Responding to Thaksin's statement made in an interview on Channel 11 on Monday night that he was ready to do whatever asked by anti-Thaksin protesters to settle the current political turmoil, Asst Professor Thitiphan Chuerboonchai, dean of the Faculty of Law, urged the tax review.

"This is to pave the way for court procedures. If the Revenue Department won't do it, the case will never go court. If the premier is confident in what his legal advisor recommended, he should fight in the court," Thitiphan said.

Thitiphan compared the Shin share sale with an earlier dispute between the Revenue Department as the plaintiff and Thai MC Co Ltd as the defendant.

According to Thitiphan, Thai MC was a Thai company acting as an agent for a foreign company, namely MC, authorised to attract Thai customers for the offshore outfit. According to Revenue Code Article 76 (2), a foreign company with employees or agents in Thailand helping to generate income must be subject to tax payments in Thailand. Its agents must pay taxes on behalf of the company. Thai MC generated income for MC, so it had to pay taxes.

Thai MC argued that it did not represent MC but represented customers in Thailand. Despite that assertion, the Supreme Court ruled that Thai MC had to pay taxes in accordance with the Revenue Department's opinion.

"I think they decided it from the principal of substance over form," Thitiphan said.

He said that Ample Rich Investments was the equivalent of MC in this case, while Pinthongta and Panthongtae were equivalent to Thai MC. Both acted for MC in finding customers, which is Temasek Holdings in this case. The shares that Ample Rich sold to both are also equivalent to the products that Thai MC sold in Thailand for MC.

 The gains from the share sale to Temasek Holdings at Bt48.25 per share were realised by both persons, and the gains could be defined as dividend payments to them from Ample Rich.

Thus, according to law, Ample Rich is subject withholding tax of 15 per cent, or the broker who represented Temasek must shoulder the tax burden.

SCB Securities acted as financial advisor and tender offer arranger for Temasek. The securities firm was also one of five brokers involved in big lot transactions of Shin shares between Temasek and the Shinawatra and Damapong families.

"They should bear in mind that the statutory limit of this case is 10 years," he said.

However, he said the tax law could be interpreted in two ways: Ample Rich must pay taxes, as compared to the MC case, or Panthongtae and Pinthongta must pay taxes.

If the latter interpretation is adopted, Panthongtae and Pinthongta must pay capital gains taxes.

He said the Revenue Department recently said that Ample Rich's share transfer to Thaksin's two children was, in fact, not a sale, rather a transfer to the real shareowners. Thus, according to the law, they are subject to no tax.

He argued that Ample Rich and the Pinthongta-Panthongtae duo were different entities. Thus, the transfer of Shin shares from Ample Rich to both persons should be defined as "sold" not "transferred" to the owners. In this case, the Revenue Department could raise tax on the sale, at the market price not at "any price" as it said earlier.

Jiwamol Kanoksilp

The Nation