Bangkok Post : The world's your oyster if your aunt is PM

MAKING SENSE

The world's your oyster if your aunt is PM
This week, Revenue Department officials acknowledged publicly that the department would not appeal a judgement by the Central Tax Court overturning a multi-billion-baht tax judgement against Panthongtae and Pinthongta Shinawatra.


Non-taxable: Panthongtae Shinawatra and his younger sister Pinthongta. Revenue officials have decided not to appeal against a court ruling on the 12-billion-baht tax case against the two multimillionaires.

This news comes the same week their aunt Yingluck Shinawatra has been named Thailand's 28th prime minister and first female leader.

Serendipity, no doubt.

A refresher course: In January 2006, then prime minister Thaksin Shinawatra, Ms Yingluck's brother, announced the sale of the family's 49% stake in telecom giant Shin Corp, to Singapore's Temasek Holdings.

It emerged later that the shares were partially held in an offshore holding company, Ample Rich Investment. On Jan 20, 2006, Ample Rich sold 329.2 million Shin shares to Thaksin's children at the price of one baht a share. The following business day, Mr Panthongtae and Ms Pinthongta sold off the shares to Temasek at a price of 49.25 baht each, pocketing capital gains of 15.88 billion baht.

The Revenue Department announced that the transaction was subject to taxes worth some 12 billion baht, prompting an appeal by the Shinawatra siblings.

The Central Tax Court, on Dec 29, 2010, ruled in favour of Mr Panthongtae and Ms Pinthongta, arguing that the two acted as nominees for Thaksin and thus could not be considered as the share owners for tax purposes. This was despite the fact that Mr Panthongtae and Ms Pinthongta had both offered testimony in court attesting that they were the owners of the Shin shares and that they were not acting as proxies for their parents.

But the court judgement was logical if viewed from the perspective that it was consistent with the Supreme Court's ruling in early 2010, which found that Thaksin was the actual owner of the Shin shares and thus guilty of conflict of interest in policy-making during his term as premier. The Supreme Court ordered the confiscation of 46 billion baht in funds gained from the Temasek sale as a penalty.

The original argument put forth by the department was that the purchase of the shares by Mr Panthongtae and Ms Pinthongta, as directors of Ample Rich, at a below-value price represented a fringe benefit subject to taxation on the gains received, equal to 7.94 billion baht per person.

The two Shinawatra siblings, as part of their defence, presented a letter from a department official stating that the purchase of shares at a below-market price, if purchased outside of the Stock Exchange of Thailand, was not subject to tax.

The department's actions in the case have been in line with precedent.

A 1995 ruling on the issue of personal tax liability for shares received free or at a discount from fair value, states clearly that taxes are owed on the benefits received.

The ruling by the tax panel, chaired by then finance permanent secretary Aran Thammano, said directors or staff receiving shares at below-market value from a juristic person are liable for tax liability on the difference between the market value and sale price under Section 39 of the Tax Code.

The Central Tax Court, however, essentially ruled that the 1995 rule did not apply in the case of the Shinawatra children, as they were not the legitimate owners of the Shin shares from the start.

I can understand why the Revenue Department has declined to appeal the tax case. Though at the same time, I can't help but feel a sense of unease about the entire issue. After all, the fact of the matter is that the Shin shares were sold at a hefty profit - must there not be taxes paid by someone?

And the fact that the Shinawatra children originally testified before the Central Tax Court that they were the "original owners" of the shares, only to reverse their defence after the Supreme Court ruling came down... well, that also is troubling.

Personally, I feel justice will not really be served so long as such questions remain. If we really desire answers, then the department must exhaust all of its legal options, including appealing the lower court ruling. Appeal not with any real expectations of a different outcome, but to prove the point that the tax authority is genuinely committed to the principles of equality, fairness and justice - for all.



Wichit Chantanusornsiri