'Thaksin cannot be punished twice'
Thaksin Shinawatra
The IRS does not intend to impose a tax bill on Thaksin for the sale of his shares in telecommunications company Shin Corp to Singapore-based Temasek Holding in 2006.
If the agency did so, Thaksin would be punished twice because in February last year the Supreme Court confiscated 46,37 billion baht of his assets, says Satit Rungkasiri, director general of the Revenue Department.
Satit responds to questions from former Prime Minister Abhisit and former Finance Minister Korn why the Tax and Customs Administration has not appealed the decision of the Tax Chamber not to charge Thaksin's children Panthongtae and Pinthongta for their share transaction, which brought them 15,88 billion baht earned.
Public Prosecution Service and Finance advise against appeal procedure
Satit says that the Tax and Customs Administration has asked the Attorney General for advice. He did not consider an appeal necessary, because both the Supreme Court and the Tax Chamber were of the opinion that the shares had been owned by Thaksin and not by the two children. The Tax and Customs Administration also consulted the Ministry of Finance, which took the same position.
'There was a consensus to not file an appeal. Once the court ruled that the shares belonged to [Thaksin], then the [Ample Rich] sale to the children was actually a “hidden” transaction and in fact, the sale involved that of [Thaksin] and [Temasek]', said Satit .
Thaksin didn't pay a penny in tax
Thaksin sold his 49,6 percent stake in Shin Corp in January 2006 for 73 billion baht. The transaction, which took place through the Stock Exchange of Thailand, did him no harm, because he didn't pay a cent in tax on it, using an exemption ground for individual share sales in the market.
After the September 2006 military coup that ousted Thaksin, Thaksin's assets were blocked. In February 2010, the Supreme Court found Thaksin guilty of corruption because he had made policy decisions that favored his telecom company during the period 2001 to 2006 when he was prime minister. The 46,37 billion baht seized was based on the appreciation of the shares between 2001 and the sale date.
Shares partly placed in Virgin Islands
The share transaction in 2006 was somewhat more complicated because part of the shares was placed with a holding company in the British Virgin Islands. A few days before the sale was announced, the holding company, Ample Rich, sold 329,2 million shares to Panthongtae and Pinthongta Shinawatra, directors of the holding company. They paid 1 baht per share. The pair sold the shares to Temasek a day later for 49,25 baht per share and made a profit of almost 16 billion baht.
Tax Chamber follows Supreme Court
The tax authorities then hit the two for 12 billion baht, assuming that they had owned the shares. The two appealed and in December 2010 the Tax Chamber canceled the assessment. The Tax Chamber followed the same reasoning as the Supreme Court earlier that year in February, namely that the shares had always been owned by Thaksin. He had appointed his children and relatives as agents to hide his assets. He did that because as prime minister he was not allowed to have any financial interests. The Tax and Customs Administration subsequently withdrew the assessment and decided not to appeal against the decision of the Tax Chamber.
Not fair to all Thais who pay taxes
Former Finance Minister Korn Chatikavanij criticizes the reasoning of the Tax and Customs Administration and/or Chamber. 'If the department refuses to assess taxes due to argument that it was a “hidden transaction”, then it must answer what part can be considered void? Just the part involving tax liability? Because the actual share sale to Temasek certainly took place.
The transaction between Ample Rich and Thaksin, as done through his children acting as nominees, was a clear transaction between a company and an individual outside of the SET and so subject to tax. I don't believe that this is fair at all to all Thais who have a duty to pay taxes. If the department grants an exception in this case, then there will certainly be questions about whether doing so is suitable or correct.'