Thai Stock Exchange Indifferent To Corporate Tax Break

by Mary Swire, Tax-News.com, Hong Kong

09 May 2003

Thailand's stock exchange (SET) revealed that it will not urge the government to extend a tax break given to new listings, arguing that firms have cited more fundamental underlying reasons, such as investor confidence, in their decision to list on the exchange.

"We don't think the tax incentives are the most important factor to encourage companies to seek listings on the bourse. The market atmosphere and sentiment are more vital," SET president Kittiratt Na Ranong told the Bangkok Post this week.

The tax incentive, which expires this year, allowed a company listing on the SET to pay corporation tax at 25% instead of the full 30% for five years. Similarly, firms listing on the Market for Alternative investment (MAI) pay a 20% rate for five years.

Despite this, the number of companies which have taken advantage of the lower tax was much less than anticipated, with only 25 new listings taking place on the SET and MAI last year, according to Kittiratt. The boards have set themselves a target of 60 new listings this year.

However the exchange president did acknowledge that market conditions have been particularly tough in the last few months, with the war in Iraq and the recent SARS outbreak suppressing investment in the region.

As a consequence of the sharp downturn in the Asia Pacific region recently, Kittiratt said the SET may have to review its plan to hold a European roadshow designed to promote the SET, later this year. Whether or not the event would go ahead would very much rely on an upturn in investor confidence with regard to the region, Kittiratt said.

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