The Stock Exchange of Thailand is again pushing the military regime for tax waivers for mergers and acquisitions. The tax is seen as a major obstacle for Thai corporates to expand via M&A.
Sathit: Lower taxes needed to compete
The SET asked the Finance Ministry to revise the M&A tax structure as Thailand levies double taxation on many items and has a complicated process of levying tax. The SET and the Federation of Thai Capital Market Organizations (Fetco), which is a SET member, will jointly propose the matter to the National Council Peace and Order (NCPO) for consideration.
The move coincides with the Securities and Exchange Commission recently proposing a long list of tax changes from the junta, comprising amending double taxation, including the M&A tax, to accelerate the development of the Thai capital market and help the private sector strengthen businesses across Asean.
Sathit Limpongpan, the SET chairman, said M&A is an effective method for businesses to expand rapidly, but Thailand's double taxation including corporate income, asset transfer and dividend taxes results in higher costs here than for regional peers.
"M&A will be crucial to drive private sector expansion in the future. We should resolve complicated tax levies because they make buyers and sellers reluctant to use M&A deals," said Mr Sathit.
Kesara Manchusree, the SET president, said Fetco and SET recently discussed M&A taxes and other levies that limit the growth of listed companies and the expansion of the capital market with the Revenue Department.
Wicha Tomana, executive vice-president of Phillip Securities, agreed the M&A tax hinders business expansion and has found it to be a major cause of failures in quite a few M&A deals.
In a related development, Chanitr Charnchainarong, SET's executive vice-president, said the SEC approved the primary listing rules for foreign firms, allowing fundraising for dual listing and bond sales. Under the new primary listing rule, the foreign parent can list directly.
"They don't need to go through a nominee, subsidiary company or holding company as before," he said.
"The SET expects by September all IT systems that serve foreign primary listings will be ready, and we heard some Thai firms listed in other markets are interested in returning to the SET."
Fund inflows are continuing for bonds and equity assets.
"The Thai market maintained its high trading liquidity among its peers in the region. The SET plans to hold its annual Thailand Focus investment event in late August, along with three other big events this year, so foreign investors can receive updates on Thailand's economic figures, investment trends and the political situation. All these factors have a positive outlook, so we expect fund inflows will continue," said Mr Chanitr.