The amount invested in the recently approved Super Savings Funds (SSFs) could dwindle by half from the annual sums invested in long-term equity funds (LTFs) because of the significant reduction in tax privileges, says a capital market executive.
SSFs is expected to see inflows worth around 20 billion baht next year, a 50% drop from annual inflows of 40 billion into LTFs, said Wikij Tirawannarat, senior vice-president at Bualuang Securities.
The lower projection is attributed to SSFs lower tax deduction incentive, capped at 30% of annual accessible income, not exceeding 200,000 baht, said Mr Wikij.
The 30% ceiling is an upgrade from the existing 15% allowed for personal income tax deduction, but the maximum deduction is down from 500,000 baht per year.
He said it is up to fund managers to structure investment products under SSF investment conditions to entice investors.
Investors could continue investing in SSFs given attractive products bundled with the new tax-saving fund, said Mr Wikij.
SSF investment conditions are more relaxed than those for LTFs, as SSF units can invest in any assets, while LTFs stipulate equities as the major investment asset.
On Dec 3, the cabinet approved SSFs as a new tax-saving fund to replace LTFs, for which the tax incentive is due to lapse at year-end.
The tax-deductible amount is capped at 500,000 baht per year as a combined amount for contributions to the new tax-saving fund, retirement mutual funds (RMFs), provident funds, the Government Pension Fund, the National Savings Fund and pension insurance premiums.
The lock-up period for contributions to SSFs is 10 calendar years.
There is no minimum contribution requirement for SSFs, and individual taxpayers are not required to make continuous contributions.
Fetco chairman Paiboon Nalinthrangkurn said he disagreed with the ministry's plan to set the maximum for combined tax-deductible contributions for SSFs and RMFs at 500,000 baht per taxpayer per year.
