Society must work to sanction tax cheats
The Finance Ministry’s tax reform process, with a new tax structure, is well under way. The next step is to find ways to get tough with tax dodgers. It’s known that tax evasion has become normal in Thai society. People charged and prosecuted with tax evasion rarely face social sanctions like in advanced countries where law enforcement is strong. In Thailand, tax authorities may be afraid that punishing the rich who fail to pay taxes may bring chaos to the business sector and that may eventually cause the state to lose further income.
Instead, authorities tend to opt for pardons. The Revenue Department issued the latest pardon on Jan 1 this year for all tax dodgers who agree to turn a new leaf. The same measure is applied to operators of small- and medium-sized enterprises (SME), who are exempted from backdated tax scrutiny. Moreover, the department provides incentives — tax reductions — for operators who stick to a oneaccount scheme and pay taxes properly
At the same time, the Revenue Department is accelerating e-payment in the hopes that it will improve the tax collection system as all transactions will be digitally recorded.
The latest measure approved by the cabinet is the amendment to qualify three tax crimes as offences linked to money laundering. Criminal offenders will now not just face penalties under tax legislation.
The new amended code designates tax evasion, making false claims for tax refunds and issuing fake tax invoices as a basis for money laundering investigations. Moreover, it will give the chief of the Revenue Department power to freeze assets of suspected tax dodgers for 90 days for investigation.
It also specifies the amounts of money involved in each category to qualify as money laundering predicate offences.
In cases of tax evasion, the offender will face a money laundering investigation if the accumulated amount is 10 million baht or more. In the category of making false claims for tax refunds, the amount starts at one million baht. If issuing fake tax invoices is involved, the amount starts at 15 million baht.
The amount of money in the second category starts at one million baht, which is relatively low compared with the others because it is considered an attempt to steal from the state. Last year, the Revenue Department handled false claims for tax rebates which caused more than 4 billion baht in damages to the state.
In addition, the Revenue Department is seeking to increase the power of tax officials to enable them to make arrests and investigate tax offences without waiting for police who have no expertise in dealing with tax cases. If successful, this will improve the efficiency of tax crime investigations.
Closing loopholes in the tax collection system is key to ending tax evasion. On top of that, the tax system must ensure fairness, not allowing anyone to take advantage of others by not paying taxes.
No matter how good the new measures are, they are doomed to fail without stringent law enforcement as has been the case in the past. Weak enforcement allowed tax evaders to “bargain” through bribes — the same way traffic offenders deal with police.
Lack of law enforcement is apparent in scandals involving imported vans. It’s known that some of the rich who imported luxury vans would add up to 10 seats to place them in the category of passenger vans which pay much less tax than personal vans. Once the tax process is over, the van owners remove the additional seats. This scam was not possible without bribing state authorities.
Another notorious case involved imported auto parts for vintage luxury cars like the one that is currently under the Department of Special Investigation’s scrutiny. In the case, importers brought in individual items to be reassemble in Thailand. As the state charges higher tax for completely built vehicles, this process enabled the owner of the vehicle in question to dodge taxes. Checks on the serial numbers of the imported parts allowed the authorities to know that the owners and those involved attempted to cheat. This is one of the prime examples.
We also need further social campaigns against tax dodgers who should be subject to social sanctions to deter them from breaking the law. With this, we hope we can tackle tax evasion more efficiently.