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Thailand: Mutual funds subject to 15% income tax (effective 20 August 2019)

Thailand: Mutual funds subject to 15% income tax

Under recent legislative changes, mutual funds will be subject to income tax at a rate of 15% on a fund’s gross income, with an effective date of 20 August 2019.


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The legislative changes are contained in Amendment Act No. 52, published in the Royal Gazette on 22 May 2019, and reflect amendments to the definition of “company or juristic partnership” (under Section 39 of the Thai tax law) to include mutual funds whether established under Thai laws or under foreign laws. Accordingly, with this amendment, a mutual fund will be subject to income tax in Thailand.

Mutual funds will be subject to income tax at a rate of 15% on gross income (i.e., the amount before deductions for any expenses). Gross income will include only income as determined under Section 40 (4) (a), such as interest income and discounts derived by the mutual funds.

The income tax can be collected via withholding tax mechanism applicable on the payment of income by the issuer of debt instruments, thereby resulting in issuers of debt instruments (that previously had no withholding tax obligations on payments made to mutual funds) being required to withhold tax at a rate of 15% on such payments (similar to the withholding tax obligations already applicable on payments to other investors). However, any tax withheld can be credited against the mutual fund’s income tax liability and will not apply to income arising from deposits, bills or debt instruments held before the effective date of 20 August 2019.   

The legislative amendment also extends the definition of income (under Section 40 (4) (g)) to include income from the “sellback” of investment units to mutual funds and specifically valued in money exceeding the amount invested. As a result, gains derived from the disposal of investment units by foreign corporate investors not conducting business in Thailand will be subject to a 15% withholding tax under Section 70.

The Thai Revenue Department has clarified that a provident fund will be understood to be a fund that is set up in accordance with a specific law and is not a mutual fund. Therefore, a provident fund (unlike a mutual fund) will not be subject to income tax.

KPMG observation

The legislative amendment was intended to reduce existing tax discrepancies in the form of additional tax burdens imposed on direct investment in debt instruments when compared to an investment in debt instruments via mutual funds. There are expectations that future legislation would exempt from income tax the income of retirement mutual funds (RMFs), but not long-term equity funds (LTFs).

Read a June 2019 report prepared by the KPMG member firm in Thailand

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