Revised Shinawatra family tax bill:
Just deserts or double jeopardy?
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
 |
Before the 2006 Thai Coup, newspaper articles could not refer to Shin Corp as Thaksin's corporation.
Even though everyone knew that Thaksin called the shots and made all the decisions as far as Shin Corp was concerned, journalists had to observe the legal fiction that Thaksin had nothing to do with the corporation.
The Shinawatra siblings Panthongtae and Pinthongta were the captains at the helm of Shin Corp.
The hefty tax bill that was finally handed to the Shinawatra siblings yesterday is hardly breaking news.
This tax liability has been discussed for over a year already.
The importance of intention in determining whether someone violated tax laws was discussed in great depth in a March 23, 2006 Bangkok Post Op-Ed piece by lawyer Anuphan Kitnitchiva.
Does this tax bill reverse favoritism that was initially shown to the Thaksin family? Is it just?
For further reading from history, check out one of the first Bangkok Post articles on Ample Rich way back in 2000 before the elections that brought Thaksin to power. Former Prime Minister Anand predicts that Thaksin might "fall from his high horse" and there was speculation that Ample Rich and secretive share transfers might hurt Thaksin's election prospects. They didn't.
Check out more Bangkok Post articles on the Shin Sale and Coup supplemented with vocabulary and reading questions for language study.
Reading Questions
Here are some questions to guide your reading (See answers at end):1. What is the total tax liability that Panthongtae and Pinthongta Shinawatra [the Shinawatra siblings] now owe to the government according to yesterday's ruling?
2. What government administrative body ordered them to pay these taxes?
Who appointed this administrative body? When was it appointed?
3. What are the two components of tax liability owed to the government?
4. Where was Ample Rich registered as a corporation?
5. Why was it registered there?
6. Was the Ample Rich an effective device for dealing with the Shinawatra tax liability? Why or why not? What would you have said two years ago? What would you say now?
7. What position do Panthongtae and Pinthongta Shinawatra [the Shinawatra siblings] hold at Ample Rich?
8. What are the components of Ample Rich's corporate tax liability owed to the government? Which is these is the largest?
9. What problems where caused by Ample Rich's selling of shares to the Shinawatra siblings "at a price much lower than their real value" ? (Cite specific Thai laws.)
Article
April 24, 2007Tax shock for Thaksin children
Must pay B21bn extra over Ample Rich deal SURASAK GLAHAN AMPA SANTIMATANEDOLPanthongtae and Pinthongta Shinawatra, two grown-up children of deposed prime minister Thaksin, have been ordered to pay almost 21 billion baht more in outstanding taxes and fines relating to the sale of Shin Corp, the Assets Scrutiny Committee (ASC) ruled yesterday.
The panel decided the two siblings must pay another 20.89 billion baht in corporate income tax on behalf of Ample Rich, of which they were directors, for reaping the profits in Thailand.
The ruling means the Shinawatra family will have to pay 27.42 billion baht in total. This sum includes personal income tax of 5.69 billion baht the siblings were already ordered by the military-appointed panel to pay for the Shin share deal they made via Ample Rich last year, along with other charges.
Citing Article 76 of the Revenue Code, Viroj Laohaphan, chief of the panel's tax probe team, said despite being registered in the British Virgin Islands, a tax haven, Ample Rich could not escape tax liability in the kingdom because its operations took place in Thailand.
As Mr Panthongtae and Miss Pinthongta were directors of Ample Rich, they had to pay the company's taxes, he said.
A large chunk of the corporate income tax stemmed from dividends the firm had earned over the past four years, plus fines for failing to submit its tax payments on time, and profits on selling Shin shares to the siblings on Jan 20 last year, said Mr Viroj. Other charges include distribution of profits outside the country, he added.
The biggest profits Ample Rich made were from its sale of Shin shares to the siblings, when they were its directors, at one baht apiece while the market value was 49.25 baht, the probe team said.
The team said taxation of the two on behalf of Ample Rich did not overlap with their personal income tax.
ASC secretary Kaewsan Atipho, citing Article 65 (bis) (4) of the Revenue Code, explained that the firm is still liable to pay tax on its part because the law imposes the liability as punishment for unreasonably selling the shares to individuals at a price much lower than their real value.
The ASC said the hefty tax amount was imposed as "punishment" for the tax evasion attempt.
"Ample Rich colluded with the buyers [the siblings] to sell the shares at a cheaper price to help them evade tax. So, the firm must be punished by imposition of tax to set a precedent for similar cases," the probe team said.
The share purchase by Mr Thaksin's two children took place days before the Shinawatra and Damapong families sold their stakes in Shin Corp to Temasek Holdings of Singapore - a deal which sparked street protests against the then prime minister.
Had Ample Rich sold the shares directly to Temasek in the stock market, they would not have been forced to pay such hefty taxes, said Mr Kaewsan.
The panel will order the Revenue Department to proceed with collecting taxes on Ample Rich.
The ASC also decided to file a defamation lawsuit against acting Thai Rak Thai leader Chaturon Chaisaeng for allegedly calling the agency "a semi-kangaroo court". It also set up a subcommittee headed by Udom Fuangfung to look into the digit lottery, a project launched when Mr Thaksin was in power.
"The ASC is legally authorised [to investigate]. It is not a kangaroo court. The ASC does not mind criticism of its members, but it will not endure criticism against the agency as an [established] authority," said ASC spokesman Sak Korsaengruang.
Vocabulary (in discussion above)
just deserts - to get what you deserve to get (in the end) (Thai: Som Nam Naa), note that "all theories of distributive justice claim that everyone should get what he or she deserves. Where they diverge is in disagreeing about the basis of desert"
distributive justice - "Distributive justice concerns what is just or right with respect to the allocation of goods in a society. Thus, a community whose individual members are rendered their due would be considered a society guided by the principles of distributive justice. Often contrasted with procedural justice, which is concerned with just processes such as in the administration of law, distributive justice concentrates on just outcomes and consequences. The most prominent contemporary theorist of distributive justice is the philosopher John Rawls." (See Wikipedia)
double jeopardy - a law forbidding that someone be tried twice for the same crime (See Wikipedia on the law and the film)
Shin Corp - (See Wikipedia on Shin Corporation and Sale of Shin Corporation to Temasek Holdings)
Temasek Holdings - (See Wikipedia)
call the shots - make all the decisions, be in control
a legal fiction - facts according to law (that are actually not true in real life; See Wikipedia)
criminal defamation - the Thai law that can put you in jail if you publicly say something that is false and offensive about someone
siblings - brothers and sisters
an intention - an idea or plan about what you are going to do
an inconsistency - dealing with the same situation in two different ways
favoritism - unfairly helping one person or group more than another
just (adj), justice (noun) - (See Wikipedia on justice and social justice)
grown-up children - children who are over 21 and therefore adults (just using he word "children" sounds like they are not adults yet and might sound like cruelty to innocent children)
deposed - when a political leader is forced out of their political position
outstanding - not yet paid (for example outstanding bills)
Assets Scrutiny Committee (ASC) - the post-coup committee investigating government corruption
a panel - a small group of people chosen to discuss a problem or make a decision
do x on behalf of y - do y for y (because they could not do it for some reason)
Ample Rich - tehe holding corporation that the Thaksin family used for selling Shin Corp (See Wikipedia)
reap - enjoy the benefits of (for example "reap the benefits of" or "reap the rewards of" or "reap the profits of")
a ruling - an official decision made by a judge or court
personal income tax - taxes paid by individual people on their income (every year)
corporate tax - taxes paid by corporations on their profits (every year)
an article - a part of a formal document dealing with one point or topic
the Revenue Code - Thai laws regarding the collection of taxes (Read the laws)
the Revenue Department - Thai government agency responsible for collecting taxes
the British Virgin Islands - one of the worlds leading offshore financial services centers and tax havens (See Wikipedia on the country and its economy)
tax haven - a country with low or no income taxes (See Wikipedia)
liability - an obligation to pay money to another party (here the government)
tax liability - the amount owed to the government for taxes
liable to pay tax on x - tax laws say that you must pay tax on income x
x stems from y (verb) - a problem or condition x comes from or is caused by y (See glossary )
dividends - the portion of a corporation's profits paid to shareholders at the end of the year (See Wikipedia)
charges - requests to pay money, formal accusations that someone has committed a crime
overlap with - two things share a common part (two things intersect or have an intersection)
hefty - large in size
impose - use your authority to force people to accept something (for example impose a penalty and impose a punishment)
tax evasion, evade tax - the crime of not paying taxes to the government, the deliberate failure to pay taxes (usually by making a false report; See Wikipedia)
colluded with - secretly cooperate with
Shinawatra and Damapong families -
a kangaroo court - said disapprovingly of a court that isn't fair (intended to find someone guilty even before it started investigating the case)
Answer Key:
1. What is the total tax liability that Panthongtae and Pinthongta Shinawatra [the Shinawatra siblings] now owe to the government according to yesterday's ruling?
27.42 billion baht.
2. What government administrative body ordered them to pay these taxes?
Who appointed this administrative body? When was it appointed?
The Assets Scrutiny Committee (ASC) issued the order to pay the taxes.
This committee was appointed by the military after the coup.
3. What are the two components of tax liability owed to the government?
5.69 billion baht is a personal income tax liability.
20.89 billion baht is corporate income tax on behalf of Ample Rich
4. Where was Ample Rich registered as a corporation?
The British Virgin Islands.
5. Why was it registered there?
6. Was the Ample Rich an effective device for dealing with the Shinawatra tax liability?
Why or why not?
What would you have said two years ago?
What would you say now?
Two years ago Ample Rich probably seemed to have no real problems associated with it.
Ample rich did not disuade people from voting for Thaksin in the first place.
Now, obviously Ample Rich seems like a big mistake.
7. What position do Panthongtae and Pinthongta Shinawatra [the Shinawatra siblings] hold at Ample Rich?
They are the directors of the company.
8. What are the components of Ample Rich's corporate tax liability owed to the government? Which is these is the largest?
a. Taxes on dividends earned over the past four years
b. Fines for failing to submit its tax payments on time
c. Taxes on profits from selling Shin Corp shares to the Shinawatra siblings
d. Charges for distributing the profits outside the country.
(c) is the largest.
("The biggest profits Ample Rich made were from its sale of Shin shares to the siblings, when they were its directors, at one baht apiece while the market value was 49.25 baht, the probe team said.")
9. What problems where caused by Ample Rich's selling of shares to the Shinawatra siblings "at a price much lower than their real value" ? (Cite specific Thai laws.)
According to Article 65 or Thailand's Revenue Code, Ample Rich is liable to pay taxes because this artifical sale was an attempt to evade taxes. The intent is important here, not just what the transation looks like on the surface. This was a point made last year after the sale but before the coup in a Bangkok Post Op-Ed piece.
