Long lock-up for tax-saving fund possible
Uttama sees period exceeding 10 years
The lock-up period for a new tax-saving fund to replace long-term equity funds (LTFs) could be more than 10 years, says Finance Minister Uttama Savanayana.
The new fund must encourage long-term savings, meaning the lock-up period must be longer than that for LTFs, he said.
Mr Uttama has instructed the Fiscal Policy Office (FPO) to hold discussions about the new tax-saving fund with related parties.
“I’ll summon the FPO to report the outcome of the discussion next week,” he said. “A conclusion is expected to be reached in the coming days.”
A source at the Finance Ministry said recently that the new fund would bear a resemblance to the Sustainable Equity Fund proposed by the Federation of Thai Capital Market Organizations.
The new tax-saving fund’s ceiling contribution entitled to a personal income tax deduction will be raised to 30% of annual income, while the maximum amount will be lowered to 250,000 baht to combat income disparity, Mr Uttama said.
Lowering the cap for investment in a tax-saving fund means high-income earners would see less of a tax deduction, while lower-income earners could benefit because the percentage of annual income is doubled to 30%.
Individual taxpayers are allowed to deduct up to 15% of total annual income, or a maximum of 500,000 baht a year, whichever is lower, for the contribution to LTFs.
The tweak in the maximum contribution to the new tax-saving fund is a part of the Finance Ministry’s effort to revamp the structure of allowances, deductions and exemptions for personal income tax.
For allowances and tax-deductible expenses, each individual taxpayer can claim a 60,000-baht tax allowance, a 50% income deduction (but only for up to 100,000 baht), a 30,000-baht child allowance for all biological children and up to three adopted children, insurance premiums of up to 100,000 baht for life protection products with at least 10-year terms, up to 200,000 baht for retirement insurance premiums, and up to 100,000 baht for mortgage interest, plus a raft of contributions such as for social security funds, provident funds, LTFs and retirement mutual funds.