Companies set to meet tougher tax collector

Bangkok Post (21 November 2007)

Stricter audits and enforcement next yearPrivate companies should prepare for tougher tax collection by the Revenue Department, say tax experts. Thavorn Rujivanarom, lead partner of PricewaterhouseCoopers Legal & Tax Consultants, said the Revenue Department would press on to collect taxes from private companies this year after tax receipts last year were below officials' projections.

This year, the department hopes to collect 1.208 trillion baht in taxes from all sources. Last year, the total tax collected was 1.119 trillion baht, below its target of 1.14 trillion.

''The Revenue Department has been imposing a tougher tax collection policy, especially on companies. ... Tax officers will use every means they have, from an operation visit to auditing and a change of tax law to favour the state,'' he said.

Tax audits would be more aggressive and companies would have to appeal cases related to tax payments.

In cases requiring interpretation of the tax law, Somboon Weerawutiwong, a PWC partner, said the rulings would favour the government rather than private companies.

''Tax officers are very careful and strict. They were accused of favouring big companies and costing the state a lot of money in the past, especially in the controversial case of share sales by Shin Corp to Temasek and the Ample Rich share transfer case,'' he said.

Both legal experts suggested that companies prepare sufficient documents for tax officers when they conduct an audit.

Mr Thavorn noted that the Revenue Department has changed its policy related to tax collection on projects that have been awarded tax privileges by the Board of Investment.

In the past, each company was able to report losses on a project-by-project basis and carry accumulated losses as a tax shield for five years.

But the new policy states that if a company has many BoI-approved projects, it must offset profits and losses among all projects first before reporting total profits.

The new ruling has increased the tax bill for many companies and some who disagreed with this method have appealed to the Finance Ministry's special committee related to laws and legislation, he said.

Mr Thavorn said the Revenue Department was closely monitoring the automobile, banking and finance industries. It is trying to link its information database with the other agencies such as the Port Authority of Thailand and the Commerce Ministry to cross check whether companies pay taxes.

''Some rulings and law interpretations in the past can be changed now. This has caused many companies a lot of confusion,'' he said.

Mr Thavorn said the Revenue Department should change its mindset, and help companies expand, which in turn would help boost tax revenues.

Work practices and legal interpretations used by different tax officers and offices throughout the country should also be made uniform, he added.

Mr Thavorn said Thailand should have a clear tax policy to attract foreign investors. This would also help increase competitiveness of companies.

Thailand's 30% corporate income tax is higher than other countries in Asia. Vietnam charges 28%, Malaysia 27%, Singapore 20% and Hong Kong 17.5%.

''I think foreign investors can stay with tougher laws and regulations but the rules must be clear so that they will can forecast risk and return,'' Mr Thavorn said.

''Enforcement must be consistent as well as foreign investors don't want to deal with uncertainty.''