Update! What changes have been made to the "Mutual Fund Tax Law" in 2020 that investors should be aware of? Which types of mutual funds are subject to tax, and which are exempt?

The mutual fund tax law has undergone changes, and it is important to understand the new criteria and conditions. First, let's revisit 2019 when the government enacted a law to collect taxes on investments in debt securities, imposing a 15% tax rate on interest income received by mutual funds, effective from August 20, 2019. This was intended to create equity in tax collection between direct investments in debt securities and investments through mutual funds.

According to the new law, mutual funds are required to pay corporate income tax, which is specifically applicable to interest income at a rate of 15% on income before any deductions. Non-interest income is not included in the calculation for corporate income tax. However, the government continues to exempt corporate income tax for mutual funds in retirement savings categories, such as Retirement Mutual Funds (RMF), National Savings Funds, Government Pension Funds (GPF), and Provident Funds.

Based on the above principles, the tax burden for individual investors in 2020 is summarized by fund type and income type as follows:

1) Debt Mutual Funds will be exempt from income tax on both profit shares and capital gains, as the law considers that tax has already been collected at the mutual fund level, thus avoiding double taxation and additional burdens on investors.

2) Equity Mutual Funds and Mixed Securities Funds for individual investors receiving profit shares will have a withholding tax of 10% deducted at source by the mutual fund as the payer of the profit shares. Investors have the option not to include these profit shares in their total income for personal income tax calculations at year-end, while capital gains will be exempt from tax.

3) Infrastructure Mutual Funds for individual investors receiving profit shares will be exempt from income tax for a period of 10 years from the year the fund was established under Royal Decree No. 544. After this period, a 10% withholding tax will be applied to the profit shares, and investors can choose not to include these profit shares in their total income for personal income tax calculations at year-end, with capital gains also being exempt from tax.

4) Real Estate Mutual Funds for individual investors receiving profit shares will have a 10% withholding tax deducted at source by the mutual fund as the payer of the profit shares. Investors can opt not to include these profit shares in their total income for personal income tax calculations at year-end, with capital gains similarly exempt from tax.

SOURCE : www.bangkokbiznews.com