Why 25% Corporate Income Tax For Set Listed Companies,

[pattyboy]

A friend of mine who is a struggling business student was given the assignment to find 2 reasons why companies that are listed on the Stock Exchange of Thailand pay only 25% corporate income tax on net earnings, but non-listed companies must pay 30%. We have both looked for this type of information specific to Thailand without any success, and I've looked for general information as to why governments, in general, would give tax breaks/incentives to get companies to list on the stock exchange, but I haven't found anything. The only thing I've thought of so far (that makes sense to me) is that it would make investing in those companies easier (especially foreign investment) and likely higher. Perhaps I'm out in left field with that idea, so if anybody can steer me in the right direction with some answers it would be appreciated.

Edited November 18, 2007 by pattyboy

[JimsKnight]

All I can tell you is from what I think the UK charges in corporation tax (which is 20% and 40% respectively). Thailand charging 25%.. that could be an incentive to start floating the company in the public domain, not necessarily a good thing if theres another stock market crash though....

[tingtong]

I can also think this as incentive. or long therm investment for the country.

company goes SET -> raise money ->invest extra money to expand business -> ultimately pays more taxes...win-win situation.

same as tax breaks to encourage companies to move here.

[pattyboy]

Thanks TT and JK.

I'll pass your ideas on.

[Irene]

The question is somewhat incorrect. Listed companies are subject to the same rate as 30% as non-listed except of the incentives (limited to five years) given to those medium-sized companies listed in 2001 and thereafter. The main reasons are to induce medium-sized companies to be listed and widen sources of supplies of companies on the Thailand stock exchange. The incentives have been partially successful in its objective but somewhat disappointing of the number of increase.

[pattyboy]

The question is somewhat incorrect. Listed companies are subject to the same rate as 30% as non-listed except of the incentives (limited to five years) given to those medium-sized companies listed in 2001 and thereafter. The main reasons are to induce medium-sized companies to be listed and widen sources of supplies of companies on the Thailand stock exchange. The incentives have been partially successful in its objective but somewhat disappointing of the number of increase.

Thanks for the clarification. Actually, I did notice those particulars after doing a little more research but thought it would be confusing to edit the original question. After all, those details aren't really important (but the more accurate info you've provided is appreciated). I think what the question really comes down to is: Why would governments want companies to list on the stock market/exchange? What are the benefits to the country/government?

Thanks also for your answer, but I must admit I don't really follow what you mean by, "widen sources of supplies of companies on the Thailand stock exchange". I'm sure your answer is well-stated, but I just don't have much of a head for business and government related issues.

Edited November 19, 2007 by pattyboy

[Irene]

pattyboy,

My comments are in bold type:

Thanks for the clarification. Actually, I did notice those particulars after doing a little more research but thought it would be confusing to edit the original question. After all, those details aren't really important (but the more accurate info you've provided is appreciated). I think what the question really comes down to is: Why would governments want companies to list on the stock market/exchange? What are the benefits to the country/government? They want more companies to be listed because of the insufficient number of stocks traded on the exchange that has made the Thailand exchange as not that attractive when compared with Singapore and Malaysia.

Thanks also for your answer, but I must admit I don't really follow what you mean by, "widen sources of supplies of companies on the Thailand stock exchange". I'm sure your answer is well-stated, but I just don't have much of a head for business and government related issues. Again, they just want more companies to come into the stock exchange having their shares sold in the market. That would make good business for the Stock Exchange hoping for more activities.

[cclub75]

A friend of mine who is a struggling business student was given the assignment to find 2 reasons why companies that are listed on the Stock Exchange of Thailand pay only 25% corporate income tax on net earnings, but non-listed companies must pay 30%. We have both looked for this type of information specific to Thailand without any success, and I've looked for general information as to why governments, in general, would give tax breaks/incentives to get companies to list on the stock exchange, but I haven't found anything.

Your friend doesn't seem to have a lot of imagination...

The reason is very simple : to boost the market, both on the supply side (convince more companies to get listed) and on the demand side (investors can enjoy better return with higher dividends for instance, etc.).

It's just another thai version of the boiler room.

[pattyboy]

A friend of mine who is a struggling business student was given the assignment to find 2 reasons why companies that are listed on the Stock Exchange of Thailand pay only 25% corporate income tax on net earnings, but non-listed companies must pay 30%. We have both looked for this type of information specific to Thailand without any success, and I've looked for general information as to why governments, in general, would give tax breaks/incentives to get companies to list on the stock exchange, but I haven't found anything.

Your friend doesn't seem to have a lot of imagination...

The reason is very simple : to boost the market, both on the supply side (convince more companies to get listed) and on the demand side (investors can enjoy better return with higher dividends for instance, etc.).

It's just another thai version of the boiler room.

Thanks for your reply.

The student's teacher requested 2 reasons specific to the Thai stock exchange, and this is where the problem lies. I should have been more specific in my OP and stressed that the information being researched needs to include something about the direct business relationship (laws / rules / regulations, etc.) between The Thai government and the SET. This specific type of information is what seems impossible to find. This is also true when researching the same type of information for other countries (I was hoping that the laws and regulations used in other countries pertaining to their stock markets might be usable in the student's answer.) As information about the the SET and the Thai government are very difficult to find, I was hoping that maybe somebody with intimate knowledge regarding this aspect of business in Thailand might run across the post and offer a couple of facts specific to Thailand.

Sorry that I wasn't clearer about the type of info I was seeking. I guess I can understand why you've bothered to make a derogatory remark about not having a lot of imagination. I agree that the benefits you've mentioned are obvious ones and require no imagination at all.

Edited November 25, 2007 by pattyboy

[Irene]

Sorry that I wasn't clearer about the type of info I was seeking. I guess I can understand why you've bothered to make a derogatory remark about not having a lot of imagination. I agree that the benefits you've mentioned are obvious ones and require no imagination at all.

pattyboy,

You are really a forgivable person. No, you are right to ask your question and I find the derogatory remark was unwarranted. People who ask questions of any level are wiser thereafter. I prefer to be a dumb person than being a wise guy because I don't have many people to compete with and being less aggressive in my attitude to my fellow men.

[cclub75]

You are really a forgivable person. No, you are right to ask your question and I find the derogatory remark was unwarranted. People who ask questions of any level are wiser thereafter.

Relax. It was not a derogatory remark.

Look at the 2 smileys i used in my first message. Okay ?

As for the question, well I do not know. It might be a formal link, for instance the thai gvt shareholder of the SET.