The Office of the Auditor-General (OAG) had the right to question Revenue Department officials over why the prime minister's children were not required to pay tax for shares sold in the Bt73-billion Shin Corp takeover, a Council of State subcommittee concluded yesterday.

Meechai Ruchuphan, head of the subcommittee, said the panel reached the decision yesterday in response to a request by the Revenue Department on whether the OAG has jurisdiction over its tax operations.

While he refused to disclose the details, Meechai said, "The title of the inspector's office has a clearly defined role."

Meechai said the secretary-general of the Council of State would make an official announcement shortly.

Revenue Department director-general Sirote Swasditanich, however, said late yesterday he had yet to receive any notice from the Council of State about the decision.

The OAG earlier asked Revenue Department officials to explain why the department decided not to tax Panthongtae and Pinthongta Shinawatra, Premier Thaksin's eldest children, for Shin stock transactions.

Panthongtae and Pinthongta purchased Shin Corp shares from Ample Rich Investment Co Ltd, a firm registered in the British Virgin Islands, for only Bt1 each before selling them for Bt49.25 to Temasek of Singapore on the following trading day.

Some tax experts have claimed that Panthongtae and Pinthongta should have been subject to capital gains tax of more than Bt5.8 billion from this transaction.

But lawyers on behalf of Panthongtae and Pinthongta have argued that no capital gains tax is involved in this case because the two own Ample Rich and thus it was a transaction by the same party, and they bought the Shin stocks below par value.

However, the OAG, which is probing the controversial Shin takeover, wants to know exactly on what grounds the top tax officials at the department agreed to provide tax exemptions to Panthongtae and Pinthongta.

The OAG has asked Sirote and four colleagues to clarify aspects of the Shin deal.

But the Revenue Department has so far refused to comply with the request, arguing that Article 10 of the Revenue Code prohibits the department from disclosing

taxpayers' confidential information.

But recently, Sirote and his colleagues have softened their stand and agreed to visit the OAG to clarify the matter.

However, a legal source said Article 10 of the Revenue Code provided an exemption in the event that an agency, set up by legislation, requests any information, and it must comply with the request.

The Revenue Department asked the Council of State on July 19 to look into whether the OAG has jurisdiction in regard to this matter - to see whether it is required to disclose details of the deal.

Wichit Chaitrong

The Nation