Thailand pledges tax incentives to promote stock market listings

The Thai Finance Ministry has pledged to use tax incentives to entice companies to list on the stock market and improve their efficiency, reported the Bangkok Post.

According to Finance Minister Pichai Chunhavajira, some companies considering listing on the Stock Exchange of Thailand (SET) have a declining return on equity, which may stem from business cycles or an inability to adapt to market changes.

The ministry is assessing tax measures to support these businesses to adapt for greater efficiency, such as reducing the rate of corporate income tax, he said, adding that similar measures have helped foreign companies adjust overseas.

He said one measure the ministry is considering is that if a company's profits over the past three years are at a certain level and after making efficiency improvements the profits increase beyond the average of those past three years, a lower corporate income tax rate would apply, possibly as low as 10% on the profits exceeding the three-year average. The remaining profits would be taxed at the regular rate of 20%.

Regarding the Bank of Thailand's rate cut of 25 basis points to 2% on February 26, Pichai said the reduction makes everyone feel better and should help in improving overall sentiment. Whenever the repurchase rate is close to the return on bond investments, financial institutions will need to find alternative ways to release money and increase lending.

In addition, the official said the central bank is reviewing the ministry's proposal to relax the loan-to-value (LTV) ratio. Pichai also proposed the bank consider weakening the baht, a strategy exporters support.