Thaksin’s tax saga: One bizarre rationale begets another

[webfact]

OPINION

Thaksin’s tax saga: One bizarre rationale begets another
By Tulsathit Taptim

 

BANGKOK: -- It’s a story of two camps going out of their way in a bid to outsmart each other. If the renewed efforts to tax Thaksin Shinawatra over the 2006 sale of Shin Corp to Singapore’s Temasek are baffling, the scheme he allegedly used to evade that tax is no less perplexing. 

 

Forget everything you know, folks, and welcome to a financial and political black hole where all basic reasoning breaks down.

 

Let’s talk about the fresh attempts to tax him first. The tax law says they are redundant since the statute of limitations on any charges has expired. The government of Prime Minister Prayut Chan-o-cha, however, is applying the civil law, which it insists allows one last try thanks to a longer statute of limitations. The civil law can be applied because the case is a crime, not a matter of someone innocently filing wrong information or forgetting to pay the Revenue Department, the government points out.

 

The Thaksin side can be forgiven for thinking the revival of the case is an arm-twisting tactic to force his participation in “reconciliation” talks. But let’s forget about that for the moment and stick with the legal situation. The Thaksin camp can cite basic legal principles that “specific laws” should take precedence over general laws. In other words, sectors governed by their own specific law like taxation should observe that law on every matter – including how long a case can last.

 

Citing principles is a risky political move, however. Thaksin has not always been on the right side of principles. In fact, several “principles” were endangered by his actions in the Temasek sale in the first place.

 

Here’s a background on how a “missing” tax payment of about Bt10 billion has damaged many things beyond repair in political, national and even international terms. It started with the setting up of Ample Rich Investments for just one dollar in the British Virgin Islands in 1999. Registered by Thaksin himself, this new company bought Shin Corp stocks at Bt10 a share for a total deal worth Bt329 million. Adding to the intrigue, Ample Rich Investments borrowed the money from Shin Corp to complete the deal.

 

Thaksin claimed the whole deal was aimed to help his telecom empire make inroads on the US Nasdaq stock exchange. It seemed an honest ambition but for the fact that he failed to report this part of his assets while holding political office. Ample Rich Investments stocks formed part of the infamous “share concealment scheme” that involved his household staff.

 

In December 2000, Thaksin, rocked by the share-concealment inquiry, reportedly “sold” Ample Rich to his son, Panthongtae, for one dollar. In August 2001, splitting par value of Shin shares meant Ample Rich was holding 329.2 million Shin shares (from 32.92 million shares). Thaksin’s daughter, Pinthongta, became an Ample Rich co-owner after buying a one-dollar Ample Rich share from her brother in May 2005 after he had increased its registered capital to five dollars (five shares). They each owned 164.6 million Shin shares.

 

In 2006, Ample Rich Investments “sold” the Shin shares to its “owners”, Panthongtae and Pinthongta, for Bt1 apiece. Just a few days after that, the 329.2 million Shin shares headed straight into the hands of Temasek – at Bt49.25 apiece. The Shinawatras argued that no tax had to be paid, because Ample Rich was “not making any profit”. Let’s put it this way: Panthongtae and Pinthongta – “the Ample Rich owners” – could not sell directly to Temasek because they would have been taxed heavily. They had to sell the shares to Panthongtae and Pinthongta “the individuals”, who could “park” the shares and then sell them as individuals in the stock market.

 

Was it a legitimate means to avoid tax, or was it an illegal scheme? You tell me. A significant detail is that Thaksin was prime minister of Thailand during much of all this.

 

A lot has happened since the Temasek sale, including two coups and countless often-violent protests. A key post-Temasek incident was the seizure of the Shinawatras’ assets, including the money they received from the Singaporeans.

 

So, here’s another key question: With the asset seizure, is it fair to try to tax him again?

 

“What else do they want from us?” Panthongtae asked, quite understandably. 

 

To tell the truth, I don’t quite get it, either. All I can say is this: If this is a world where Panthongtae the Ample Rich owner can sell Shin Corp shares at Bt1 apiece to Panthongtae the individual who resold them at Bt49.25 per unit in the stock market, tax-free, this also must be a world where a court can seize the money made from such a clever trade and the Revenue Department can say we had nothing to do with the seizure and we still want to tax you retroactively anyway.

 

Source: http://www.nationmultimedia.com/news/opinion/tulsathit/30309821

 

-- © Copyright The Nation 2017-03-22

[halloween]

Is share trading designed to evade tax illegal? Definitely.

Can the proceeds of illegal activity be seized? Certainly

Can the profits from illegal activity be taxed? Ask Al Capone

 

More to the point, should wealthy and powerful figures be allowed to subvert the taxation system and the law for their own benefit?

[ezzra]

36 minutes ago, webfact said:

Forget everything you know, folks, and welcome to a financial and political black hole where all basic reasoning breaks down.

 

In a country where logics, common sense and rationality  

and logics is almost as rare as

a baby pink elephant, so it's not a surprise that negligence, carelessness and derelict

of duties can and will bring about such situations.....

Edited March 21, 2017 by ezzra

[debate101]

What they did was unethical, and clearly they intended to avoid paying taxes. That being said, the courts have thusfar been unable to successfully prosecute them under normal procedures.

 

Regardless of one's own opinion on the topic, the last sentence is dead wrong. The legal system as a whole must be held to a higher standard of behavior than its private citizens, which, although they were the members of a public figure's family, they were acting as in this case that was not official government business. 

 

This idea that we can invent or twist laws to get the correct outcome is part of the toxic trap the country has never been able to escape from. Two wrongs, etc... That the state must follow its own procedures is essentially why we even have rule of law rather than anarchy.

 

[Reigntax]

There is a difference between tax avoidance and tax minimisation even to zero. Anyone who doesnt minimise the amount of tax paid by using the law to their benefit is a fool,.

[maewang99]

isnt there a little conundrum somewhere? a legitimate one?

 

using secret nominees for holding Thai securities occurs 100% of the time.... when you use a bank or broker that is "overseas". 

and to open an account with a non Thai broker....  you need what? a drivers license..... a Soc Sec number (gee that's tough to get).. and a local address of some kind.

 

why nominees always? bank secrecy laws? secrecy means the right to buy and sell.... directly.....Thai securities in secret???? does it go that far?
 

if you use a Thai bank or broker you can bet 100% somebody's real name is at the TSD. 100%. LOL. and as well the bank or broker "knows their customer".

but when you use a non Thai bank or broker you can bet your name was neither needed and certainly not disclosed to an intermediary that was brought in just to ensure that your name and identity are more than just secret... and the intermediary contacts the market broker in the destination country.

 

and to boot.... this goes on even though it openly violates the Non Discrimination clause of the USA-Thai Double Taxation Treaty.

 

Edited March 22, 2017 by maewang99

[Eric Loh]

2 minutes ago, Baerboxer said:

Smart business men and rich people may avoid tax by exploiting loopholes but rarely when their dad happens to be the country's PM and sells them the business concerned for a pepper korn amount.

PM and President pay tax too according to the revenue law statutes. The onus is for the revenue department to decide if the pepper corn loophole is taxable. They didn't in the early rounds and the Supreme Court concurred.  Let's see if the miracle of law will break the impasse. I don't believe in miracle. In any case, they got half of his wealth in the bag already. 

[kiwikeith]

5 hours ago, debate101 said:

What they did was unethical, and clearly they intended to avoid paying taxes. That being said, the courts have thusfar been unable to successfully prosecute them under normal procedures.

 

Regardless of one's own opinion on the topic, the last sentence is dead wrong. The legal system as a whole must be held to a higher standard of behavior than its private citizens, which, although they were the members of a public figure's family, they were acting as in this case that was not official government business. 

 

This idea that we can invent or twist laws to get the correct outcome is part of the toxic trap the country has never been able to escape from. Two wrongs, etc... That the state must follow its own procedures is essentially why we even have rule of law rather than anarchy.

 

New Zealand is one of the worst countries in the world for tax evasion and similar scams, it hides money in trusts for overseas companies to avoid tax including some huge money from Thailand, the government does nothing about it.

[Docno]

7 hours ago, Reigntax said:

There is a difference between tax avoidance and tax minimisation even to zero. Anyone who doesnt minimise the amount of tax paid by using the law to their benefit is a fool,.

Or principled. I don't try to milk tax loopholes--though there are many available to me--because I believe that I benefit from living in a particular society and maintaining that society has cots. I don't mind contributing to covering those costs.  A fool I may be, but I know I'm doing the right thing...

[Reigntax]

5 minutes ago, Docno said:

Or principled. I don't try to milk tax loopholes--though there are many available to me--because I believe that I benefit from living in a particular society and maintaining that society has cots. I don't mind contributing to covering those costs.  A fool I may be, but I know I'm doing the right thing...

 

Do i detect a fool?

[Docno]

2 minutes ago, Reigntax said:

 

Do i detect a fool?

Perhaps.... but if there is a heaven, it is surely populated by fools and not by those concerned with their self-aggrandizement. Cheers.

p.s. seems I was right with my Trump comment :-)

Edited March 22, 2017 by Docno

[mfd101]

7 hours ago, Reigntax said:

There is a difference between tax avoidance and tax minimisation even to zero. Anyone who doesnt minimise the amount of tax paid by using the law to their benefit is a fool,.

A nice distinction invented by the tax lawyers for wealthy clients, and their politician stooges.

 

And then there's morality, all too rare in all human beings not least the wealthy and our political 'leaders'.

[Reigntax]

2 hours ago, mfd101 said:

A nice distinction invented by the tax lawyers for wealthy clients, and their politician stooges.

 

And then there's morality, all too rare in all human beings not least the wealthy and our political 'leaders'.

Poor taxation laws and loopholes are created by the taxation departments and finance ministries.

 

Every accountant and lawyer has a duty to obtain the best result for their client, not the government.

 

I have never seen tax law where morality received even a mention.

 

Morality is the donation to a favourite charity.  After ensuring the donation will be tax deductible, of course.

Edited March 22, 2017 by Reigntax
On typo

[halloween]

8 hours ago, Eric Loh said:

Ask Trump who infamously said that smart (wealthy) businessman don't pay tax. You should know that. Wealthy people hire the best lawyers for the purpose of evading tax without breaking the law all round the world

Perhaps you should learn the difference between tax avoidance and evasion. Hint, only one is legal.

[Reigntax]

3 minutes ago, halloween said:

Perhaps you should learn the difference between tax avoidance and evasion. Hint, only one is legal.

 

Actually, one is an obligation and duty for any professional representing their client.

[halloween]

Just now, Reigntax said:

 

Actually, one is an obligation and duty for any professional representing their client.

And the other is frequently used by habitual criminals, one of whom is the evader of taxes under discussion.

[metisdead]

Off topic trolling posts and replies have been removed. 

[Reigntax]

7 minutes ago, chainarong said:

A billionaire in OZ once said he didn't employ Accountants on high salaries to pay tax.

I believe the person you refer to may have, when be questioned under oath, stated words to the affect "of course I try to minimize the amount of tax I pay,. The government does such a poor job in spending what I already pay them"

[robblok]

11 hours ago, Reigntax said:

There is a difference between tax avoidance and tax minimisation even to zero. Anyone who doesnt minimise the amount of tax paid by using the law to their benefit is a fool,.

Agree.. but being the PM at the time makes things a bit more of a problem as nobody would go against him and call this scheme a tax fraud.

 

But I agree with what your saying as long as its legal use it.

[Reigntax]

3 hours ago, robblok said:

Agree.. but being the PM at the time makes things a bit more of a problem as nobody would go against him and call this scheme a tax fraud.

 

But I agree with what your saying as long as its legal use it.

 

The courts have made a judgement when the case was prosecuted. It not his fault or anyone else for being smarter than the taxation department. If they didnt pursue the case fully because of him being the incumbent PM, sack the lot of them. 

 

The horse has bolted and Prayuth trying to reignite the issue is just a farce and shows an obvious lack of his understanding of law.

 

Let him use his section 44 power to introduce retrospective tax law and watch the country fall a further 50 years behind every asian country.

 

Prayuths a clown and every day his attempt to get at the Shins confirms he has no place leading a circus, let alone a country.

 

 

 

 

[bangrak]

Khun Tulsathit, thank you very much for this, very clear, unbiased opinion which sets things into their correct perspective! But I know it will never be enough to make the lemming followers of Thaksin and his clan accept even the true reality of facts, alas... 

[Eric Loh]

16 hours ago, halloween said:

Perhaps you should learn the difference between tax avoidance and evasion. Hint, only one is legal.

You don't need a miracle of law if it is illegal. The junta will be rubbing their hands with glee if it is avoidance. Don't you think so?