False tax invoicing to be targeted

In early September the Revenue Department announced the arrest of a gang who had created a false front as a building materials distributor in Nonthaburi province and allegedly purchased fake tax invoices from several companies and sold them for a what the Department claimed was a combined value of around one billion baht to more than 500 companies.

The arrest highlighted a major loophole in taxation revenue, especially with regards to the collection of value-added tax (VAT). While using false VAT invoices is a clear violation of taxation law and therefore understates corporate income tax bills, which leads to the state being in receipt of reduced revenues, it is clearly a practice which is far from uncommon.

The Revenue Department has therefore announced it will step up its crackdown on false tax invoices, but at the same time will try and encourage more individuals and operators to pay tax correctly.

The Department is aiming to take a firm but fair line aimed at drawing small and medium-sized enterprises into the single financial account scheme. Part of the process is to educate these businesses about tax-deductible expenses to help them understand the taxation system.

The Revenue Department is also preparing for the introduction of e-tax by 2019.

E-tax is just one part of the planned national e-payment system which hopes to turn Thailand into a largely cashless society and digital economy.

With e-tax, all e-payment transactions will be keyed into its taxation data system to boost efficiency.

It has been claimed that the e-tax and single financial account schemes would boost VAT collection by at least 100 billion baht a year.

Under Thai law, those who falsify VAT invoices and the like are subject to both civil and criminal penalties. On the criminal side, prison sentences of three months to seven years and fines of 2,000 to 200,000 baht can be handed down for each forged tax invoice with a maximum 20-year prison term.

As well, individuals and companies can be fined equal to twice the value of the tax they evaded plus an interest rate of 1.5 percent per month.

Since 2014, some 16 gangs selling fake VAT invoices to 4,700 buyers have been arrested.

The biggest tax scam scandal of recent times cost the government 4.3 billion baht in lost revenue between 2012 and 2013 and allegedly involved the Revenue

Department’s former director-general, Satit Rungkasiri.

The scam involved 65 bogus metal export companies which illegally used copies of villagers’ ID cards to register with the Internal Trade Department, open bank accounts, and register for tax refunds.

They then submitted falsified tax invoice documents worth 60 billion baht in value and claimed 4.3 billion baht in refunds.