PM Abhisit To Be Grilled Over Tobacco Firm Role

[webfact]

PM to be grilled over tobacco firm role

By The Nation

The Pheu Thai Party plans to grill Prime Minister Abhisit Vejjajiva for allegedly meddling in an effort to help an international tobacco company evade Bt68 billion in import tariffs between 2003 and 2007.

"One of the censure and impeachment charges against Abhisit is his inteference in the legal proceedings in a tax evasion case involving Philip Morris (Thailand) Limited," party deputy spokesman Yuthapong Jarassathian said yesterday.

Yuthapong alleged that Abhisit intervened in the prosecution review, resulting in the dropping of charges against the company.

Despite his image as "Mr Clean", Abhisit allegedly instructed his close aide, known by the initial K, to exert influence on the company's behalf, prompting speculation about kickbacks being paid to a foreign bank account, Yuthapong claimed.

He also voiced suspicion that certain companies became big donors to the Democrat Party. These companies would pay Bt2 million in a fund raising dinner for the Democrats, scheduled for tomorrow, he said.

The Philip Morris case came to light after the Excise Department asked the Department of Special Investigation (DSI) to probe what it claimed was the company's illegal trade practice of undervaluing its cigarettes in order to avoid paying high import tariffs.

The DSI forwarded its September report to the Office of the Attorney-General recommending the case go to trial.

The opposition said the secretariat of the prime minister issued an urgent instruction for the DSI, the public prosecutors and the Excise Department to review the proceedings against the tobacco company.

The instruction took place four days after the public prosecutors received the DSI report.

Following the instruction, Thai trade representative Kiarti Sitthi-amorn called the attention of relevant agencies to the decision by the World Trade Organisation's Dispute Settlement Body related to the trade dispute between Thailand and the Philippines.

The opposition has yet to clarify how and why the instruction had a direct bearing on the tax evasion case.

DSI director-general Tharit Pengdit said public prosecutors notified him last week about dropping charges against the company.

"I have to study the prosecution report before deciding whether to oppose the decision not to try the company," he said.

Under trial procedures, if the DSI and the public prosecutors have differing opinions, the attorney-general will have the final say on whether to try the case.

-- The Nation 2011-03-07

[Ricardo]

If the cigarettes were undervalued, on the import-invoice, but then sold for normal-price on the open market, then surely the company made massive taxable profits, and paid-up that way instead ? As the government tax-inspectors can verify.

Or did the company sell them too-cheaply at retail, as well ? What benevolent chaps !

Either way this has to be better for the Thai tax-man than the massive-trade in smuggled MBO which I recall in the old days, sold on street-corners by shady-characters. But perhaps the (I assume) reduction in that trade meant smaller brown-envelopes, for the forces of law-and-order, with a lower commission to the Customs for not seeing the containers coming-in ?

[Thaddeus]

PM Grilled Over Hot Ashes.

[timekeeper]

Poo Thai are desperately clutching at straws

give me a cigarette........

[whybother]

If the cigarettes were undervalued, on the import-invoice, but then sold for normal-price on the open market, then surely the company made massive taxable profits, and paid-up that way instead ? As the government tax-inspectors can verify.

Or did the company sell them too-cheaply at retail, as well ? What benevolent chaps !

Either way this has to be better for the Thai tax-man than the massive-trade in smuggled MBO which I recall in the old days, sold on street-corners by shady-characters. But perhaps the (I assume) reduction in that trade meant smaller brown-envelopes, for the forces of law-and-order, with a lower commission to the Customs for not seeing the containers coming-in ?

That depends on what the import tax is (and other taxes are) compared to the VAT and income taxes. I would suggest that the import taxes would be higher than VAT and income taxes, otherwise what is the point of them?

[Oberkommando]

Thailand has also been found guilty of violating transparency rules and customs valuations by the WTO over imports of Philippines tobacco.

[Bagwan]

My understanding is that the Customs department is even more corrupt than BiB. When my personal effects arrived from the UK I was asked to pay 100 baht in addition to the invoice amount. I was told it was tea money and unless I coughed up, my gear would stay where it was and I would be charged for storage. I do not doubt that some skulduggery is being perpetrated and maybe Abhisit is going with the flow until he can muster enough power and a mandate to start on the massive operation of cleaning the Augean stables.

[Ricardo]

If the cigarettes were undervalued, on the import-invoice, but then sold for normal-price on the open market, then surely the company made massive taxable profits, and paid-up that way instead ? As the government tax-inspectors can verify.

Or did the company sell them too-cheaply at retail, as well ? What benevolent chaps !

Either way this has to be better for the Thai tax-man than the massive-trade in smuggled MBO which I recall in the old days, sold on street-corners by shady-characters. But perhaps the (I assume) reduction in that trade meant smaller brown-envelopes, for the forces of law-and-order, with a lower commission to the Customs for not seeing the containers coming-in ?

That depends on what the import tax is (and other taxes are) compared to the VAT and income taxes. I would suggest that the import taxes would be higher than VAT and income taxes, otherwise what is the point of them?

Taxation of tobacco can be very complex, I was once responsible for monitoring import-tax/distribution-chain pricing-models for cigarettes into some 20-odd relatively-uncomplicated 3rd-world countries, and recall that the average was about 25 different components per country.

The key from a governmental POV should ideally be to raise significant tax, and give an advantage (but not too much) to locally-made (but often inferior) products, thus hopefully encouraging the big companies (often US/UK) to do licensing-deals for local-production (creating more local employment & technology-transfer) with careful monitoring of production/ingredient-quality by the brand-owners.

Thailand is of course a tobacco-growing country, so poor farmers (amongst others) can benefit from growing this high-value (if harmful-to-health) crop, indeed one reason for calling the Golden-Triangle 'golden', is that it produces a lot of tobacco, there is a very-interesting exhibit about this at the museum at the (mainly tourist photo-opp) 'Golden-Triangle' where the three countries meet.

But too-great a tax-take on legal-imports can often lead to high-levels of illegally-smuggled/sold supply, paying no tax at all, often euphemistically called the 'transit-trade', and this can also be encouraged when legal tax-regimes in neighbouring-countries are wildly-different. Too high an import-tax risks killing the golden-goose !

Edited March 7, 2011 by Ricardo

[Bagwan]

The Godfather of Chonburi started his upward climb by smuggling in cigarettes from Indonesia.