THAILAND – Tax Exemption on Personal Income for Investing in Thai ESG Funds

On December 8, 2023, the Thai Cabinet endorsed a tax exemption initiative for individuals interested in investing in Thai Environmental, Social, and Corporate Governance (ESG) projects. Subsequently, the Minister of Finance issued the Ministerial Regulation No. 390 regarding tax exemptions aimed at encouraging sustainable investments in Thailand. Following this, the Revenue Department issued the Notification of Director-General on Income Tax No. 442 on December 20, 2023, granting income tax exemptions for purchasing investment units in Thai ESG Funds.

The Thai ESG fund, categorized as a Thai mutual fund focusing on sustainability, offers investors the opportunity to utilize their investment amount as a deduction for personal income tax purposes. Investors in Thai ESG funds can deduct up to 30% of their annual taxable income, with a maximum investment cap of 100,000 baht.

This initiative parallels previous schemes such as Retirement Mutual Funds (RMF), Super Savings Funds (SSF), Super Savings Fund Extra (SSFX), or Long-Term Equity Funds (LTF). There is no specified minimum investment, and these deductions can be claimed for tax years spanning from 2023 to 2032 (for 2023, the purchasing period only extended from November 21, 2023, to December 31, 2023). Notably, investments in Thai ESG funds do not count towards the limit of other retirement and savings funds, making it an enticing option for tax-conscious investors.

The minimum investment period for Thai ESG spans a full eight years from the purchase date. Investors can purchase Thai ESG funds in any given year and claim tax deductions only for the years units were purchased. There is no obligation to buy continuously each year.

Failure to comply with the stipulated conditions requires income earners to pay taxes for the year in which the tax allowance for Thai ESG was utilized. This involves adding back the deduction and paying additional tax for that year, along with a surcharge from the filing date of that tax year until the filing date of additional personal income tax returns.

Should you need more information or assistance to understand how this order might impact your tax situation, please do not hesitate to get in touch with us at contact@orbis-alliance.com for professional tax counsel.