Analysts Fear a Tax on Share Trades Will Reduce SET’s Trading Volume

Analysts warn that collecting tax on earnings from stock trading may put market volatility worsening and would adversely impact trading volume.

Finance minister Arkhom Termpittayapaisith, said on Monday that the ministry will shortly forward to the cabinet a proposal for collecting tax on earnings from stock trading.

The government reportedly seeks to impose a 0.1 percent tax on stock transactions within this year, with a 90-day grace period if the tax is approved and enacted.

The financial transaction tax has been withheld since 1991.

Arkhom remarked, “We will not begin tax collection so long as the stock market index continues to decline everyday.”

He expects the levy will yield tens of billions of baht in annual state revenue.


Asia Plus Securities said that concern over tax on share trades was one of the factors contributing to yesterday’s decline in Thai stocks. If this taxation is approved, according to the broker, it will have a negative impact, worsening the volatile market, and reducing trading volume. Moreover, some investors will be affected, particularly those participating in high frequency trading. ASPS advises investors to keep a cash position of 10 to 20 percent and to focus on reopening plays, dividend plays, and stocks that profit from the baht’s weakening.


Meanwhile, Capital Nomura Securities projects the SET Index would undergo another correction if the tax is imposed. However, no timeframe has been set for the implementation of the 0.1% tax on share transactions.