Thailand Financial Transactions Tax - Introduction
Draft legislation has been approved by Thailand’s cabinet paving the way for the introduction of a Financial Transactions Tax (“FTT”).
The tax will apply to securities traded on the Stock Exchange of Thailand (“SET”).
This does away with a tax exemption that has been in place for over three decades.
Assuming that it ultimately finds its way onto the statute book, it is envisaged that it will apply to transactions starting from April 2023.
Existing law
As alluded to above, the sale of securities through SET has been exempt from specific business tax since the end of 1991. The rationale was that this would stimulate trading on the secondary market and providing a shot in the arm for the domestic economy.
The FTT essentially acts to repeal this exemption. It is an indirect, transactional tax imposed on income from the gross receipts from share disposals.
Who will be liable for FTT?
Broadly speaking it will be those that are selling securities who will be liable for FTT.
However, the draft law also requires brokers to withhold FTT from the share sales income and to pay these amounts to the Revenue on behalf of the seller.
Phasing in of the FTT
It is anticipated that the new FTT tax will be introduced in two phases.
These phases are as follows:
| Which phase? | Rate of FTT (inc local tax) | Expected date of commencement |
| Phase one | 0.055% x gross income from share disposals | With effect from April 2023 |
| Phase two | 0.11% x gross income from share disposals | With effect from January 2024 |
Does the FTT apply to all shares and securities?
The FTT will apply to the following:
- shares (both ordinary and preference),
- warrants,
- derivative warrants,
- exchange traded funds,
- depositary receipts,
- mutual fund units, and transferable subscription rights.
Some persons are specifically exempted.
If you have any queries relating to the new Thailand Financial Transactions Tax or tax matters in Thailand more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article