Tax fraud and evasion through setting up of a non-juristic body of persons.    Date : 27/03/2009  

The Revenue Department has discovered that, there have been cases of tax evasion and tax fraud through setting up of a non-juristic body of persons. A company creates fictitious expenses such as transportation, commission, consultation and hiring expenses to reduce net profit or create losses to the company in order to reduce or avoid tax payment or even claim tax refund. The expenses were claimed to be paid to a fictitious non-juristic body of persons set up by the company. The Revenue Department’s investigation discovered that individuals with their names in the body of persons were not aware of its formation or were not in any part involved in its operations.

                         There are also wealthy individuals who avoid tax by setting up many non-juristic bodies of persons. In this way the income of one individual is distributed into various entities and eventually is subject to lower tax rate.
 
                         Also there are cases of bodies of persons applying for tax refund by claiming that tax has been withheld despite such entities having no actual income.
 
                         Mr. Vinai Vittavasgarnvej announced that, “Such activity if caught will be subject to civil law punishment. The person must pay tax along with penalty and surcharge. Since the person has intent to avoid tax, this activity is a criminal violation Section 37 of the Revenue Code. The violator is subject to fine of 2000-200,000 baht and 3months – 7 years of imprisonment.
 
                         “Tax refund fraud is a violation of Criminal Code under Sections 341, 80 and 83 and is subject to 3 years imprisonment and fine up to 6,000 baht or both.
 
                         “In addition, declaring false statement is a violation of Criminal Code under Section 137 and is subject to up to 6 months imprisonment or fine of 1000 baht or both.”
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