A proposal to extend the transaction tax waiver for stock trades is currently being considered by the Ministry of Finance.
The Federation of Thai Capital Market Organizations (FETCO) proposed the extension after the ministry announced plans to reimpose the tax this year. The waiver for the transaction tax on stock trades has been in effect since 1991.
According to FETCO Chairman PaiboonNalinthrangkurn, studies have shown that the tax will trigger a 40% decrease in liquidity in the stock market. This will in turn cause the average daily trading value to drop from 80 billion baht to 50 billion baht and make it difficult for some businesses to raise capital while impeding long-term growth.
Paiboon emphasized the issue of increased investment costs as a result of the tax, which he believes will deter investors and drive them to consider other stock exchanges.
To attract overseas investors, he encouraged the Stock Exchange of Thailand (SET) to provide new products in line with investment trends. He added that if the market is allowed to operate freely, the country will gain more revenue from corporate income tax than from taxes on transactions.
The FETCO chairman also predicted a favorable outlook for SET, citing an estimate that the Thai economy will grow 4% as a result of the tourism industry’s resurgence. (NNT)
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