Previously, a taxpayer had to hold investment units in a Long-term Equity Fund (LTF) for 5 years or more to obtain tax benefits. However, the Thai government issued Ministry Regulation No. 317 (2559 B.E.) in June 2016 extending the period that investment units in an LTF have to be held in order to obtain tax benefits from 5 to 7 years for units purchased from 2016 through 2019.
Keywords: Mazars, Thailand, Personal Income Tax, LTF, Ministry Regulation, Tax Allowance
1 August 2016
We set below a summary of the Regulation:
- The amount paid to purchase investment units in an LTF under the law governing securities and exchanges is deductible for the Thai personal income tax purposes of individuals. This tax benefit is not available to a partnership, body of persons, or undistributed estate.
- The maximum deductible amount is 15% of assessable income or 500,000 baht (whichever is lower).
- To obtain the tax deduction, the individual must hold the units in the LTF for 7 calendar years or more, except where the unit holder is incapacitated or dies. However, as noted above, this Regulation applies only to units purchased from 2016 through 2019. Therefore, if a taxpayer purchased the units before 2016, the minimum holding period for obtaining tax benefits remains at 5 years.
- Remuneration or benefits received from the redemption of LTF units are also exempt from Thai personal income tax for an individual, provided that the individual holds the units for the required minimum holding period.
Any length of time that units are held in a calendar year counts as one year. Thus to meet the 7-year holding period requirement, it is possible to purchase units on 30 December 2016 and to redeem them on 2 January 2022 (a total holding period of 5 years and 4 days).