Despite several dubious tax issues, the authorities have brushed aside public demand that the five persons benefiting from the sale of shares in Shin Corp Plc be taxed.Even before the explanation by the Shinawatra family’s legal counsellor Suvarn Valaisathien last Wednesday, Finance Minister Thanong Bidaya said that the deal was wrapped up within a proper legal framework.

A day later, the Revenue Department at a press conference reiterated its stance: none of the sellers should be taxed on the Bt73.3 billion proceeds they reaped from selling a 49.6-per-cent stake in Shin to Temasek.

Renowned for his legal counselling and rated as one of the country’s tax planners, Suvarn also insisted that the deal had been executed in accordance with Thai law.

Paul Ashburn and Andrew Jackomos, senior partners of BDO Richfield Advisory Ltd, an international tax consulting firm, said in a letter to The Nation: “There is no new precedent set here. Every day people sell shares on the stock market tax free, in accordance with the law. Every day taxpayers exercise their legal right to arrange their affairs so they can legally minimise their tax bill. The public should be thankful for the free lesson on tax planning.”

Now tax planners can advise their clients to copy the entire process of these transactions, which date back to 2000.

Then, Thaksin’s wife, Khunying Pojaman, transferred Shin shares to her brother Bhanapot Damapong at par without paying tax. Thaksin’s transfers of shares to his children, Panthongtae and Pinthongta, were not taxed either, nor the transfer of shares to his sister, Yingluck.

No taxmen were present when there were transactions of shares between the British Virgin Islands-registered Ample Rich Investments Co Ltd and their former and present shareholders.

To tax planners, these two episodes were determined on the right grounds. While not yet making any profit from the shares, the beneficiaries should not pay taxes for non-existent benefits.

Still, several lawyers raised eyebrows when learning that they were still untaxed after realising capital gains from the shares.

In the first case, Bhanapot and Yingluck reaped Bt39.25 per share in profits, when selling those they received at Bt10 par value at Bt49.25 apiece on January 23. Panthongtae and Pinthongta netted an even higher amount – Bt48.25 per share – on the 329.2 million shares they bought from Ample Rich on January 20 at only Bt1 a share.

Taxmen said selling shares in the stock market sheltered them from capital gains tax.

Dej-udom Krairit, president of the Law Society of Thailand, was outraged with the conclusion. He noted that it is against the Revenue Code.

The Law Society launched a statement explaining that a company’s shares enjoy two statuses: common shares and listed securities. “The law says if you accumulate common shares, you have to sell them as common shares [out of the market]. If you have listed securities, you have to sell them as listed securities [in the market],” Dej-udom said.

He noted that the deal broke the law when Thaksin and Pojaman transferred their shares to their relatives as common shares, but the shares were sold as listed securities.

A dubious point lies with the multi-level share transactions of Ample Rich between Thaksin, his son and his daughter, which does not involve any taxation.

Whatever the accusations might be, they have now been clarified by the financial authorities. And tax planners can now give similar advice to billionaires who need no longer worry about the enormous taxes that share transactions to their children should incur.

There are none.

Business Desk

The Nation