Thaksin's Children To Be Forced To Pay Income Tax At 37 Per Cent Rate

[johnnyk]

ooohhhh - lets all hate taksin. Lets hope he becomes poor.

You guys all sound a little jealous that Taksin has managed to make it so big in his life. What did he use to get there? His brain. He is a very clever man, obviously, and has made millions of dollars and also done his lttle bit of good along the way (increasing the average wage etc) So he made a few mistakes - dont we all?

Now he has been deprived of his job and his face, isnt that enough. Let the poor guy alone.....

Save your sympathy for the genuinely poor and f*cked over people of Thailand.

Do a little more research.

[Jai Dee]

Thaksin's kids to face giant tax bill

Legal action launched as ousted PM's children miss share deal's tax deadline

The Revenue Depart-ment has decided to take legal action against former Prime Minister Thaksin Shinawatra's children after they failed to pay personal income tax on the controversial Temasek Holdings takeover of Shin Corp, marking an abrupt change in departmental policy.

Department director-general Sirote Swasdipanich told a press conference: "I ordered tax officials to proceed with the legal action to collect personal income tax from Pan-thongtae and Pinthongta."

Earlier, he was in the hot seat for of his department's failure to collect a single baht in tax from Thak-sin's children.

Sirote yesterday, however, said Thaksin's children were supposed to pay tax of 37 per cent on the sale of 329.2 million shares previously held by Ample Rich Investments - a Shinawatra family company registered in the British Virgin Islands tax haven.

Panthongtae and Pinthongta were supposed to pay their tax bills by September 30, the deadline for half-year tax payments for non-salaried income earners.

However, Sirote said they had submitted no payment, so the department would proceed with legal action by inviting them to report to officials.

He failed to disclose the sum that Thaksin's two children were supposed to pay or reveal whether they would face a fine.

Sirote said it depended on the agreement reached between the department and the ousted premier's offspring, and if they did not agree, they could appeal to Tax Appeals Bureau.

Tax lecturers have estimated the two were supposed to pay about Bt5.8 billion in taxes, because they received a net profit of Bt15.88 billion from the transaction. Normally, failure to meet a tax deadline would incur a fine and lead to a doubling of the payment.

Sirote said he reported the department's action to Depu-ty Prime Minis-ter and Finance Minister MR Pridiyathorn Devakula. When Thaksin was in power, the department insisted the premier's children were not required to pay any tax.

The Revenue Department's change of position came after the coup. Now the Office of the Auditor-General (OAG), the National Counter Corruption Commission (NCCC) and the Assets Examination Committee (AEC) are investigating the tax controversy related to the Temasek-Shin deal.

Asked why the Revenue Depart-ment was changing its stance, Sirote said the department had obtained new information suggesting tax should be paid by anyone who made a profit of more than Bt40 on the stock exchange. "Collecting taxes is a matter of duty. If we fail to perform our duty, tax officials could be put in jail," said Sirote.

Panthongtae and Pinthongta bought 329.2 million Shin shares from Ample Rich at Bt1 apiece and then sold them to Temasek for Bt49.25 each, netting Bt18.9 billion from the transaction. The share sale was part of the Bt73.3-billion transaction of the Shinawatra and Damapong families and Singapore's investment arm, Temasek.

The deal sparked a public outcry, because the Revenue Department had earlier said the Bt73.3-billion Shin-Temasek was tax free, because individual investors selling shares in the stock market were exempt from taxes.

After the Administrative Court jailed three former Election Commissioners for their mishandling of the invalid April general election, the OAG started to investigate the Revenue Department, examining whether Sirote and senior officials had failed to perform their duties honestly.

Sirote yesterday dismissed rumours that political pressure caused him to change his position and denied he had been reported to the OAG, the NCCC or the AEC.

He said the OAG was an independent body empowered to investigate any government agency and that if the AEC asked for more information, it would be kept abreast of developments.

Source: The Nation - 8 September 2006

[brahmburgers]

Financially speaking, his kids are him, they aren't separate - neither is his wife. He (and kids/wife) will slip out of this little dust-up just like he's easily slipped out of all previous predicatments. Some might say 'he didn't slip out of losing his PM position' yes, he lost the job, but he's still got powerful tentacles in every facet of power politics in Thailand. And the power game is just a game for him, the real prize is money - getting as much as possible, and spending as little as possible outside his family and selfish needs. His 'donation index' probably amounts to about .00001 of 1%.

[womble]

They could be charged double for the late payment of tax.

Wouldn't that be sweet, that would amount to almost 70% tax!!!

Som num na ching ching!

[PhilHarries]

Is 329.2 million shares all they sold?

I don't agree with this figure either.....

How did they manage to sell 0.2 of a share?

At the risk of getting a slap for being nitpicking that's 0.2 million shares or 200,000.

Anyway let's not celebrate too early, never forget the man, and by association his family, are as slippery as an eel in a bucket of grease.

[John K]

Lets not forget what is going on behind the scenes. Thaksin can’t come back just yet so his wife and family are here to do some wheeling and dealing to minimize the losses of other peoples money that they posses. What was her first stop? Where has she been going? Certainly not sitting at home making a welcome home sign for hubby.

How may deposed people that you know of have done this type of thing? I can’t think of any off the top of my head. He only wants money, that is the whole game for him.

[mongoose]

They could be charged double for the late payment of tax.

Wouldn't that be sweet, that would amount to almost 70% tax!!!

Som num na ching ching!

Do not get too excited. Run the numbers in the article and you find that the shares being taxed times the sale price per share add up to only about 22% of the grand total sale price. That means that the tax you are talking about is 70% of 22% or about 15% of the total sale price. Might get some more from other sellers but might not even collect from the Shins.

[Scott]

I have no love for the man or his family, nor do I have any hate or revenge motive. I do think, however, that it sets an extremely poor example when the head of a country changes the law so as to sell his telecoms business, then sells it and then manages to avoid paying taxes.

Every businessman everywhere tries to avoid the tax man. They will have legions of lawyers and accountants to figure out how to minimize the amount paid. In the end, however, they pay what they have to pay.

As the head of a country and the head of a family with a business, he had a serious conflict of interest and he used to his and his families advantage. Somewhere laws and rules have been broken. They need to found and corrected.

I don't care how much they end of paying. I just hope they end up paying something that is in line with what would others would pay.

[Plus]

Financially speaking, his kids are him, they aren't separate - neither is his wife. He (and kids/wife) will slip out of this little dust-up just like he's easily slipped out of all previous predicatments.

No, legally these two are grown ups, he is not legally responsible for whatever they do. It's THEIR assets, not his. He has other, underage kids, and they are on his balance sheet.

He has never been in this situation before, getting past the generals is not the same as getting through the Constitution Court.

[bino]

Is 329.2 million shares all they sold?

I don't agree with this figure either.....

How did they manage to sell 0.2 of a share?

At the risk of getting a slap for being nitpicking that's 0.2 million shares or 200,000.

Anyway let's not celebrate too early, never forget the man, and by association his family, are as slippery as an eel in a bucket of grease.

Not nitpicking- you're right! I didn't read it properly.

Edited November 8, 2006 by bino

[PeaceBlondie]

Chownah asked if I believe Thai press releases to be accurate. Of course not.

I spent many years computing taxes for the IRS, and I note that the press release(s) compute the taxable income (which wasn't reported) at 19 billion net, when it's 16 billion net. I would have been in big trouble at my job, if I had made a 3 billion error in my computations.

[steveromagnino]

key issue exactly as I predicted a while back is that the kids have broken the law, by using an offmarket transaction to acquire shares at a price no one else could, then almost immeidately selling them, which leaves them liable tax on the profit made, since it is clear they are in the business of buying and selling shares. Why is wasn't ruled like this right from the beginning smacks of interference.

Kids are a great target, as is the wife, because the great unwashed in Isaan never liked or loved either; go after the father and there could be trouble - most of Isaan don't understand or cannot understand what this guy did in business, and only are happy to have their nice little payouts with 30b healthcare, debt forgiveness and the like.

So... go after the kids, and everyone stays happy, while punishing the guy in probably the harshest way possible in some ways..

The entire deal being illegal probably rests on the buyer more than the seller, caveat emptor and all that. Don't see how enforcing tax on one group of shares has any relevance to the legality of the nominee companies set up in question to get around 49%. They will be given a year to fall back to the limit and anyway, no matter what they'll lose their shirts because they overpaid.

[sriracha john]

...and the fighting begins:

Toppled Thai leader's lawyer says family will fight paying taxes on controversial deal

BANGKOK, Thailand: Ousted Prime Minister Thaksin Shinawatra's family will fight the Thai Revenue Department's decision to hold Thaksin's two children responsible for taxes on a controversial multimillion-dollar deal initially billed as tax-free, a lawyer said Wednesday.

In its stunning reversal Tuesday, the department had said Thaksin's son and daughter would have to pay taxes on the family's sale earlier this year of telecommunications empire Shin Corp. The 73.3 billion baht (US$1.9 billion; €1.55 billion) deal ultimately led to Thaksin's downfall.

"We will bring this case to court," the family's attorney, Nopadol Patama told, The Associated Press.

Nopadol said the family would "do everything in accordance with the court ruling."

The Shin Corp. sale to Singapore's state investment arm, Temasek Holdings, drew widespread protests in Thailand because it placed strategic assets — including communications satellites — in foreign hands, and because the deal was structured so that Thaksin's family did not have to pay capital gains taxes.

Protests over the sale fueled calls for Thaksin to resign, causing political tension that culminated in the Sept. 19 coup.

The Revenue Department's director-general, Sirote Swasdipanich, said Tuesday that Thaksin's son, Phantongtae, and one of his daughters, Pintongta, had failed to pay personal income tax on gains made from the sale of their Shin Corp. sales.

Thaksin had transferred his Shin Corp. shares to his children, who are now in their 20s, after becoming prime minister, because Cabinet members and their spouses are not allowed to retain holdings in companies with government contracts.

Sirote said it was not currently clear how much Thaksin's children would have to pay. Individuals are subject to a progressive income tax of up to 37 percent of their income after allowable deductions.

The department sent a letter Monday calling for the Shinawatra children to clarify the issue, since they had not filed their tax statements by the September 30 deadline, said Sirote.

Family's lawyer Nopadol said he didn't understand the Revenue Department's reversal.

"The family of Mr. Thaksin had consulted the Revenue Department to strike a deal and at the time Sirote said that they didn't have to pay taxes," Nopadol said. "Then the political situation changed and he comes out and says that Mr. Thaksin's family has to pay taxes."

The Shin Corp. deal is still the subject of legal investigations, with a major issue being whether the use of Thai nominee firms by Temasek constituted a breach of laws limiting foreign shareholdings in Thai companies to 49 percent.

- Associated Press

[Old Man River]

...and the fighting begins:

Toppled Thai leader's lawyer says family will fight paying taxes on controversial deal

"The family of Mr. Thaksin had consulted the Revenue Department to strike a deal and at the time Sirote said that they didn't have to pay taxes," Nopadol said.

- Associated Press

Before taxes are due under the law, can you call the TRD to strike a deal? Is this possible?

[sriracha john]

...and the fighting begins:

Toppled Thai leader's lawyer says family will fight paying taxes on controversial deal

"The family of Mr. Thaksin had consulted the Revenue Department to strike a deal and at the time Sirote said that they didn't have to pay taxes," Nopadol said.

- Associated Press

Before taxes are due under the law, can you call the TRD to strike a deal? Is this possible?

sadly, it appears that is the case:

Loophole found in tax law

Citing a little known revision made to the tax laws, Thaksin family lawyer Noppadol stated they will not be paying any taxes on the huge windfall from the Shin sale. "According to Tax Revision Act of 2548, Article 23, Subparagraph 98, it clearly states, "Anyone with the English transliterated family initials of T.S. is able to contact the Revenue Department prior to any stock sale and negotiate a deal up to and including the omission of payment of 100% of the taxes due on the sale." Noppadol wryly smiled and said to the assembled reporters, "What's the next case ya got for me?"

Bangkok Herald-Examiner

*disclaimer: According to Subparagraph 99 of the same act, the above post can be up to and including 100% facetious*

[Tony Clifton]

This will hurt!

Thaksin share probe to go back to 1997

The assets scrutiny committee will investigate all share transfers involving deposed premier Thaksin Shinawatra and all his family members as far back as 1997, committee chairman Nam Yimyaem.

http://www.bangkokpost.net/breaking_news/b...s.php?id=114093

[sriracha john]

Speaking of hurting, Tony.... this one just shouts out, "OUCH!!"

Ex-Thai PM Thaksin's children ordered to pay 11.7 Billion baht for Shin sale

BANGKOK - The children of ousted premier Thaksin Shinawatra have been ordered to pay 11.7 billion baht in taxes and fines for their controversial sale of shares in telecoms firm Shin Corp, a tax official said.

Panthongtae Shinawatra and Pinthongta Shinawatra, Thaksin's son and elder daughter, have to pay the amount by March next year, the official said.

Thaksin founded Shin Corp before entering politics. His family sold its 49 percent stake in the telecom giant to a consortium led by Singapore's state-linked investment firm for 73.3 billion baht in January.

The tax-free deal outraged the Thai public, snowballing into months of street protests demanding Thaksin's resignation over alleged abuse of power and corruption and leading to the September 19 bloodless coup.

Thaksin's opponents have accused his family of taking advantage of a long-standing provision that scraps the tax if the sale is conducted through the Stock Exchange of Thailand, instead of paying the normal 30 percent.

The revenue department said some of the Shin Corp transactions were made outside the stock exchange, thus subjecting Thaksin's children to pay taxes worth 5.6 billion baht.

Ruengkrai Leelitwattana, an advisor to the auditor general, said financial regulators would also order the children to pay 6.1 billion baht in fines for failing to pay taxes following the Shin Corp deal.

"Apart from taxes, they are subjected to pay fines for failing to pay taxes on time," Ruengkrai said.

Thai Finance Minister Pridiyathorn Devakula said the payment order against Thaksin's children was not politically motivated.

"Our decision was in line with the tax law. This had nothing to do with the (post-coup) government," the minister told reporters.

But Thaksin's legal adviser Noppadol Pattama disagreed with the decision and Thaksin's children are ready to fight in court over the tax order.

"We closely consulted with the revenue department, which had told Thaksin's family that they did not have to pay taxes as long as stock transactions were made through the stock exchange," Noppadol said.

"We have to prove legally that we have done everything in accordance with Thai laws," he said.

After the 49-percent buyout of Shin Corp, a Temasek-led group of investors increased its total stake to 96 percent through a mandatory offer for the outstanding shares, sparking allegations of a possible violation of foreign ownership rules here.

Under Thai rules, foreign investors can own up to 49 percent in telecom companies. The question deliberated on was whether local entities acted on Temasek's behalf, in which case their holdings might not be counted as separate.

The post-coup Thai government has vowed to investigate the deal. A Thai court is due to hear a case against Shin Corp, now under control of Temasek Holdings, for alleged violations of foreign ownership regulations.

- Forbes & AFP

[sriracha john]

During Happier Times:

Thaksin Shinawatra with his children, elder daughter Pintongta (L), son Pantongtae (2nd L) and youngest daughter Paetongtan (right).

Channel News Asia

Thaksin's children fined and taxed US$320 million for Shin Corp sale

BANGKOK : The children of ousted premier Thaksin Shinawatra have been ordered to pay 320 million US dollars over a controversial sale of shares in telecoms giant Shin Corp, a tax official has said.

http://www.channelnewsasia.com/stories/afp.../240141/1/.html

During Less Happy Times:

A solitary Thaksin Shinawatra aimlessly strolls the streets of London.

The Nation

Edited November 9, 2006 by sriracha john

[PhilHarries]

During Less Happy Times:

A solitary Thaksin Shinawatra aimlessly strolls the streets of London.

The Nation

Looks like he just crawled out of a cardboard box on the southbank.

Maybe it's becauhse ahm a Lahndahner,

that aih lahrve lahndahn taahn!

[Tony Clifton]

Cardboard box! :D

His neighbours waiting for him to bring back the morning paper

Edited November 9, 2006 by Tony Clifton

[sriracha john]

During Less Happy Times:

A solitary Thaksin Shinawatra aimlessly strolls the streets of London.

The Nation

Looks like he just crawled out of a cardboard box on the southbank.

:D

Thaivisa Post Of The Month

[johnnyk]

Must be lonely with no entourage, imagine having to tie your own shoelaces every day!

[Barney_the_Dinosaur]

Whilst I don't want to rain on the parade of schadenfreude, to the best of my knowledge neither income tax or capital gains tax is payable in Thailand on share sales.

If it was nobody would invest there in the SET. Me included.

They can't just change the Law (or grandfather a change) for one deal.

Even if transactions were done off the stock market i've never seen any Private Placements in the Thai market being taxable.

Edited November 10, 2006 by Barney_the_Dinosaur

[ColPyat]

They can't just change the Law (or grandfather a change) for one deal.

Presently they can, appearantly.

[Barney_the_Dinosaur]

Well yes, the legislators can do as they like I suppose.

[sriracha john]

Cardboard box! :D

thaivisa reader??

http://newley.com/2006/11/09/lonely-thaksin

[sriracha john]

Whilst I don't want to rain on the parade of schadenfreude, to the best of my knowledge neither income tax or capital gains tax is payable in Thailand on share sales.

If it was nobody would invest there in the SET. Me included.

They can't just change the Law (or grandfather a change) for one deal.

Even if transactions were done off the stock market i've never seen any Private Placements in the Thai market being taxable.

Would this have any bearing on the matter? Or have you also been offered to buy stock for a baht and sell it for almost fifty baht 2 days later?

Panthongtae and Pinthongta will be taxed on the profits earned from buying the Shin Corp stocks at Bt1 a share only to sell them to Temasek within days for Bt49.25.

The tax amount is about Bt5.8 billion, which does not include fines.

Deputy PM Pridiyathorn has brought in Aran Thammano, a former permanent secretary for finance, to help the government handle this case as Aran had ruled during his tenure at the Finance Ministry that directors or employees must pay tax upon receiving stocks from their companies even before selling it.

That ruling held that stocks earned by directors or company employees should be considered taxable income.

[sriracha john]

Also being investigated:

The gift of 738 million baht Potjaman Shinawatra made to her brother Bannapot Damapong in 1997.

"Awwww gee... thanks, sis.. you're so nice... and it's not even my birthday... you're a great sister"

Mr Bannapot used the money to buy Shin Corp shares from the Shinawatra family's maid in the same year.

*soooo... she makes a cash gift to her brother in order for him to buy stock shares from her maid who had been given the stock shares by her for nothing in the first place....... is that about it????

Sounds completely normal and all above board to me.*

:D

''We will continue to investigate this transaction as the statute of limitations is due to expire in one year and two months,'' said Mr Viroj Laohaphan, chief of the investigation team.

http://www.bangkokpost.com/News/11Nov2006_news01.php

[Jai Dee]

SHIN DEAL PROBE

noose tightens

Deputy PM sets up panel to look into tax evasion by the Shinawatra clan spill do not cut

MR Pridiyathorn Devakula, the deputy prime minister and finance minister, has formed a panel to investigate the entire Shin Corp deal in connection with alleged tax evasion by the Shinawatra clan, before submitting the findings to the Assets Examination Committee (AEC).

"For the time being, we would like to collect the tax [from the Shin Corp deal] first," Pridiyathorn said yesterday.

Meanwhile, the AEC and the Revenue Department yesterday found different angles of the law to take action against the children of deposed prime minister Thaksin Shinawatra for failing to pay taxes on the sale of Shin Corp shares to Singapore's Temasek Holdings.

Pridiyathorn has recruited Dr Aran Thammano, a former permanent secretary for finance, to advise him in this particular case. Aran will chair the four-member panel to investigate the Shin Corp deal.

Sirote Swasdipanich, the director-general of the Revenue Department, has already sent tax bills to Panthongtae and Pinthongta, two of the children of the deposed premier, asking them to pay some Bt5.8 billion in owed tax.

If fines are included, the tax bills could exceed Bt10 billion, depending on the negotiations between the brother and sister and tax officials.

On January 20, 2006, Panthongtae and Pinthongta bought 329 million shares of Shin Corp at Bt1 apiece from Ample Rich Investments Co, a shell company allegedly set up by Thaksin and incorporated in the tax haven British Virgins Islands.

On January 23, the two sold the stocks to Temasek at Bt49.25 a share via the stock market, without having to pay any tax.

Thaksin had transferred his holdings in Ample Rich Investments to Panthongtae and Pinthongta, who are also its directors and shareholders.

Lawyers for Thaksin's two children claimed they did not have to pay tax because Ample Rich Investments had sold the stocks to Panthongtae and Pinthongta at below the market price of Bt47 a share. Besides, it was simply a switch of money from the left pocket to the right pocket because the two owned Ample Rich in the first place.

Benja Louicharoen, an adviser to the Revenue Department, then issued a letter to confirm that the Shin Corp transactions would not be subject to any tax because Ample Rich Investments was incorporated in a tax haven that did not have any tax treaty with Thailand.

However, the Revenue Department is now changing its stand regarding the tax issue in the Shin Corp deal.

Panthongtae and Pinthongta will be taxed on the profits earned from buying the Shin Corp stocks at Bt1 a share only to sell them to Temasek within days for Bt49.25.

The tax amount is about Bt5.8 billion, which does not include fines.

Pridiyathorn has brought in Aran to help the government handle this case as Aran had ruled during his tenure at the Finance Ministry that directors or employees must pay tax upon receiving stocks from their companies even before selling it.

That ruling held that stocks earned by directors or company employees should be considered taxable income.

Banapot Damapong, the brother of Khunying Pojaman Shinawatra, will also be a target of investigation in the Shin Corp deal.

Khunying Pojaman transferred her Shin Corp stocks amounting to almost Bt1 billion to Banapot as a gift, which was given as the reason for his not having to pay tax.

The Revenue Department then also opined that Banapot did not have to pay tax because he had not yet realised the profits from their sale.

But Banapot joined the Shinawatra family in selling his Shin Corp stocks, worth more than Bt400 million, to Temasek in January without paying tax by claiming an individual selling the stocks via the stock market is exempted from tax.

The AEC yesterday interviewed Revenue Department chief Sirote about the tax exemption in the Shin Corp share sale.

After five hours, Viroj Laohaphan, who heads the AEC group investigating tax-related cases, said Sirote used Article 40 (8) of the Code of Revenue, which says the deadline for submitting tax payment forms was September 30 as required once every six months to take action against Panthongtae and Pinthongta Shinawatra.

Meanwhile, the AEC thought the case should comply with Article 40 (2), which required submissions of tax payment forms annually and tax collection on payment. The due date to submit the document is in March next year, Viroj said.

The implications of the law have yet to be discussed, and the AEC needs to investigate all the people involved in the case, as well as the route of the money transferred to the Bank of Thailand (BOT) and the Securities and Exchange Commission (SEC), Viroj said.

Sirote would send the information to the AEC next week, Viroj said.

Viroj said the case of Pojaman's share transfer to her step-brother Banapot in 1997 hadn't expired as the case has a 10-year term. The AEC would trace back whether there had been a collection of withholding tax.

The AEC was preparing to examine whether there would be withholding tax payment reported in the tax declaration document due to be submitted in March 2007, as, at the time of the sale, Ample Rich had sold the shares to Panthongtae at Bt1 per share when the market price was Bt49 per share.

If no withholding tax paid, the sale might not have happened.

When Panthongtae and Pinthongta sold the shares to Temasek at Bt47 each, they didn't pay tax claiming it was trading in the market. However, the tax would be calculated based on the market price.

Using Article 40 (8), Sirote would be able to take action against Thaksin's children without him being guilty of malfeasance. Moreover, Thaksin's children would be able to get away just by paying the back-dated tax.

On the other hand, using Article 40 (2), the Revenue Department director-general would not be able to call for a back-dated investigation as the crime had not been committed. However, the AEC would be able to investigate the case.

AEC spokesman Sak Korsaengruang said Sirote claimed he had recently decided to investigate tax payments related to the Shin Corp share sales earlier this year as he received more information after the department officers had finished the process.

However, the AEC found possible irregularities and it will further investigate the case, although the information could not be revealed.

On Tuesday, Sirote told the press that the department had decided to take action against Thaksin's children for tax evasion related to the Shin Corp share sale.

The statement marked a U-turn in the department's policy as earlier this year it insisted the deal was tax-free.

Source: The Nation - 11 November 2006

[Jai Dee]

TAX scam slowly unravels

Facts seem to bear out suspicion of an orchestrated plan

The Thaksin regime was the first administration to use tax as a tool to subdue its political opponents. Now this tactic is having a boomerang effect.

"We now have solid grounds to tax the two people," Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula said on Tuesday.

He was referring to the U-turn stance of the Revenue Department, which is planning to send tax bills to Panthongtae and Pinthongta Shinawatra, the children of former prime minister Thaksin Shinawatra.

The two made capital gains on the sale of their 329 million Shin Corp stocks to Temasek Holdings of Singapore, without paying tax.

This case has become a hot political issue because Pridiyathorn appears to be trying to protect Sirote Swasdipanich, the director-general of the Revenue Department, and Suparut Kawatkul, the permanent secretary of the Finance Ministry.

Sirote and Suparut failed to act on Panthongtae and Pinthongta when they bought 329 million shares from Ample Rich, incorporated in the British Virgin Islands, for Bt1 apiece before selling them via the Stock Exchange of Thailand (SET) to Temasek for Bt49.25 each the following day.

This transaction should have been taxed at a rate of Bt5.8 billion, but the Revenue Department turned a blind eye. But this time Sirote emerged to point out there were grounds to tax the two children of the Shinawatra family.

As a bureaucrat, it is always difficult to adjust to different political environments. Pridiyathorn has no intention of sacking Sirote or Suparat because he needs them to assist him in fiscal policy planning.

Sirote has reported to Pridiyathorn about all the tax questions relating to the Shin Corp transactions. Neither he nor Suparut handled the Shin Corp deal. Benja Luicharoen, an adviser to the Revenue Department, acted on Sirote's behalf when she issued a letter on September 21, 2005 assuring Pranee Vechapreukpitak, a confidant of Khunying Pojaman Shinawatra, that the Shin Corp transactions would not be subject to any tax at all. Pranee was asking Benja on behalf of Panthongtae and Pinthongta.

This piece of evidence showed that all the preparations had been made in advance to avoid paying tax for the Shin Corp deal.

Both Sirote and Suparut were understood to have come under political pressure not to raise any objections against the pre-determined opinion that the Shin Corp deal should not be taxed. "They did not dare go against then finance minister Dr Thanong Bidaya," said a well-informed source.

But Sirote and Suparut erred badly by appearing at a news conference with the head of the Securities Exchange of Thailand in early February this year. They assured the public that the Shin Corp transactions were transparent and were not subject to any taxation at all.

The legal team of the Shinawatra family then also argued that Panthongtae and Pinthongta were not subject to any taxation because both were owners and shareholders of Ample Rich, set up by Thaksin in the tax-free islands for a very ambiguous purpose before he entered politics in 2001. Transacting 329 million shares from Ample Rich to Panthongtae and Pinthongta amounted to simply a shift of assets from the left pocket to the right pocket. Besides, Ample Rich was incorporated in a tax haven, which did not have any taxation treaty with Thailand.

When Panthongtae and Pinthongta sold the stocks to Temasek via the SET, they did not have to pay tax either because capital gains of individuals in the stock market were tax-exempt.

Were Ample Rich to sell the Shin Corp stocks directly to Temasek, it would have had to pay the capital gains at the top rate of 30 per cent.

Now the Finance Ministry has taken a new approach to the Shin Corp transactions. It views Panthongtae and Pinthongta as having attempted to avoid paying tax by having Ample Rich sell the stocks to them first at Bt1 a share - at below the market price - before selling the stocks to Temasek on the following day for huge profits.

If Panthongtae and Pinthongta were to hold on to the Shin Corp stocks after buying them from Ample Rich without further transactions, they would not be taxed. But the motive in this particular transaction was very clear - they wanted to avoid paying tax.

However, Noppadol Patama, the lawyer of the Shinawatra family, plans to fight the case in court. Noppadol had Benja's letter in his hand to verify to the court that the official line was in favour of the two kids of the Shinawatra family. But the authorities would argue that Benja was simply issuing her opinion upon request about the tax issue. Her opinion did not necessarily reflect the Revenue Department's stance as a whole.

Source: The Nation - 11 November 2006