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Published on July 13, 2007

The Stock Exchange of Thailand disagrees with the idea of taxing capital gains on stock investments, saying it would crush market confidence.

President Patareeya Benjapolchai told reporters yesterday that the government should study the pros and cons prudently before deciding to adopt the tax.

The legal research and development centre of Chulalongkorn University has reportedly proposed to the Revenue Department to tax stock-trading gains starting at Bt5 million as well as property funds.

A tax on capital gains would have an adverse impact on the stock market, she said.

"Many countries waive capital-gains tax on stocks. Most choose to collect taxes from listed companies.

"Thailand taxes corporate income at 30 per cent - above the 25-28 per cent charged by other countries," Patareeya said.

Capital-gains tax on mutual funds would spoil the investment atmosphere and gains from capital investment might not be attractive enough, she added.

The SET's board will decide at its meeting this month whether to lower its sights for new listings this year since only a few companies have taken the step so far.

Its target was set at 64 new companies entering the bourse.

Thai Beverage plans to seek a dual listing on the Thai exchange, but it would have to submit a new application to the Securities and Exchange Commission, she said.

"ThaiBev's issue would depend on the law governing alcohol," she said.

ThaiBev, the brewer of the famous Chang Beer, had to shift to the Singapore Exchange to raise funds because the SEC will consider if it will allow alcohol manufacturers to list on the local board only after the Alcohol Control Act is passed.

The CEO of Asia Plus Securities (Thailand) called

for caution in making a

decision on the capital-gains issue.

"At the moment, 67 countries around the world do not impose capital-gains tax on stock investments.

"I don't want to see such a measure implemented with the aim only to punish certain investors as it would hurt overall investor confidence," he said.

Siriporn  Chanjindamanee

The Nation