Cabi­net green lights Su­per Sav­ings Funds

Bangkok Post - - FRONT PAGE - WICHIT CHANTANUSO­RNSIRI

The cabi­net has okayed Su­per Sav­ings Funds to re­place long-term eq­uity funds, for which the tax in­cen­tive is due to lapse at year-end.

The ceil­ing to a per­sonal in­come tax de­duc­tion will rise to 30% of an­nual in­come, not ex­ceed­ing 200,000 baht, Fi­nance Min­is­ter Ut­tama Sa­vanayana said yes­ter­day.

The tax-de­ductible amount is capped at 500,000 baht per year when con­tri­bu­tions to the new sav­ing fund are added to re­tire­ment mu­tual funds, prov­i­dent funds, the Govern­ment Pen­sion Fund, the Na­tional Sav­ings Fund and pen­sion in­surance pre­mi­ums. The lock-up pe­riod for con­tri­bu­tions to Su­per Sav­ings Funds is 10 cal­en­dar years.

The cabi­net has ap­proved Su­per Sav­ings Funds as a new tax-sav­ing fund to re­place long-term eq­uity funds (LTFs), for which the tax in­cen­tive is due to lapse at year-end.

The ceil­ing con­tri­bu­tion en­ti­tled to a per­sonal in­come tax de­duc­tion will rise to 30% of an­nual ac­ces­si­ble in­come, not ex­ceed­ing 200,000 baht, for the sav­ings fund, said Fi­nance Min­is­ter Ut­tama Sa­vanayana.

The tax-de­ductible amount is capped at 500,000 baht per year when com­bined con­tri­bu­tions to the new tax-sav­ing fund are added to re­tire­ment mu­tual funds (RMFs), prov­i­dent funds, the Govern­ment Pen­sion Fund, the Na­tional Sav­ings Fund and pen­sion in­surance pre­mi­ums.

The lock-up pe­riod for con­tri­bu­tions to Su­per Sav­ings Funds is 10 cal­en­dar years, longer than LTFs’ seven years.

In­di­vid­ual tax­pay­ers are now al­lowed to deduct up to 15% of ac­ces­si­ble in­come, or a max­i­mum of 500,000 baht a year, whichever is lower, for con­tri­bu­tion to LTFs.

They are also per­mit­ted to sep­a­rately deduct con­tri­bu­tions to RMFs worth up to 500,000 baht but no more than 15% of ac­ces­si­ble in­come. The 500,000-baht RMF con­tri­bu­tion cap must in­clude con­tri­bu­tions to prov­i­dent funds and pen­sion in­surance.

There is no min­i­mum con­tri­bu­tion re­quire­ment for Su­per Sav­ings Funds, and in­di­vid­ual tax­pay­ers are not re­quired to make con­tin­u­ous con­tri­bu­tions to the new fund.

Su­per Sav­ings Funds are al­lowed to in­vest in all kinds of se­cu­ri­ties, Mr Ut­tama said.

Tax perks for con­tri­bu­tions to the funds will last for five years through 2024.

Peo­ple can still in­vest in LTFs af­ter this year, but their con­tri­bu­tion is no longer en­ti­tled to a per­sonal in­come tax de­duc­tion.

The Fi­nance Min­istry be­lieves that tax re­funds for con­tri­bu­tions to Su­per Sav­ings Funds will dif­fer little from those for LTFs, Mr Ut­tama said.

He said the new funds are meant to en­cour­age long-term sav­ings, with mid­dle- and low-in­come earn­ers ben­e­fit­ing the most.

In re­lated news, the cabi­net tweaked the tax in­cen­tive cri­te­ria for RMFs by dou­bling the per­cent­age of con­tri­bu­tions to the fund to 30% of ac­ces­si­ble in­come but keep­ing the max­i­mum amount un­changed at 500,000 baht per tax year.

The min­i­mum con­tri­bu­tion re­quire­ment to RMFs of 3% of ac­ces­si­ble in­come or at least 5,000 baht is scrapped to en­able mid­dle- and low-in­come earn­ers to make con­tri­bu­tions to the funds. The re­quire­ment for con­tin­u­ous in­vest­ment with a pro­hi­bi­tion of stop­ping con­tri­bu­tions for more than one year re­mains un­changed.

Ruen­vadee Suwan­mongkol, sec­re­tary-gen­eral of the Se­cu­ri­ties and Ex­change Com­mis­sion, said Su­per Sav­ings Funds are ex­pected to be ready for sub­scrip­tion from Feb 2, 2020.

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