Many companies find loopholes in tax code

We can't close every loophole, says Mr Satit.
Bangkok Post

Too many companies, while not outright violating the tax code, take advantage of loopholes at the expense of society, said Satit Rungkasiri, a deputy director-general of the Revenue Department.

Reforms are needed to close the existing loopholes in the tax code, he said. "But the reality is that even amending the law cannot close every loophole for those intent on evading the law. Ultimately it depends on the ethics and sense of responsibility of each company," Mr Satit said. He pointed to the use of entertainment expenses as a tax deduction as one area rife with abuse.

The tax law allows companies to claim as deductions entertainment expenses of up to 0.3% of revenues. "But in practice, some companies claim personal expenses as entertainment expenses for clients. Unfortunately, it's something that is quite difficult for the Revenue Department to prove," Mr Satit said. Another example is the deduction allowed for company cars, now set at up to one million baht per car. "Some companies go and buy a Porsche or Ferrari. While they can't deduct the full price of the car, they do claim a deduction, even though it's extremely unlikely that the use of the car is genuinely for the company's operations," Mr Satit said. Other companies siphon or launder money for other illicit purposes through transactions such as the purchase of art pieces at artificially inflated prices. During the 1997 economic crisis, government officials discovered numerous cases of such transactions made to reduce tax liability or to facilitate bribes or payments to third parties. In some cases, the artwork itself was an outright forgery of a prominent artist, further proving that the transaction was simply a conduit for fraud. "At the end of the day, it depends on the heart of the person. We simply can't close all of the loopholes available," Mr Satit said. The Revenue Department recently launched its RD Camp programme to help educate children about their responsibilities as citizens to pay taxes and how evasion simply takes advantage of greater society.