The government is currently struggling with an important decision as to whether it should increase the value-added tax (VAT) rate to cope with the need to cover the rising budget deficit. As the increase will certainly have a negative impact on living costs, raise inflation and reduce domestic consumption, some government officials favour expanding the tax base as much as possible in lieu of increasing the VAT rate.
Earlier this month, chaos arose in the capital markets when the Securities and Exchange Commission (SEC) sent out letters containing a surprising request to brokers, custodian banks and Thailand Securities Depository Co (TSD). It asked them to hand over information regarding over-the-counter (OTC) trading of shares, warrants, derivative warrants, non-voting depository receipts (NVDR) and depository receipts (DR), for which they act as intermediaries. The request originated with the Revenue Department, which is looking to plug loopholes and collect unpaid tax, especially personal income tax, from OTC transactions.
When an individual derives capital gains from the "sale of the securities in the Stock Exchange of Thailand", that person will be exempted from personal income tax under Section 2 (23) of the Ministerial Regulation. This exemption does not apply to "gains from the sale of debentures or bonds". The Revenue Department normally treats gains from the sale of warrants, derivatives, NVDR and DR as capital gains from securities trading exempted from personal income tax as well _ when traded on the SET.
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