News No.   :  23/2007

Date             :  18 June 2007

Subject        : The Revenue Department focuses on tax avoidance in the form of off-shore activities

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                          At present, the Revenue Department has discovered that there are medium to large enterprises that avoid tax liabilities by opting for services from Tax Heaven Countries which allow companies to transfer their profits to those countries using the distorted pricing method. For example, if an exported good is priced at 140 baht, the exported company should report an income of 140 baht. In stead, the company exports the good to Tax Heaven Countries at the price of 100 baht. Then a country in the Tax Heaven Countries sells such good to the destined country at the new price of 140 baht. This generates a profit of 40 baht which will be exempted from tax in that country. Such action is against the Thai law and the Revenue Department of Thailand has a right to assess the company’s earning.

                         Mr. Satit Rungkasiri, the Deputy Director-General and the spokesperson of the Revenue Department, said that, lately, there is an increasing number of businessmen who give consultations and organize seminars inducing Thai companies to set up their branches in the Tax Heaven Countries. They directly challenge the Revenue Department. At the moment, the Revenue Department is in the process of punishing those who involve with this business. We also focus on investigating the companies that organize seminars and give consultations about tax avoidance, including their customers whom we believe to have intention to avoid tax liability.