THAILAND

A new tax deduction for consumers buying pension policies will be proposed for cabinet consideration soon, says Chantra Purnariksha, the secretary-general of the Office of the Insurance Commission.

Prime Minister Abhisit Vejjajiva and Chantra Purnariksha, secretary-general of the Office of the Insurance Commission, admire a display at an awards event held to honour outstanding insurers at Government House yesterday. PATTANAPONG HIRUNARD

The new measure would promote more usage of insurance policies for financial security and health coverage, which would lighten the government's financial burden.

The aim is to increase insurance penetration to 30-35% of the population over the next few years from 26%, she said.

Mrs Chantra said the OIC also proposed the measure to the Finance Ministry for consideration.

However, Satit Rungkasiri, director-general of the Fiscal Policy Office, said the ministry had yet to offer the OIC's proposal for consideration. He argued that the government should raise the tax deduction for consumers buying pension policies as long as the new products have stringent conditions that prevent early policy surrender.

Penalty conditions such as returning the tax rebate in full plus interest and a fine could be applied to those who fail to fulfil the long-term contract, he said.

According to the OIC proposal, the government would be asked to allow individual consumers buying a pension policy to deduct another 100,000 baht or no more than 15% of total income from their annual taxable income, but not more than 200,000 baht total per person.

Currently, taxpayers can use up to 100,000 baht a year in life insurance premiums (up from 50,000 baht in 2008) as a personal deduction from taxable income.

Under the new proposal, taxpayers could enjoy a maximum deduction of 200,000 baht per year if they hold both general life and pension policies.

Prime Minister Abhisit Vejjajiva urged consumers and businesses alike to buy insurance products as risk management tools while pledging to offer greater tax incentives to the industry.

Sara Lamsam, president of Muang Thai Life Assurance, also suggested the government allow female insurance sales agents to combine their income with that of their husbands for a lower income tax payment.

Sales agents in the industry are treated as independent contractors and charged separately when submitting annual income tax returns. Agents earning up to 1.8 million baht a year are subject to both value-added and personal income tax.

Female sales agents currently account for 50% of life insurance agents, or about 300,000 to 400,000.