Off Shore Accounts

[kanom]

I have 2 Companies in Thailand.

Both Companies invoice to US and UK.

To reduce tax liability I think it advisable to open an offshore account for them to pay into and I can skim what is wanted within Thailand to continue operations.

Anyone have any advise?

Thanks, appreciated

[Indo-Siam]

Kanom -

I sent you a PM several days ago, with information about establishing an "offshore" company, and opening a bank account for that company.

Cheers!

Indo-Siam

[cclub75]

I have 2 Companies in Thailand.

Both Companies invoice to US and UK.

To reduce tax liability I think it advisable to open an offshore account for them to pay into and I can skim what is wanted within Thailand to continue operations.

Anyone have any advise?

Thanks, appreciated

Think about all those years... you've missed. And all the taxes you paid. For nothing.

Your scheme is the good one.

Create a BVI company, with a bank account in Hong Kong (a very respectable market place, no one in Europe or USA will be suspicious to send money in HK, i mean it's not like Bahamas and other shady places.).

This shell company will invoice your customers (US,UK)... Then your thai companies will invoice the off shore company.

You keep a chunk of the added value in HK... totally free of taxes.

You will need to go yourself in HK, in order to open the bank account, and to present yourself along with a business plan.

But it's easy.

[taxin]

I have 2 Companies in Thailand.

Both Companies invoice to US and UK.

To reduce tax liability I think it advisable to open an offshore account for them to pay into and I can skim what is wanted within Thailand to continue operations.

Anyone have any advise?

Thanks, appreciated

Think about all those years... you've missed. And all the taxes you paid. For nothing.

Your scheme is the good one.

Create a BVI company, with a bank account in Hong Kong (a very respectable market place, no one in Europe or USA will be suspicious to send money in HK, i mean it's not like Bahamas and other shady places.).

This shell company will invoice your customers (US,UK)... Then your thai companies will invoice the off shore company.

You keep a chunk of the added value in HK... totally free of taxes.

You will need to go yourself in HK, in order to open the bank account, and to present yourself along with a business plan.

But it's easy.

Hang on, you say get the Thai company to then invoice the offshore company ? Doesn't this contradict the whole purpose of having the offshore company in the 1st place ? i.e keeping money out of Thailand ?

Of course assuming that you mean invoicing the offshore company, and effectively sending funds to a Thai based company, wouldnt the Thai company still be liable for paying tax in Thailand ?

[monty]

Hang on, you say get the Thai company to then invoice the offshore company ? Doesn't this contradict the whole purpose of having the offshore company in the 1st place ? i.e keeping money out of Thailand ?

Of course assuming that you mean invoicing the offshore company, and effectively sending funds to a Thai based company, wouldnt the Thai company still be liable for paying tax in Thailand ? huh.gif

The purpose is not to keep money out of Thailand!

The purpose is to reduce tax liability.

You manufacture a product for 500 Baht.

You sell it for 1000 Baht.

You have 500 Baht profit. You'll get taxed on that profit.

Now you manufacture the same product, and you sell it for the same price to the customer. But you don't let him pay your Thai company.

He pays your off-shore company the 1000 Baht.

Now your Thai company bills the off-shore company 600 Baht.

Suddenly for the Thai Tax man you only made 100 Baht profit, so you tax liability pretty much disappears. You just made 400 Baht entirely tax-free, sitting untouchable in a Hong Kong bank...

Unfortunately the Thai tax man knows how this works, and if you are a big volume exporter, your friendly tax man will start wondering why on Earth you get paid by a BVI registered company with a bank in Hong Kong, while you are shipping the goods to Europe!

Small exporters, or sellers of services do not need to worry, but I wouldn't feel too comfortable doing big time export of tangible goods this way...

[Indo-Siam]

That Thai tax system will not care. It is a completely unremarkable and legal transaction - the Thai company is simply a subcontractor to an overseas company. It is irrelevant where that overseas company is located.

Basically, most Thai manufacturing operations for export operate this way.

The Thai officials know where the overseas bank account is - but they do not know the location of the company that operates that bank account.

Cheers!

Indo-Siam

[taxin]

Hang on, you say get the Thai company to then invoice the offshore company ? Doesn't this contradict the whole purpose of having the offshore company in the 1st place ? i.e keeping money out of Thailand ?

Of course assuming that you mean invoicing the offshore company, and effectively sending funds to a Thai based company, wouldnt the Thai company still be liable for paying tax in Thailand ? huh.gif

The purpose is not to keep money out of Thailand!

The purpose is to reduce tax liability.

You manufacture a product for 500 Baht.

You sell it for 1000 Baht.

You have 500 Baht profit. You'll get taxed on that profit.

Now you manufacture the same product, and you sell it for the same price to the customer. But you don't let him pay your Thai company.

He pays your off-shore company the 1000 Baht.

Now your Thai company bills the off-shore company 600 Baht.

Suddenly for the Thai Tax man you only made 100 Baht profit, so you tax liability pretty much disappears. You just made 400 Baht entirely tax-free, sitting untouchable in a Hong Kong bank...

Unfortunately the Thai tax man knows how this works, and if you are a big volume exporter, your friendly tax man will start wondering why on Earth you get paid by a BVI registered company with a bank in Hong Kong, while you are shipping the goods to Europe!

Small exporters, or sellers of services do not need to worry, but I wouldn't feel too comfortable doing big time export of tangible goods this way...

You say sellers of services need not to worry ?

So let me get this right. Thai company sells a "service" to a client for $1,000, client pays $1,000 to the offshore company/account. Thai company then bills offshore company for lets say $300. The Thai company charges $500 on the basis that by doing so his accounts break even after expenses, or shows very little profit resulting in a low tax burden on his bottom line ?

Surely there is still an element of risk here of being flagged for tax avoidance ? Especially if the tax man ever found out that you actually billed your customer $1,000 and not $300 ? Or are we saying that the tax man would turn a blind eye to this ?

[Indo-Siam]

So let me get this right. Thai company sells a "service" to a client for $1,000, client pays $1,000 to the offshore company/account. Thai company then bills offshore company for lets say $300. The Thai company charges $500 on the basis that by doing so his accounts break even after expenses, or shows very little profit resulting in a low tax burden on his bottom line ?

Not quite. It is the offshore company that sells the service to the end client overseas - for $1,000. The offshore company then subcontracts the work to the Thai company - and pays the Thai company US $300 - or whatever amount is needed to offset the cost of the Thai operation. $700 in profit is retained by the offshore company.

There is absolutely nothing remarkable about this approach. It is completely legal for an overseas company to contract with a Thai company to create a deliverable - at any price at which the two parties agree. And - there is nothing wrong with the overseas company reselling the service for a profit.

The fact that the overseas company exists merely as an incorporation certificate, bank account, and perhaps a website - is not apparent to anyone.

[Maestro]

Going into details, using the example of a US buyer, the document trail will be as follows:

1. US company orders from Hong Kong (HK) company.

2. HK company orders from Thai company, requesting delivery to US company.

3. Thai company ships to US company.

4. Thai company invoices to HK company.

5. HK company invoices to US company.

6. US company pays to HK company.

7. HK company pays to Thai company.

If a letter of credit is involved, some additional considerations have to made but it is also quite simple and straightforward.

--

Maestro

[raro]

Also worth a mention is that as soon as the money arrives in Thailand it will be taxed, this way or that way.

Another possible scheme is to make the BVI company the owner of your brand and your Thai company has to pay a license fee to the BVI company.

The following is as to my understanding, not 100% sure about it and please correct me if I'm wrong:

The trick is, that you cannot make contracts with yourself, i.e. if it is shown that you are the owner of both, the Thai and the BVI company it gets suspicious. BVI has the wonderful advantage that the ownership of the company can be hidden with nominees....

[Indo-Siam]

Here is an ideal candidate for using an offshore company:

1. You reside in Thailand with stable Immigration status - typically from employment here.

2. On the side, you run a trading or service business, that you can manage on-line, and whose customers are outside of Thailand.

3. You set up a company in a tax-haven jurisdiction - let's say the BVI - and open a bank account for that company at a bank in Hong Kong - let's say at HSBC.

4. You run the offshore business from home in Thailand. At HSBC, you an set up multiple-currency accounts (even gold taels) - current and/or savings - on-line. You can also set up payees and initiate international wire payments - in various currencies - on-line. You can create a payee and send an outbound wire transfer in less than three minutes. This is so different from the hassle of sending an international wire payment from a Thai company bank account.

5. If your offshore company needs to source a deliverable from Thailand, it does so at whatever price you want to charge. It is absolute nonsense to suggest that Thai officialdom cares whether a Thai and a foreign company both have shareholders or directors in common - even if they somehow found out about this.

6. With a BVI company, and a HK bank account, the company owes no taxes - and no accounting submissions or financial reports to any government. You just manage the bank account.

7. You get an HSBC ATM card - which you can use to draw salary and expenses from the HK account.

8. Costs: Set -up BVI company, with HK secretarial address, and document certification for HK bank: US $2,100

(Annual renewal cost are US $1,100)

HSBC - send outbound international transfer : US $24.32

HSBC - send outbound transfer to another HK bank US $1.12

HSBC - transfer to another HSBC account - free

HSBC - receive incoming wire transfer - US $7.08

HSBC - fee for ATM withdrawal - US $3.85

HSBC - monthly on-line banking service charge - US $1.50

This sort of operation works very smoothly. Very little bureaucracy or make-work admin.

The hardest part is setting up the initial bank account - this takes two trips to HSBC Hong Kong, and they are surprisingly strict in their requirements to demonstrate proof of the nature and ongoing activity of your business.

If anyone is interested in setting up something like this, please contact me via PM. I am Thailand agent for an offshore registrar, helping perform "due diligence" checks on applicants.

Cheers!

Steve Sykes

Managing Director

Indo-Siam Group

[taxin]

So let me get this right. Thai company sells a "service" to a client for $1,000, client pays $1,000 to the offshore company/account. Thai company then bills offshore company for lets say $300. The Thai company charges $500 on the basis that by doing so his accounts break even after expenses, or shows very little profit resulting in a low tax burden on his bottom line ?

Not quite. It is the offshore company that sells the service to the end client overseas - for $1,000. The offshore company then subcontracts the work to the Thai company - and pays the Thai company US $300 - or whatever amount is needed to offset the cost of the Thai operation. $700 in profit is retained by the offshore company.

There is absolutely nothing remarkable about this approach. It is completely legal for an overseas company to contract with a Thai company to create a deliverable - at any price at which the two parties agree. And - there is nothing wrong with the overseas company reselling the service for a profit.

The fact that the overseas company exists merely as an incorporation certificate, bank account, and perhaps a website - is not apparent to anyone.

But what if the Thai company sells it ? In other words customer walks into my office in Thailand, we agree a cost for the service, I give him an invoice with my offshore company address and bank details, he sends money to offshore bank.

Question being, as that business was conducted "physically" on Thai soil between 2 parties wouldnt this be illegal ?

[Indo-Siam]

In most cases, for a B-2-B transaction involving a Thai company paying an overseas company for a service, the Thai company making the outbound remittance must withhold 15% of the billed amount - and pay this to the Thai Revenue Department.

See: http://www.rd.go.th/publish/6044.0.html - Section 3, sub-section 8.

Indo-Siam

[taxin]

In most cases, for a B-2-B transaction involving a Thai company paying an overseas company for a service, the Thai company making the outbound remittance must withhold 15% of the billed amount - and pay this to the Thai Revenue Department.

See: http://www.rd.go.th/publish/6044.0.html - Section 3, sub-section 8.

Indo-Siam

Where did the 15% withholding tax issue come into it ? Or are you referring to the comment Raro made about the Thai company being billed by the offshore company ?

[Indo-Siam]

Taxin -

I was responding to your question. It would be entirely legal and normal - as long as the Thai company withheld proper taxes.

Some people on this thread seem to feel that an offshore company is somehow a "second class citizen" company.

That is not true. A company incorporated in the BVI is just as valid as a company incorporated in USA, or Japan, or UK, or Australia. The rules with respect to Thai taxes are identical.

But - it dose not make much business sense to route Thai B-2-B transactions through an offshore company.

Cheers!

Indo-Siam

[Naam]

The hardest part is setting up the initial bank account - this takes two trips to HSBC Hong Kong, and they are surprisingly strict in their requirements to demonstrate proof of the nature and ongoing activity of your business.

Cheers!

Steve Sykes

Managing Director

Indo-Siam Group

what about the requirement as far as the account's beneficiary is concerned? to the best of my knowledge no HK bank accepts a company as beneficiary but insists that natural person(s) are named.

[Indo-Siam]

The bank will only allow company principals - basically company directors and shareholders - to have signature control over the bank account. And - the bank will require full disclosure of identity and residence address information for those individuals.

The registrar with whom I am associated will in some cases provide nominees for banking purposes - but - in every such case - will require that the beneficial owners be properly identified and documented to their office.

So - I am not addressing the concept of identity concealment.

From my registrar, there is also a significant listing of company business activities that render the business not eligible to proceed - including (for example) involvement in pornography, on-line gaming, on-line sales of excise tax items (such as cigarettes), on-line sale of drugs or pharmaceutical products, and provision of financial management services that involve management of client/third-party funds. Anyone who is presently the subject of a bankruptcy proceeding is also ineligible, up until the bankruptcy judgment has been fully discharged (you must present discharge certificate).

The requirement to to appear two times in Hong Kong to set up the bank account with on-line banking (and the visits must be at least two weeks apart) is because in-between the visits, an international criminal records check is evidently conducted, to determine whether the individual has any outstanding criminal warrants for arrest . If you do, I presume that on your second appearance, police might be waiting to take you into custody.

So - the operations I described are not intended for use by "shady" businesses, or "shady" people - they are for normal people, running normal businesses.

Cheers!

Indo-Siam

[Naam]

The registrar with whom I am associated will in some cases provide nominees for banking purposes - but - in every such case - will require that the beneficial owners be properly identified and documented to their office.

Cheers!

Indo-Siam

= standard international procedure since 2002 except for publicly listed companies with anonymous shareholders. thanks for answering my question

[monty]

Steve,

I think you are taking a bit of a risk stating the things you do!

On July 20th last year an article was published in the Bangkok post stating that tax officials were going to start a crack down on companies avoiding tax in exactly the same way we are describing here.

FYI, they also stated that they were especially going to go after tax advisers setting these avoidance systems up.

The tax department knows they are losing out on billions of tax in this way!

I attached a screenshot of my search results in the Bangkok post archives in case you are not registered with them. Saves you a bit of work . If you want to read the full article you'll need to buy some e-points (430 Baht for 10 articles).

Copyright laws do not allow me to copy and paste the full article!

The full article describes exactly the same thing we are describing here in this thread. Under Thai law, you can get prosecuted for tax avoidance and get heavily fined!

I know quite a lot of exporting manufacturers due to my location on the Eastern Seaboard, and I know at least one of them who got hit hard by the tax man for doing exactly this.

His lawyers and accountants had to do some serious negotiations on what would be a fair price/profit margin on the product he exported until they got an agreement with the tax department, and several years worth of retroactive taxes had to get paid to keep him (and his accountants) from being prosecuted!

[Indo-Siam]

Monty -

I think that you will find that the Thai government interest to which you refer is mainly in regards to something other than the scenario I described above.

Go back and study the "Ample Rich" saga (BVI company), in relation to Thaksin and Shin Corp. There are issues in regards to having Thai companies owned by offshore entities - and then having defacto sales of Thai businesses occur outside of Thailand, by simply transferring ownership of the offshore company. I do not recommend that scenario.

Government interest is also in regards to B-2-B sales between two Thai companies, in which very low transfer prices are recorded inside Thailand, with most of the transaction being conducted between offshore entities outside Thailand. I am also not advocating this practice.

In my scenario, I am referring to a practice such as is carried out by Nike, Seagate, or any other overseas company that sub-contracts manufacturing (or services) to Thailand. They earn their retail profits outside Thailand - and pay only wholesale transfer prices to the Thai entity.

So - anyway - I laid out a specific scenario. It complies with Thai taxation laws. I am not advocating any practice that is not in keeping with Thai tax laws. I am stating that people who currently export deliverables at retail prices can establish an intermediary company outside Thailand, and switch to having retail prices earned by the intermediary company, which then purchases the deliverables from Thailand at wholesale prices. This is a very common business practice - this sort of transition is carried out by many companies as they grow.

Having beat the dead horse into a pulp, I will now shift my attentions back to actual customers.

Cheers!

Steve

[worldfun]

interesting - how about using singapore as alternative banking centre?

any specific drawbacks with that???

[Shah Jahan]

interesting - how about using singapore as alternative banking centre?

any specific drawbacks with that???

I seem to remember reading an article recently that singapore was going to start requiring reporting of entry or exit of certain amounts of $$$

however in HK, can bring in and out freely.

can somebody confirm or correct?

also - to confirm Indo-Siam - This is something my lawyer sent me a while back - It talks about the difference between operating a HK company vs. a BVI company with correspondence in HK.

"

There is usually some misunderstanding about HK companies. HK has no offshore (i.e. IBC) companies, but only limited companies. A BVI company will not be subject to HK taxes if the operations are not carried out in HK and the shareholders/directors are not HK resident and no proof is required in that case.

Since you are much concerned over the HK taxes matter, we are pleased to advise you more information in this regard. A HK company's profits will not be subject to HK taxes subject to the approval of the HK Inland Revenue Department provided that it can PROVE by filing an annual audited accounts and evidence that it has no operations in HK, i.e.

Basically a HK company is not subject to HK taxes if its operations are not carried out in HK, i.e.

1. it has no real office in HK and only uses our office as a registered office

2. it has a overseas office (can be a director's home) in which the company's directors and staff are working

3. it has no staff in HK, its staff and directors rarely come to HK, e.g. about 2 weeks per annum (passport copies need to be retained)

4. it negotiates and concludes contracts with suppliers and customers outside HK (evidence of faxes, emails, telephone bills and memos of meetings need to support this)

5. it has no HK suppliers and customers

6. shipment does not go through HK and arrangement of shipment is not done in HK

7. physical inspection of goods is not carried out in HK

If you want an offshore company, we would usually recommend British Virgin Islands (BVI) companies which can have correspondence address in HK. A BVI company owned and operated by a non HK resident is not subject to HK taxes.

The major benefits for a BVI company are that the shareholders and directors can be anonymous, and there is no need to prepare annual audited accounts nor submission of tax returns to HK Inland Revenue Department if it has no operations in HK. The major benefit of a HK company is that HK companies have a lot of trading operations and are not regarded by any tax authority for tax planning purpose. If a HK company has no operations in HK, it is still not subject to HK taxes subject to the approval of the HK Inland Revenue Department. If you want to use a HK company and to be anonymous, you need to use our full nominee directors and shareholders service and the costs will be higher than a BVI company. However if you need to operate L/C or carry on business in HK, a HK company will be the better choice.

[Naam]

The major benefits for a BVI company are that the shareholders and directors can be anonymous...

that just goes for the IBC's setup. opening any bank account requires that the "beneficiaries" as well as their identities are revealed! that's common practice now all over the world. in essence that means that the often highly praised "anonymity" is completely worthless.

[taxin]

Steve,

I think you are taking a bit of a risk stating the things you do!

On July 20th last year an article was published in the Bangkok post stating that tax officials were going to start a crack down on companies avoiding tax in exactly the same way we are describing here.

FYI, they also stated that they were especially going to go after tax advisers setting these avoidance systems up.

The tax department knows they are losing out on billions of tax in this way!

I attached a screenshot of my search results in the Bangkok post archives in case you are not registered with them. Saves you a bit of work . If you want to read the full article you'll need to buy some e-points (430 Baht for 10 articles).

Copyright laws do not allow me to copy and paste the full article!

The full article describes exactly the same thing we are describing here in this thread. Under Thai law, you can get prosecuted for tax avoidance and get heavily fined!

I know quite a lot of exporting manufacturers due to my location on the Eastern Seaboard, and I know at least one of them who got hit hard by the tax man for doing exactly this.

His lawyers and accountants had to do some serious negotiations on what would be a fair price/profit margin on the product he exported until they got an agreement with the tax department, and several years worth of retroactive taxes had to get paid to keep him (and his accountants) from being prosecuted!

This is the exact point I was trying to get to.

Of course it goes without saying that a Thai B-2-B transactions simply doesnt make sense however, with a Thai-2-foreign entity transaction surely there would still be some element of tax avoidance ? As the above article states.

I have been looking at doing this myself (service related not goods or exporting) but it all seems a bit risky. I just cant see the Thai authorities taking too kind to Thai companies providing a service "in Thailand" to a foreign entity, and having the funds associated with those services sent to an offshore company/account.

[monty]

Steve,

I think you are taking a bit of a risk stating the things you do!

On July 20th last year an article was published in the Bangkok post stating that tax officials were going to start a crack down on companies avoiding tax in exactly the same way we are describing here.

FYI, they also stated that they were especially going to go after tax advisers setting these avoidance systems up.

The tax department knows they are losing out on billions of tax in this way!

I attached a screenshot of my search results in the Bangkok post archives in case you are not registered with them. Saves you a bit of work . If you want to read the full article you'll need to buy some e-points (430 Baht for 10 articles).

Copyright laws do not allow me to copy and paste the full article!

The full article describes exactly the same thing we are describing here in this thread. Under Thai law, you can get prosecuted for tax avoidance and get heavily fined!

I know quite a lot of exporting manufacturers due to my location on the Eastern Seaboard, and I know at least one of them who got hit hard by the tax man for doing exactly this.

His lawyers and accountants had to do some serious negotiations on what would be a fair price/profit margin on the product he exported until they got an agreement with the tax department, and several years worth of retroactive taxes had to get paid to keep him (and his accountants) from being prosecuted!

This is the exact point I was trying to get to.

Of course it goes without saying that a Thai B-2-B transactions simply doesnt make sense however, with a Thai-2-foreign entity transaction surely there would still be some element of tax avoidance ? As the above article states.

I have been looking at doing this myself (service related not goods or exporting) but it all seems a bit risky. I just cant see the Thai authorities taking too kind to Thai companies providing a service "in Thailand" to a foreign entity, and having the funds associated with those services sent to an offshore company/account.

The guy I was talking about has a factory on the Eastern Seaboard (Pin Thong) and produces industrial air conditioning units, partly from local materials and partly from imported materials (mainly the compressors).

He has received his payments through his off shore accounts as described above, keeping his tax liability very low (perhaps too low) for several years without any complaints or inquiries from the revenue department.

One day the tax guys show, and simply asked why he sells his units for peanuts to an off shore company, all the while shipping the units all over the world.

I can assure you it put him darn close to bankruptcy!

[cclub75]

Unfortunately the Thai tax man knows how this works, and if you are a big volume exporter, your friendly tax man will start wondering why on Earth you get paid by a BVI registered company with a bank in Hong Kong, while you are shipping the goods to Europe!

Small exporters, or sellers of services do not need to worry, but I wouldn't feel too comfortable doing big time export of tangible goods this way...

Well... he doesn't know that the company in HK is... BVI.

The BVI company has an address in HK plus a bank account in HK... therefore everything looks sabai.

As for the goods shipped in Europe.... well there are many other schemes.

Do you really believe that the large companies play the game ? For instance cars markers in Thailand have a lot of means to send out of Thailand the added value. They buy car parts... from themselves (from companies in Japan for instance) ! And then they have tax cuts on... exports ! To summarize : they win on all front.

This is why the amount of taxes that those japanese companies are paying in Thailand is probably a state secret.

Same with large retailers. In france, Carrefour and all the others... are buying the goods for their stores from... "central buying company", located in... Luxumbourg and operated by them...

It's perfectly legal... And very difficult to proove that there is an escape of value.

We all need to understand one fundamental point : all the big companies, in the world, are cheating. Well "cheating" is a big word... let's say that they are ALL OF THEM "playing" with regulations, to their advantages.

It's our duty (us, the littles) TO DO THE SAME. To use exactly the same weapons.

That's the trick. The people who don't understand that, shall remain slaves.

[cclub75]

The full article describes exactly the same thing we are describing here in this thread. Under Thai law, you can get prosecuted for tax avoidance and get heavily fined!

I know quite a lot of exporting manufacturers due to my location on the Eastern Seaboard, and I know at least one of them who got hit hard by the tax man for doing exactly this.

Law is merely printed paper in Thailand... I mean... come on... Nobody believe in those "crackdowns".

Thailand is the country of crackdowns.

Furthermore, you said it all : "i know quite a lot of manufacturers... and I know at least one"

Yes, from time to time, one guy -too greedy and/or too stupid- is falling. So what ?

If your factory make air conditionning units... and if you sell them at -90 % of the regular wholesale price... then of course... even by thai standards, you are going to have problems with the Revenue Department (but as you pointed out for the guy you know... MANY YEARS AFTER ) !

We are talking here about thai.... administration.

But again, there should be a clear frontier between fiscal optimization and... bold stupidity.

[cclub75]

I've located the paper (Nation) you talked about.

It's a real funny piece. It's like the Revenue Department discovers that water is liquid : thai companies are cheating ! Oh my god, I'm shocked !

REVENUE DEPT

Firms told to stop using tax havens

Pledge to prosecute consulting companies

The Revenue Department has warned large and medium-sized companies to stop evading taxes after finding many Thai firms transferring profits to offshore tax havens.

Deputy director-general Satit Rangkasiri said many large and medium-sized corporations had used services offered by tax-haven countries to “doctor” their books or inaccurately declare taxable income.

For example, one exporter’s products had a price of Bt140 apiece, but he exported to a tax-haven country and declared a product price of only Bt100 apiece. The tax-haven country then sold the products to destination countries for Bt140 without tax payment. Thailand was only able to collect tax on the Bt100 sale instead of Bt140, and the country lost tax revenues as a result.

“This violates tax laws. The Revenue Department must be able to collect tax based on actual earnings,” Satit warned.

He said the department had identified a number of consulting firms that advised Thai companies to set up businesses in tax-haven countries to circumvent Thai tax laws.

The department will take legal action against the consulting companies and closely monitor the setting up of business units in tax havens in the belief that the move is being made to avoid paying tax.

The Revenue Department’s move comes after the government’s decision to go ahead with legal action against the family of deposed prime minister Thaksin Shinawatra, accusing Thaksin and his family of tax evasion and corruption. Thaksin is accused of setting up the company Ample Rich in the Virgin Islands, a well-known tax haven, to facilitate the transfer of shares in Shin Corp.

Wichit Chaitrong

The Nation

http://www.nationmultimedia.com/2007/06/20...ss_30037310.php

[taxin]

The department will take legal action against the consulting companies and closely monitor the setting up of business units in tax havens in the belief that the move is being made to avoid paying tax.

So the Thai tax authorities are going to send one of there staff to every tax haven in the world ? Visiting the offices of every offshore bank and every consultant company checking to see if any Thai business's have set up there ?

I dont think so.

[monty]

Thanks for the full article cclub75!

I'll try to put my thoughts in one post

I was merely chiding Steve @ Indo-Siam for publicly advocating those offshore "tax optimization" systems, especially stating they are virtually risk free (or omitting the fact they are not risk free at all).

Obviously, to some extent every single company in the world is doing one sort or another of tax optimization.

Tax avoidance on the other hand is illegal, and it is an art perfected by the best accountants to be able to convince the tax man that what he is doing (or did) is optimization and not avoidance.

Any company knows that an accountant with the experience (and connections) to keep the tax man happy is worth his weight in gold (and the accountants know that as well judging by their fees :D )

To make my point I used one example of somebody caught out (as they promised in the article, and probably because his accountant was to cheap), and as a result I know many companies adjusted their tax optimization schemes to slightly less optimal levels...

I do know the law is one thing, but Thailand IS the land of crackdowns, and you'd better not be too much on the wrong side if you are unlucky enough to be the subject of such crack down.

Prostitution does not exist either.

In the end, I was merely pointing out that this system is basically illegal (as stated by Mr. Satit in the article), and as such carries a certain amount of risk.

After my post warning about the risks, Steve rebuked with following sentence:

Monty -

I think that you will find that the Thai government interest to which you refer is mainly in regards to something other than the scenario I described above.

The article quoted above by cclub75 clearly states that that is EXACTLY the scenario Steve was describing they were looking for!

Cheers...