SHIN DEAL PROBE

[limbo]

SHIN DEAL PROBE

noose tightens

 

Deputy PM sets up panel to look into tax evasion by the Shinawatra clan spill do not cut

 

 

MR Pridiyathorn Devakula, the deputy prime minister and finance minister, has formed a panel to investigate the entire Shin Corp deal in connection with alleged tax evasion by the Shinawatra clan, before submitting the findings to the Assets Examination Committee (AEC).

 

 

"For the time being, we would like to collect the tax [from the Shin Corp deal] first," Pridiyathorn said yesterday.

 

 

Meanwhile, the AEC and the Revenue Department yesterday found different angles of the law to take action against the children of deposed prime minister Thaksin Shinawatra for failing to pay taxes on the sale of Shin Corp shares to Singapore's Temasek Holdings.

 

 

Pridiyathorn has recruited Dr Aran Thammano, a former permanent secretary for finance, to advise him in this particular case. Aran will chair the four-member panel to investigate the Shin Corp deal.

 

 

Sirote Swasdipanich, the director-general of the Revenue Department, has already sent tax bills to Panthongtae and Pinthongta, two of the children of the deposed premier, asking them to pay some Bt5.8 billion in owed tax.

 

 

If fines are included, the tax bills could exceed Bt10 billion, depending on the negotiations between the brother and sister and tax officials.

 

 

On January 20, 2006, Panthongtae and Pinthongta bought 329 million shares of Shin Corp at Bt1 apiece from Ample Rich Investments Co, a shell company allegedly set up by Thaksin and incorporated in the tax haven British Virgins Islands.

 

 

On January 23, the two sold the stocks to Temasek at Bt49.25 a share via the stock market, without having to pay any tax.

 

 

Thaksin had transferred his holdings in Ample Rich Investments to Panthongtae and Pinthongta, who are also its directors and shareholders.

 

 

Lawyers for Thaksin's two children claimed they did not have to pay tax because Ample Rich Investments had sold the stocks to Panthongtae and Pinthongta at below the market price of Bt47 a share. Besides, it was simply a switch of money from the left pocket to the right pocket because the two owned Ample Rich in the first place.

 

 

Benja Louicharoen, an adviser to the Revenue Department, then issued a letter to confirm that the Shin Corp transactions would not be subject to any tax because Ample Rich Investments was incorporated in a tax haven that did not have any tax treaty with Thailand.

 

 

However, the Revenue Department is now changing its stand regarding the tax issue in the Shin Corp deal.

 

 

Panthongtae and Pinthongta will be taxed on the profits earned from buying the Shin Corp stocks at Bt1 a share only to sell them to Temasek within days for Bt49.25.

 

 

The tax amount is about Bt5.8 billion, which does not include fines.

 

 

Pridiyathorn has brought in Aran to help the government handle this case as Aran had ruled during his tenure at the Finance Ministry that directors or employees must pay tax upon receiving stocks from their companies even before selling it.

 

 

That ruling held that stocks earned by directors or company employees should be considered taxable income.

 

 

Banapot Damapong, the brother of Khunying Pojaman Shinawatra, will also be a target of investigation in the Shin Corp deal.

 

 

Khunying Pojaman transferred her Shin Corp stocks amounting to almost Bt1 billion to Banapot as a gift, which was given as the reason for his not having to pay tax.

 

 

The Revenue Department then also opined that Banapot did not have to pay tax because he had not yet realised the profits from their sale.

 

 

But Banapot joined the Shinawatra family in selling his Shin Corp stocks, worth more than Bt400 million, to Temasek in January without paying tax by claiming an individual selling the stocks via the stock market is exempted from tax.

 

 

The AEC yesterday interviewed Revenue Department chief Sirote about the tax exemption in the Shin Corp share sale.

 

 

After five hours, Viroj Laohaphan, who heads the AEC group investigating tax-related cases, said Sirote used Article 40 (8) of the Code of Revenue, which says the deadline for submitting tax payment forms was September 30 as required once every six months to take action against Panthongtae and Pinthongta Shinawatra.

 

 

Meanwhile, the AEC thought the case should comply with Article 40 (2), which required submissions of tax payment forms annually and tax collection on payment. The due date to submit the document is in March next year, Viroj said.

 

 

The implications of the law have yet to be discussed, and the AEC needs to investigate all the people involved in the case, as well as the route of the money transferred to the Bank of Thailand (BOT) and the Securities and Exchange Commission (SEC), Viroj said.

 

 

Sirote would send the information to the AEC next week, Viroj said.

 

 

Viroj said the case of Pojaman's share transfer to her step-brother Banapot in 1997 hadn't expired as the case has a 10-year term. The AEC would trace back whether there had been a collection of withholding tax.

 

 

The AEC was preparing to examine whether there would be withholding tax payment reported in the tax declaration document due to be submitted in March 2007, as, at the time of the sale, Ample Rich had sold the shares to Panthongtae at Bt1 per share when the market price was Bt49 per share.

 

 

If no withholding tax paid, the sale might not have happened.

 

 

When Panthongtae and Pinthongta sold the shares to Temasek at Bt47 each, they didn't pay tax claiming it was trading in the market. However, the tax would be calculated based on the market price.

 

 

Using Article 40 (8), Sirote would be able to take action against Thaksin's children without him being guilty of malfeasance. Moreover, Thaksin's children would be able to get away just by paying the back-dated tax.

 

 

On the other hand, using Article 40 (2), the Revenue Department director-general would not be able to call for a back-dated investigation as the crime had not been committed. However, the AEC would be able to investigate the case.

 

 

AEC spokesman Sak Korsaengruang said Sirote claimed he had recently decided to investigate tax payments related to the Shin Corp share sales earlier this year as he received more information after the department officers had finished the process.

 

 

However, the AEC found possible irregularities and it will further investigate the case, although the information could not be revealed.

 

 

On Tuesday, Sirote told the press that the department had decided to take action against Thaksin's children for tax evasion related to the Shin Corp share sale.

 

 

The statement marked a U-turn in the department's policy as earlier this year it insisted the deal was tax-free.

 

Bancha Khaengkhan, Budsarakham Sinlapalavan,

 

 

The Nation 11/11/06