The Ministry of Finance has approved the establishment of the ThaiESG Extra fund, aiming to provide additional tax deductions. This initiative involves two main components:
Firstly, individuals transferring funds from the Long-Term Equity Fund (LTF) to ThaiESG Extra stand to receive tax deductions of up to 500,000 baht, with 300,000 baht applicable in 2025 and the remaining 200,000 baht to be proportionately applied over the next four years.
Secondly, new investors can benefit from tax deductions of up to 300,000 baht by investing in ThaiESG Extra before the end of June, designed to encourage investments within the specified timeframe. It is important to note that the tax benefits of the ThaiESG Extra fund are separate from those of the regular ThaiESG fund.
Investors who purchase the ThaiESG fund may also enjoy additional tax deductions of 300,000 baht. Furthermore, those who combine investments in both ThaiESG Extra and the regular ThaiESG could potentially receive a total tax deduction of up to 600,000 baht.
With this initiative, LTF holders could be in a dilemma of what to do for the next move, especially in this situation that the Thai stock market had just dropped to a 5-year low, pressured by the redemption of LTF holders with THB 180 billion ready to be withdrawn.
For existing LTF holders, there are three options to consider:
- Selling the current LTF holdings is an option for those seeking immediate liquidity and alternative investment opportunities, but this option would not leverage the new tax benefits.
- Maintaining the LTF investments is an option for those with confidence in the Thai stock market but wish to avoid new fund restrictions. Notably, transferring from LTF to ThaiESG Extra would entail holding the investment locked for another five years.
- Moving LTF to ThaiESG Extra is an option for those confident in the Thai stock market and desiring enhanced tax privileges. This could yield tax deductions of up to 500,000 baht, distributed over several years. Combining investments in both ThaiESG Extra and regular ThaiESG could potentially lead to tax deductions of up to 900,000 baht in 2025.
It is essential to carefully weigh the anticipated returns against the tax benefits when considering these options. This initiative not only aims to discourage stock selling, especially from LTF, but also encourages new investments into the market.
On the other hand, a senior official noted that the Finance Ministry will lose about 50 billion baht of tax revenue from the policy. Still,
