Dumbass Tax Evasion Idea

[pedro01]

OK - I have a friend with a US company that thinks he can do the following....

1 - write some software for a Thai company (big automotive manufacturer)

2 - Get his friends small-scale restaurant to give the Thai company a VAT invoice for 1 Million Baht

3 - Get his US company to invoice the restaurant 990,000 Baht

4 - Get the restaurant to write a cheque in the US company name for 990,000 Baht

5 - Cash the cheque in a Thai Bank

6 - Pay not tax on the money anywhere.

I am telling him he's an idiot & will certainly get caught. I believe this because I run a company here & the revenue dept are always sniffing around and I run the company by the rules !

I think the revenue dept will red flag the restaurant when ther VAT statement shows that sales quadrupled in 1 month

I think they will also red flag the restaurant when sales increase but profits dont

When they look into this - they will ask the restaurant what they got for the 990,000 and he will not be able to show anything - BUT - could he claim to be an agent & selling on the software ? I don't think so because then everyone would do this stuff & tax inspectors are not usually that dumb. Would transfer pricing rules be what got him on the 'agent' claim.

Finally - with Thai banks being so strict - I can't see them cashing a cheque made out to a US company in either $ or THB.

I am NOT asking here how to do this legally. I am purely trying to convince my friend that he will get caught but he just keeps saying "how will they know ?". My explanation is - they seem to know what colour underwear I put on in the morning - they seem much more savvy here in Bangkok than they ever were in the UK.

Advice would be appreciated. PMs too !

[lingling]

1 - write some software for a Thai company (big automotive manufacturer)

2 - Get his friends small-scale restaurant to give the Thai company a VAT invoice for 1 Million Baht

3 - Get his US company to invoice the restaurant 990,000 Baht

4 - Get the restaurant to write a cheque in the US company name for 990,000 Baht

5 - Cash the cheque in a Thai Bank

6 - Pay not tax on the money anywhere.

The restaurant owner is either unaware of withholding when paying foreign companies, or has no intention to ever write a check for 990k. Either way, sounds like a not well thought through idea.

[Chang_paarp]

OK - I have a friend with a US company that thinks he can do the following....

1 - write some software for a Thai company (big automotive manufacturer)

2 - Get his friends small-scale restaurant to give the Thai company a VAT invoice for 1 Million Baht

Do you really think a multinational or a large company will accept an invoice from Somchai's Noodle House for B1M for anything?? Even if the product is known.

3 - Get his US company to invoice the restaurant 990,000 Baht

And the IRS will sit by and ignore this? This is still an income. Bad debt?

4 - Get the restaurant to write a cheque in the US company name for 990,000 Baht

Tell your friend about sick buffaloes.

What is in it for the restaurant? Not much left after they pay VAT, even on B10K. They will want at least 10%

5 - Cash the cheque in a Thai Bank

Without an account? :D

What ID will he use to cash the cheque?

Will a bank in LOS let him walk out with B990K cash??

Does he have any idea how hard it is to cash a cheque at a different branch in the same city, let alone a different province?

6 - Pay not tax on the money anywhere.

I am telling him he's an idiot & will certainly get caught. I believe this because I run a company here & the revenue dept are always sniffing around and I run the company by the rules !

Keep telling him.

The IRS will give him grief if they get wind of it, the yanks have to pay tax on all income derived anywhere in the world.

The simplest thing to do would be to invoice the company direct and have some expenses, ie site trips to fix the bugs.

[britmaveric]

Sounds like stiff penalty and jail is in your mates future.

[dave111223]

The simplest thing to do would be to invoice the company direct and have some expenses, ie site trips to fix the bugs. whistling.gif

Just get your friend to take the client out to a "900,000 Baht" noodle dinner at said restaurant before he gets the money, and put it down as in the expenses.

Obviously if anyone other than the computer looked at it they may question why it cost 900,000 baht of a noodle dinner.

Obviously i'm also joking.

[lanny]

I don't know of any bank, anywhere in Thailand, that would cash a check made out to a company -- in dollars, baht, or whatever. Maybe, if he knows the branch manager well enough and cuts him in for a slice, he could do it.

I think he would have to have an account, in the company name, and deposit the check. If he does that, there is a better than even chance that the bank will give the Revenue Dept. a copy of the check. Sooner or later, the RD will come around, asking questions.

Also, I can't imagine any major American company going along with this. Anything is possible, I suppose, but this seems highly unlikely.

[backflip]

Far be it from me to call for a "troll alert", but this exact scenario was posted about 6 months ago...with the same responses.

[naka]

Sounds like your 'Mate' is a few sandwiches short of a picnic.

Naka.

[johnnyk]

"big automotive company" may like to see the purchase order before they pay up.

your friend has spent too much time in a cubicle looking at a screen, obviously the real world is too difficult for his adolescent brain.

be scarce while he shoots himself in the foot, you don't want to be hit by a stray bullet.

[Etrigan]

I saw America's Dumbest Criminals this morning, send your mate's detail's there so we can all get a good look at him!

[Gaudente]

Simply I do not understand why invoicing to the restaurant would make it easier for him not to pay taxes. An invoice is an invoice wether the customer is a "big automotive firm" or a restaurant. If you do not register it in your book-keeping and get caught, you are in the same trouble whoever is the customer.

If he wants to risk, he just makes the invoice to the real customer, asks him to be paid with a cashier check draft on a Thai bank, cashes it , changes it in $ and flies back with cash to the U.S.A. and does not register the invoice in his book-keeping. Of course he will have better NOT to register expenses related to his permanence in Thailand as well, just to avoid rising suspicion of omitted incomes there....

Edited January 25, 2007 by Gaudente

[skippybangkok]

A 'friend' eh. mmmm

[pedro01]

A 'friend' eh. mmmm

yes - a friend. You doubting Thomas.

I run a subsidary of a Japanese multinational here. That's why I know it'd be tough to get a way with, at least - I could see no way to do it with the international transactions I deal with on a weekly basis.

I am not a troll either - but if I lived under a bridge, I would have no qualms in charging people to cross it. Maybe I am a Toll.

He seems convinced that the Thai authorities could not have their act together well enough to catch him.

In my experience, the tax authorities here are actually more efficient than the ones in the UK or the US, at least in terms of catching Limited companies of syphoning money.

[skippybangkok]

A 'friend' eh. mmmm

yes - a friend. You doubting Thomas.

I run a subsidary of a Japanese multinational here. That's why I know it'd be tough to get a way with, at least - I could see no way to do it with the international transactions I deal with on a weekly basis.

I am not a troll either - but if I lived under a bridge, I would have no qualms in charging people to cross it. Maybe I am a Toll.

He seems convinced that the Thai authorities could not have their act together well enough to catch him.

In my experience, the tax authorities here are actually more efficient than the ones in the UK or the US, at least in terms of catching Limited companies of syphoning money.

LOL. Take it easy. If really a friend.... would advise to play by the books. I did and they still tried to take a swat at me. ( un-sucessful ). Not a pleasureable experience. Having a legal way to minimise taxes is encourageable, but stay within the boudries.