidity in the market and hinder SET-listed companies’ fundraising, he said.

Mr Paiboon understands the government needs to generate more revenue, but it should focus on providing funding for small and medium-sized enterprises (SMEs) and reaping tax from their growth rather than raising tax from share sales. This would be a mutually beneficial outcome, he said.

Mr Ekniti said any measure would not be a tax on capital gains.

While declining to comment on the Reuters report, Fiscal Policy Office director-general Kulaya Tantitemit said the tax restructure is aimed at reducing inequality and ensuring fair treatment for all.

She said the tax restructure is based on four principles: enhancing Thailand’s competitiveness and ensuring sustainable growth; supporting the digital economy; supporting the green economy; and ensuring fair treatment for all.

In a separate matter, Mr Ekniti said recently Thailand will benefit from the agreement of G7 finance ministers at a London meeting last month to back global tax reform, with multinational corporations paying tax in the countries in which they operate.

He said if all G7 countries reach a consensus on the agreement, multinational firms that registered their businesses in low corporate tax countries or tax havens will still have to pay tax in every country in which they operate.

Under Thai law, the country can only collect corporate income tax from companies that have a permanent establishment in Thailand.