Tax: Understanding TISA – New Tax-Incentivized Individual Savings Account for Thai Equities

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Tax: Understanding TISA – New Tax-Incentivized Individual Savings Account for Thai Equities

Thailand is advancing toward the implementation of the Thailand Individual Savings Account (TISA), a strategic tax-advantaged investment framework intended to redirect household savings into domestic equities and mutual funds while providing substantial personal income tax deductions. Drawing inspiration from Japan’s Nippon Individual Savings Account (NISA), TISA is positioned as a cornerstone of the government’s Quick Big Win policy under the fifth pillar, aimed at fostering long-term savings and revitalizing the Thai capital market.

Recently, the Ministry of Finance (MoF) has presented the TISA proposal to the Economic Policy Committee for initial approval, with a subsequent Cabinet review scheduled for December 9, 2025.  This follows in-principle endorsement from the Economic Cabinet earlier in the year, elevating the annual tax-deductible contribution ceiling to 800,000 baht.  Upon final approval, regulations from the Revenue Department and Securities and Exchange Commission (SEC) are anticipated to enable rollout for the 2026 tax year, covering income earned in 2025. Recent analyses indicate TISA could inject significant liquidity into the Stock Exchange of Thailand (SET), particularly benefiting high-dividend sectors such as banking, while enhancing market confidence amid global uncertainties.

Key Features of TISA (Based on Proposed and Approved Framework):

1.  Eligible Participants

       •  Thai resident individuals (natural persons only).

       •  Limited to one TISA account per taxpayer, administered through asset management companies (AMCs), commercial banks, or brokerage firms.

       •  No specified minimum age, though contributions require assessable income; aligns with existing retirement savings vehicles like Super Savings Funds (SSF) and Retirement Mutual Funds (RMF).

2.  Annual Tax-Deductible Contribution Limit

       •  Up to 800,000 baht per year, inclusive of contributions to qualifying mutual funds (e.g., RMF, SSF, and Thai ESG Funds – TESG).

       •  This limit supplements deductions from other long-term savings instruments, potentially allowing high earners to deduct over 1.5 million baht annually in aggregate.

3.  Eligible Investments

       •  Primarily SET- and mai-listed ordinary and preferred shares.

       •  Expanded to include mutual fund units (RMF, SSF, TESG), bonds, and select exchange-traded funds (ETFs) tracking Thai equities; foreign securities and non-listed assets excluded initially.

       •  Enhanced incentives for sustainable investing: A 1.2x deduction multiplier for TESG contributions targeting companies with strong Environmental, Social, and Governance (ESG) performance.

4.  Holding Period Requirement

       •  Minimum one calendar year for investments to qualify for full benefits, with potential extensions to five years in equity-specific tranches to promote long-term discipline.

       •  Premature withdrawals or sales may result in retroactive disallowance of deductions, plus applicable penalties and interest.

5.  Tax Treatment of Gains

       •  Capital gains, dividends, and investment income within the TISA account are proposed to be fully exempt from personal income tax, mirroring NISA’s structure.

       •  This exemption applies post-holding period, providing a structural edge over standard taxable brokerage accounts.

6.  Lifetime or Cumulative Cap

       •  No fixed lifetime limit proposed, offering greater flexibility than Japan’s NISA (which caps cumulative investments at 18–60 million yen depending on the variant); however, annual caps ensure fiscal prudence.

What Stakeholders Should Prepare Immediately:

1. Individual Investors and High-Net-Worth Clients

•  Assess 2025 taxable income to project 2026 contribution capacity, integrating TISA with SSF/RMF/TESG for optimized deductions.

•  Curate a diversified portfolio of SET-listed dividend stocks (e.g., banking sector leaders) and TESG funds, prioritizing ESG-aligned assets for the 1.2x multiplier.

•  Initiate account setup with SEC-approved providers by Q1 2026; monitor MoF announcements for exact launch protocols.

•  Engage certified financial planners to model scenarios, factoring in the one-year minimum hold and potential government co-contributions.

2. Financial Institutions and Brokerage Firms

•  Expedite TISA-compliant platform integrations for account opening, transaction tracking, and automated tax reporting.

•  Develop compliance frameworks for the one-account rule and holding period enforcement, including penalty computation tools.

•  Launch targeted campaigns highlighting tax-exempt dividends and ESG multipliers to attract retail inflows, estimated to boost market liquidity significantly.

3. Listed Companies and Investor Relations Teams

•  Bolster retail-focused disclosures, emphasizing dividend policies and ESG metrics to capitalize on TISA-driven domestic demand.

•  Anticipate heightened scrutiny on long-term value creation, aligning with the SET’s Jump+ initiative for enhanced governance.

4. Tax Practitioners and Certified Financial Planners

•  Revise advisory models to incorporate TISA’s 800,000-baht layer and ESG enhancements, ensuring clients understand irrevocable commitments.

•  Prepare for inter-scheme coordination, as TISA may phase in as a successor to maturing SSF programs by end-2025.

Key Takeaways:

•  TISA establishes an 800,000-baht annual tax deduction for Thai equities and qualifying funds, with tax-exempt gains post-holding period and a 1.2x ESG multiplier, poised for Cabinet approval on December 9, 2025.

•  By promoting one-year-plus investments, it cultivates financial discipline and could sustain SET liquidity, especially in dividend-rich sectors, amid foreign inflow volatility.

•  High earners stand to realize compounded tax savings exceeding 200,000 baht annually when layered with existing vehicles, underscoring the need for proactive portfolio alignment.

•  Stakeholders must prioritize system readiness and education by early 2026 to harness TISA’s potential in fortifying Thailand’s retail investor ecosystem and economic resilience.

TISA signifies a transformative policy pivot, channeling public savings into sustainable market growth while mitigating reliance on external capital. Prudent early adoption, grounded in rigorous planning, will maximize its fiscal and wealth-building advantages.

Author: Panisa Suwanmatajarn, Managing Partner.

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