Thai ESG Fund, Tax Rebate of 300,000, Issued Cabinet Decision.

The Cabinet approved amendments to the criteria for Thai environmental, social and governance funds to increase tax deductions from 100,000 baht to 300,000 baht and reduce the holding period from 8 years to 5 years, retroactive from January 1, 2024 to December 31, 2026.

July 30, 2024 – Ms. Radklao Inthawong Suwankiri, Deputy SpokespersonPrime Minister's Office It was revealed that the Cabinet meeting (Cabinet) decided to approve the improvement of tax measures to promote investment for sustainability in Thailand or the Thai ESG Fund by approving the principles of the draft Ministerial Regulation No.. (B….) issued in accordance with the Revenue Act on Tax Exemption (Improvement of Tax Measures to Promote Investment for Sustainability in Thailand) in accordance withMinistry of FinanceDisplays

The Cabinet is amending the standards for Thai ESG funds, increasing the tax deduction to 300,000 baht and reducing the holding period to 5 years.

The Thai ESG funds’ deductions have been significantly revised as follows:

1. Increase the ceiling of tax exemptions
2. Reduces the holding period during which sales can be made without paying taxes.
   • Original – 8 years from date of purchase
   • New – 5 years from date of purchase

Draft Ministerial Regulation It is an improvement in providing benefits under the tax measures to promote investment for sustainability in Thailand in the Thai Sustainability Mutual Fund (Thailand ESG Fund or TESG) by expanding the limit of personal income tax deductions from the purchase price of investment units in Thai mutual funds from a rate not exceeding 30 percent of the assessable income and not exceeding 100,000 baht per year to not exceeding 300,000 baht per year.

In addition, the holding period for investment units will be reduced to no less than 5 years, compared to the previous period in which investment units had to be held for no less than 8 years.

This is for investment units purchased between 1 January 2024 and 31 December 2026 and requires that no money or benefits be brought in. The proceeds from the sale of investment units to TESG are included in the personal income tax calculation. The said investment units must be held for at least 5 years from the date of purchase of the investment units.

The TESG tax deduction limit does not count against the 500,000 baht limit for other retirement savings funds.

The TESG investment amount will not be counted with other retirement savings funds. At present, the total tax deduction ceiling is not more than 500,000 baht. he is called

1. savings account
2. Government Pension Fund (GPF)
3. Private School Teachers Care Fund
4. Retirement Mutual Fund (RMF)
5. Life insurance premiums
6. National Provident Fund (NSC)
7. Mutual Fund (SSF)

If I buy ThaiESG funds before January 1, 2024, what will happen?

If you purchase ThaiESG funds before January 1, 2024, you will get the reduction rights according to the same criteria, which is a maximum reduction of 30% of your estimated income. But not more than 100,000 baht and the investment units must be held for at least 8 years from the date of purchasing the investment units.

If I buy ThaiESG funds after December 31, 2026, what will happen?

For purchase of ThaiESG funds from 1 January 2027 onwards, you will be entitled to the reduction rights according to the same criteria, which is a reduction right of a maximum of 30% of your assessable income. But not more than 100,000 baht and the investment units must be held for at least 8 years from the date of purchase of the investment units.

The Treasury estimates the annual income loss at 13,000-14,000 million baht.

The Ministry of Finance reported the estimated loss of income and benefits received under Article 27 and Article 32 of the State Fiscal Discipline Act of 2018. An additional year of personal income tax revenue loss is expected to be approximately 13,000-14,000 million baht each (according to the original measures, it is expected to cause a loss of personal income tax revenue in the first year of about 3,000 million baht and in the following years about 10,000 million baht annually).

However, the Ministry of Finance expects to obtain the following benefits:

1. Increase investment in Thai investment funds for sustainability This will support companies that take into account the environment, society and corporate governance.
2. As a result, long-term investment in the Thai capital market has increased. This will increase the potential of the Thai capital market. And create a good investment climate and
3. It allows those who have money to increase the amount of money in savings and long-term investments. This will increase the overall returns from savings and investments.

In this regard, the relevant authorities have additional opinions, such as that it is appropriate for the Ministry of Finance to monitor and evaluate the achievements and report the results of operations under this tax measure at the end of the implementation period and increase the efficiency of tax collection to compensate for the loss in the resulting income and the Ministry of Finance should find ways to increase tax revenues in order to maintain tax collection as targeted and prevent financial risks in the future.