Hunting for amulet taxes
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
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The death at age 103 of the famous police officer Khun Phantharak Rajjadej and his funeral in Nakhon Si Thammarat set off a wave of amulet collecting recently.
As the highly valued Jatukham Rammathep amulets are bought and sold, and pass from owner to owner, one might reasonably ask if the government is or should be receiving taxes from these transactions.
Today's article is about government efforts to collect taxes on some parts of this growing market.
The history of the historical figures behind the amulets is also interesting. Jatukham Rammathep amulets date back to 1987 and the founding of Nakhon Sri Thammarat's City Pillar Shrine. The images on the amulets are said to be of kings of the ancient Srivijaya Kingdom:
Jatukham Rammathep is two people, not one. The names are the aliases of brother princes Inthara Sairen and Inthara Khao Kheo, sons of King Jantharaphanu, who ruled the Sri Thammasoke realm, the capital of the Krung Srivijaya Kingdom (757-1257) in southern Thailand, after his father who founded it.The Sri Thammasoke realm began to degenerate as a result of their father's absence of 20 years during which he expanded his dominion to as far as eastern India. The brothers founded a new capital at Chang Khom Sirithammarat (present day Nakhon Si Thammarat), and renamed the realm Srivijaya Suvarnabhumi.
Some legends say Jatukham Rammathep was another royal person living in a different era altogether, while others suggest it was a name given to King Jantharaphanu himself.
But all legends - under the influence of Mahayana Buddhism which was widely observed during the period - commonly believe that whatever king or royal person the name belongs to, the right holder of the name is an Avalokitesvara, a future Buddha after numerous rebirths committed to intense self-dedication and intense sacrifice.
Long after their deaths, the two princes continue to be idealised by succeeding generations of residents of Nakhon Si Thammarat and today are remembered by their preferred names of Jatukham and Rammathep as guardian angels. (Source)
Reading Questions
Here are some questions to guide your reading (See answers at end):1. What might be one reason that people buy amulets, according to the author?
2. What amulaet has become particularly popular recently?
3. How much revenue does the amulet industry generate?
4. Who is exempt from VAT taxes when selling amulets? Why?
5. What about private individuals working within temples, can they avoid taxes?
6. Do amulets typically decrease in price a lot when they are sold for a second,
third, or more time?
7. Under what conditions are transactions in the secondary market for amulets exempt from taxation?
8. Are most sales in the secondary market done with cash, credit card, or some other form of money?
9. How much are companies and individuals allowed to deduct from theuir income taxes
for religious donations? Do all do so? Why or why not?
10. Are goldsmiths exempt from VAT tax on any of the gold they sell for religious purposes? Do you think this is fair? (Express your opinion)
11. Why hasn't the government investigated the amulet industry more thoroughly for
tax generation purposes?
12. How have some unscrupulous individuals taken advantage of temples' tax exemptions
in the amulet industry? Is the government planning to do anything about it?
Bangkok Post Article March 28, 2007
Tuesday April 24, 2007 TaxCORNERHunting for amulet taxes
LAWALLIANCE LIMITED
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Over the past two years, Jatukarm Ramathep has become immensely popular; and this practice has not been restricted to the southern part of Thailand, but can be seen nationwide. Good luck has not only befallen those who acquire these sacred amulets, but also the industry as a whole. Their charm certainly seems to be real, as the industry's total earnings have now exceeded 20 billion baht. This good luck story is now extending to the Revenue Department.
Basically, sales revenues or donations earned by temples are not subject to any tax, as a temple does not fall within the definition of "a company and juristic partnership" under the Revenue Code. The same rationale also applies to organisations established under specific laws, such as universities and religious organisations. Temples are also exempt from having to pay VAT, as they sell or provide services for religious benefit or for public charity in Thailand.
However, traders or shops, which are treated as taxable entities, are obliged to pay taxes on any sale of amulets, even if they do this under the umbrella of temples.
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One can only imagine how this growth industry has annoyed the Revenue Department, given that most transactions are in cash and no one bothers about VAT invoices or receipts. The fact that most parties are individuals makes it even harder to cross-check and tax them.
The concern on the expense side is no less than on the revenue side. Companies are allowed to deduct donations or to contributions to public charity of up to 2% of their entire net profits. An individual taxpayer is also allowed to deduct donations made in an amount not exceeding 10% of their net income. Not all donors ask temples to issue receipts. In fact most individuals do not care, due to the belief that if they claim the tax deduction, then they may not get the merit.
Let's take, as an example, the case of a company that operates a mass-media business that sells amulets to the public with the purpose of donating the sales revenue to charity. The Revenue Department advises that such sales revenue cannot be deducted as an expense if does not exceed 2% of the company's entire net profits. Also, any sale of amulets by the company is exempt from VAT, as it is done for public charity. Nevertheless, due to such VAT exemptions, the company cannot deduct input tax paid in producing the amulets.
Goldsmiths, with an antiques trading licence, are exempt from VAT on the sale of the amulet's gold case in an amount equal to the buying rate offered by the Gold Traders Association of Thailand on the same day, provided that the gold case is not ornamented by jewels.
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However, these traders may be in for a shock as the Revenue Department has started to hunt down tax cheats, who will now have to pray and hope that their amulets can protect them from the wrath of the taxman. That said, the department may well find that it has its hands full in handling this growing Jatukarm Ramathep phenomenon.
By Rachanee Prasongprasit and Piphob Veraphong. They can be reached at admin@lawalliance.co.th
Vocabulary (in discussion above)
Khun Phantharak Rajjadej - an old and famous police officer in Nakhon Si Thammarat who was known for "wiping out many notorious criminal gangs in southern provinces such as Phatthalung and in the central provinces like Suphan Buri. As a reward, he was granted his title in 1935. In 1960, he was appointed chief of Police Region 8 and promoted to police major-general. Pol Maj-Gen Khun Phantharak Rajadej retired in 1964. He entered politics and was elected as a Nakhon Si Thammarat MP for the Democrat party in 1973." (See obituary and biography at the Thai parliament quoted from the Bangkok Post)
City Pillar Shrine (Lak Mueang) - a shrine believed to house the city spirit deity, held in high esteem by the citizens of the town, in Chiang Rai the shrine is located on top of the most ancient hill in the town (See Wikipedia)
alleviate - make an unpleasant situation less severe
vest x in y - entrust and give x for purpose y ("believers vest their faith in bettering their long-term future" means)
supernatural - creatures, forces, and events that people believe in that are beyond scientific laws
sacred - holy, believed to have a special connection with god or the supernatural
an amulet - an object that protects a person from trouble, usually worn around the neck on a chain (See Wikipedia on amulets and supernatural magic)
a talisman - an object believed to have magical powers of protection or luck
Jatukarm Ramathep - a recently very popular amulet (Read a history of the amulet and visit www.jatukarm-ramathep.com)
befallen - when an unlucky thing happens to you
charm - magical powers
a good luck charm - an object whose possession will bring good luck (for example a lucky rabbit's foot)
Revenue Department - Thai government agency responsible for collecting taxes
x is subject to law y - x must obey law y (or be punished)
juristic person - a legal entity legally registered in Thailand such as a company
juristic partnership - a partnership that is legally registered in Thailand
a rationale - a reason
VAT - Value Added Tax (See Wikipedia)
* VAT invoices or receipts
charity - an organisation that raises money to help people who can't help themselves (with a disability, disease, or no money)
an entity - something with a clear identity of its own, separately and independent from other entities (for example a household, business, charity, or temple)
taxable entities - households, companies, and other organisations that have to pay taxes
under the umbrella of - protected by, part of the same organisation
secondary market - market for used goods (secondhand goods), resale market, after market, market for selling after the original purchase (the opposite of a "primary market" ; usually refers to security markets)
cross-check - check using a different source or method than the first check
x is exempt from y - x does not have to do or pay y
VAT exemptions - legal permission not to pay VAT tax
goldsmiths - a craftsperson skilled in using gold as a raw material to create jewelry and religious objects, skilled in filing, soldering, piercing, sawing, forging, casting, and polishing the metal. (See wikipedia on goldsmith and gold)
antiques trading licence - permission to trade in antiques issued by the Thai government
Gold Traders Association of Thailand - (See website)
an adage - a wise saying about life (See Wikipedia on adages and proverbs, a more common synonym)
"Give him an inch, and he'll take a mile" - An old saying (adage, proverb) meaning "If you allow someone freedom, then they will usually take a lot more freedom than you gave them."
intentionally - planned to do it (meant to do it, did it deliberately, was not an accident)
x is a front for y - x is used to hide y's secret involvement
nominees - people acting as a front for someone else
a party - someone involved in an event or agreement (for example a "third party" or an "outside party" or "all concerned parties")
a fronting party - someone whose involvement is hiding the involvement of someone else
tax cheats - people who cheat when paying their taxes (intentionally do not pay the amount they are supposed to pay)
wrath - anger (incur the wrath of...)
has its hands full in handling x - dealing with x is so difficult, can't do anything else
Answer Key:
1. What might be one reason that people buy amulets, according to the author?
a. When people have difficulties in their lives (hard times) they turn to religion.
b. To better their long-term future, luck, and safety.
2. What amulaet has become particularly popular recently?
The Jatukarm Ramathep amulet.
3. How much revenue does the amulet industry generate?
Over 20 billion baht.
4. Who is exempt from VAT taxes when selling amulets? Why?
Buddhist temples who receive revenue from donations for the amulets not have to pay VAT tax on this revenue, because they "sell or provide services for religious benefit."
5. What about private individuals working within temples, can they avoid taxes?
No, they are subject to VAT taxes.
6. Do amulets typically decrease in price a lot when they are sold for a second,
third, or more time?
No, "some amulets can be exchanged for almost one million baht apiece."
7. Under what conditions are transactions in the secondary market for amulets exempt from taxation?
If the seller does not have a shop then the sale is "exempt from individual income tax"
since it is "sale of movable property...not used in trade or business."
8. Are most sales in the secondary market done with cash, credit card, or some other form of money?
Sales transactions are usually in cash.
9. How much are companies and individuals allowed to deduct from theuir income taxes
for religious donations? Do all do so? Why or why not?
a. Companies are allowed to deduct "up to 2% of their entire net profits."
b. Individuals are allowed to deduct "an amount not exceeding 10% of their net income."
Many do not claim the tax deduction believing that they will not receive religious merit
if they do so.
10. Are goldsmiths exempt from VAT tax on any of the gold they sell for religious purposes? Do you think this is fair? (Express your opinion)
They are exempt from VAT tax on the sale of the gold cases for amulets.
11. Why hasn't the government investigated the amulet industry more thoroughly for
tax generation purposes?
a. Trying to generate more tax revenue from the amulet industry
might reduce the level of religious donations.
b. It might be sinful to obstruct temples.
12. How have some unscrupulous individuals taken advantage of temples' tax exemptions
in the amulet industry? Is the government planning to do anything about it?
Some traders used temples as fronts for trading amulets.
The revenue department is planning to hunt down tax evading amulet traders.
("....as the old adage goes: "Give him an inch, and he'll take a mile" and the above tax exemptions are no exception as some have abused temples' tax exemptions as their nominees. Some temples are intentionally careless and do not mind acting as a fronting party in selling amulets to the public, even if a big chunk of the money goes to the real traders.")
