Govt seeks to level tax playing field

Wichit Chaitrong

The Nation

Deputy Prime Minister and Finance Minister Surapong Suebwonglee yesterday set up two subcommittees to study how to enhance the equity and debt markets within a 10-year time frame.

The ministry will restructure taxation to ensure equal treatment for all parties holding different kinds of financial assets, he said after a meeting with senior officials and experts at the ministry.

The first panel has to report back within six months.

The tax system is biased towards individual stock investors, exempting them from capital-gains tax. However, bondholders and time-deposit savers are subject to a 15-per-cent withholding tax on interest income.

"The new tax must be neutral. All investors should shoulder the same tax rate on returns from their investment," permanent secretary Suparut Kawatkul said.

The ministry has wanted to give retail investors an incentive to participate in the market, aiming at expanding its size, he said.

Stock exchange president Patareeya Benjapholchai said the tax structure did not support mergers and acquisitions. Firms lose tax and other privileges when they form a new company. Tax is also a problem when firms evaluate assets before combining their business.

Tax treatment should facilitate M&A in order to promote synergy, as firms could expand and reap economies of scale, she said.

The Finance Ministry will also revise regulations that add to the costs of fund-raising and transactions.

Surapong said the ministry would before the year ends adopt a new tax system and measures to woo both local and foreign firms to list on the stock exchange. More government bonds will be issued.

And next year the ministry plans to implement a reorganisation of the SET, create a national pension fund, introduce new financial products, expand investor bases and revamp regulations.

Public Debt Management Office director-general Pongpanu Sveta-rundra said the office would issue more long-term bonds of up to 30 years, as the first batch had been warmly welcomed by the market.

The bonds will be needed to finance budget deficits of Bt249 billion for the next fiscal year, as well as mega-projects and previous debts.