Random RCBO Trip...What Next?

[isawasnake]

I was hoping to open up and enlightening discussion about the benefits and drawbacks of dividends with Thai stock.

Of course, in Thailand there is no tax on the capital gains from selling shares, but there is a tax on dividends. So, what are the benefits of dividend stocks? What are the drawbacks of selling shares for profit, if any?

Thanks to all for the input.

[Time Traveller]

Let me give you 2 examples: let's say you purchase a stock at 100 baht per share that has a 8 baht dividend. Assuming you sell it before ex dividend and buy back after at 92 baht, then you make 8 baht per share or 8 % return

On the other example you don't sell the shares and then you receive dividend less 10% withholding tax = 7.2 baht. As most company dividends have tax credits - after paying their corporate taxes - then you can claim back these tax credits when you file your thai income taxes. So the 8 baht per share is in effect actually 10 baht per share with 2 baht in tax credits and another 0.8 baht as the withholding tax (total tax credits = 2.8 baht).

If you were in the 10% tax bracket then you would receive a refund of the difference between the tax credits and your marginal tax bracket. So it would be 2.8 baht tax credit less 1 baht for your 10% marginal income tax rate = 1.8 baht refund. So the real after tax dividend would be 10 baht (scaled up dividend) less 1 baht (your marginal tax bracket) = 9 baht per share or 9% yield

Of course if you don't file your taxes you don't get this benefit and the revenue department gets a windfall!