TISA Update – Government Responds to Industry Backlash with+ Proposed Reforms for Broader Equity Incentives

In a follow-up to our earlier publication, “Tax: Understanding TISA – Thailand’s New Tax-Incentivized Individual Savings Account for Thai Equities” (Tax: Understanding TISA – New Tax-Incentivized Individual Savings Account for Thai Equities – The Legal Co., Ltd.), which outlined the initial framework for the Thailand Individual Savings Account (TISA) as a promising tool to channel household savings into domestic equities amid Cabinet approval on December 9, 2025, recent developments reveal significant industry skepticism and swift governmental pledges for revisions. Just two days after the Economic Cabinet’s endorsement, Finance Ministry officials have announced plans to refine the scheme, addressing core criticisms that it lacks genuine incentives for stock investments, imposes tax traps on high earners, and fails to deliver structural market reforms. These adjustments aim to balance equity for low- and middle-income savers while restoring appeal for affluent investors, potentially injecting up to 1 trillion baht annually into the Stock Exchange of Thailand (SET).

The backlash, led by analysts and echoed across financial media, highlighted TISA’s resemblance to outdated Long-Term Equity Funds (LTFs) rather than transformative models like Japan’s NISA or the UK’s ISA. Critics argued that the 800,000-baht aggregate tax deduction cap—encompassing TISA, Retirement Mutual Funds (RMF), Super Savings Funds (SSF), Thai ESG Funds (TESG), and other vehicles—disproportionately benefits only 15.9% of Thais who pay personal income tax (PIT), while the proposed income-tiered multipliers (1.3x for earners below 1.5 million baht annually, versus 0.7x for those above) could effectively raise taxes for high-net-worth individuals, deterring their participation as the market’s primary liquidity providers.

Addressing Key Criticisms: Proposed Amendments to Enhance Appeal:

Later on, Deputy Prime Minister and Finance Minister convened stakeholders at the Ministry of Finance to review feedback, emphasizing that the contentious multipliers and income thresholds remain “preliminary models” subject to recalibration for fairness and efficacy. “We are not locking in any figures that could distort incentives or penalize savers; our goal is permanent, flexible long-term savings without the renewal uncertainties of past schemes like LTFs,” underscoring the scheme’s role in the “Quick Big Win” policy’s fifth pillar to combat Thailand’s declining savings rate (from 27% to 25% of GDP over the past decade) ahead of full aging society status.

Key proposed tweaks include:

1. Refined Income-Tiered Deductions

• The 1.3x multiplier for sub-1.5 million baht earners (capping deductions at 1.04 million baht for 800,000-baht investments) will be retained to empower 11.4 million low- and middle-income households, but the 0.7x cap for higher earners (limiting them to 560,000 baht) is under review. Officials signal potential equalization to 1x across brackets or a graduated scale to avoid “tax traps,” ensuring high earners—who contribute over 60% of PIT revenue—retain motivation without subsidizing fiscal shortfalls exceeding 40 billion baht annually from prior incentives.

2. Expanded Flexibility in Investments and Portfolios

• Unlike rigid predecessors, TISA will permit self-directed asset allocation across SET-listed stocks, bonds, ETFs, and mutual funds, with intra-account switches allowed without voiding deductions, provided a minimum five-year hold (or until age 55 for retirement-linked portions). This addresses complaints of a 55-year lock-in as overly restrictive, introducing up to 25% collateralization for emergency loans to enhance liquidity.

• A new 200,000-baht annual tranche, separate from the deduction cap, will exempt dividends, interest, and capital gains from tax—mirroring NISA’s success in boosting Japan’s investment-to-deposit ratio from 17% to 23.6% over a decade—directly countering the “no real return exemptions” critique.

3. ESG and Thematic Boosters

• The 1.2x deduction multiplier for TESG investments remains, but with broadened eligibility to high-ESG or governance-scoring stocks, encouraging sustainable flows without mandating funds. This aligns with the SET’s Jump+ reforms, potentially channeling 100-200 billion baht yearly into green and blue economy sectors.

4. Complementary Measures for Market Depth

• Parallel initiatives include monthly 1,000-million-baht issuances of “Savings Plus” government bonds (minimum 1,000 baht, app-based with full liquidity) and micro-insurance stamp duty exemptions to lower entry barriers. The Office of Insurance Commission (OIC) will also cut risk charges on equity investments from 25% to 18%, freeing up 100 billion baht annually from insurers for SET inflows.

These revisions, slated for Cabinet submission by late December 2025, target a July 1, 2026, rollout for the 2026 tax year, with the Securities and Exchange Commission (SEC) finalizing eligible assets.

What Stakeholders Should Prepare for in the Revised Framework:

1. Individual Investors and High-Net-Worth Clients

• Model 2025-2026 tax scenarios incorporating potential 1x equalization and the 200,000-baht exemption tranche; prioritize dividend-yield stocks (e.g., banking sector at 5-7%) for tax-free income.

• Stress-test portfolios for five-year horizons with switch flexibility, using the 25% loan collateral as a safety net.

2. Financial Institutions and Brokerage Firms

• Upgrade platforms for dynamic TISA tracking, including multiplier calculations and exemption reporting; prepare for a surge in retail accounts (targeting 5-10 million users initially).

• Collaborate on educational webinars to demystify self-directed options, focusing on ESG to capture the 1.2x premium.

3. Listed Companies and Investor Relations Teams

• Accelerate ESG disclosures and dividend policies to qualify for incentives, anticipating 20-30% retail ownership growth; leverage TISA for targeted retail roadshows.

4. Tax Practitioners and Certified Financial Planners

• Integrate TISA into holistic plans, phasing out expiring ThaiESG limits (down to 100,000 baht by 2027); advise on the new child investment exemptions under Section 40(4) to enable intergenerational wealth transfer.

Key Takeaways:

• TISA’s initial design drew valid industry fire for weak stock incentives and high-earner disincentives, but December 11 announcements signal responsive tweaks toward NISA-like exemptions and flexibility, preserving the 800,000-baht cap while adding a 200,000-baht tax-free layer.

• Reforms prioritize low-income access (1.3x deductions) but eye balanced multipliers to sustain high-earner flows, potentially averting market liquidity dips and injecting 500 billion-1 trillion baht yearly into equities.

• With Cabinet review imminent and 2026 implementation on track, stakeholders must adapt swiftly: recalibrate models, enhance platforms, and educate on self-directed perks to capitalize on this pivot toward enduring savings culture.

• Beyond TISA, holistic reforms—like monetary easing and governance upgrades akin to Japan’s “three arrows”—remain essential for true market revitalization.

This evolving TISA framework could yet emerge as a game-changer, fostering inclusive long-term investing if revisions temper fiscal conservatism with bold incentives. Early movers in compliant portfolios and advisory services will reap the rewards of Thailand’s maturing capital markets.

Author: Panisa Suwanmatajarn, Managing Partner.

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TISA Update – Government Responds to Industry Backlash with+ Proposed Reforms for Broader Equity Incentives