Customs department: Deep-rooted corruption

Deep-rooted big money corruption by customs officials & influential figures revealed in supercar tax evasion saga.

CORRUPTION & CUSTOMS DEPARTMENT

Customs department: Deep-rooted corruption

8/06/2017
Wichit Chantanusornsiri

The ongoing supercar tax evasion saga reflects the flaws in the country's tax system and deep-rooted corruption in state mechanisms.

THE SUPERCAR TAX EVASION SAGA: RICH PEOPLE WHO DO NOT PAY TAXES

As reported in the media, car tax evasion is rampant.

At least 166 luxury cars were found to be imported without proper tax and the state is believed to have lost about three billion baht in tax revenue.

MISCONDUCT OF CUSTOMS OFFICIALS

Currently, nine customs officials face a probe over their alleged misconduct in connection with the illegitimate return of nearly 20 million baht in taxes to two companies.

They were among several companies raided by the DSI last month, with the seizure of about 60 luxury cars.

HOW DID IT ALL BEGIN?

The case began with suspicions by tax evaluation officials who found the prices of two supercars as declared by the two importer firms to be unusually low, and asked the companies to provide the original invoices.

The two companies were subsequently ordered to pay deposits covering what the taxes were believed to be in case they could not provide proof to the contrary.

As the companies missed a seven-day deadline to confirm the previously declared prices, the department confiscated the deposits.

Later on the two firms appealed, and managed to have their money returned after approval by the two high-ranking officials who were deputy director-generals of the Customs Department.

Strangely, these high-ranking officials acted on their own and gave the money back without following the normal procedure.

An initial investigation found the two deputy director-generals bypassed the authority of the committee tasked with considering the appeals filed by the companies.

TAX EVASION BY INFLUENTIAL FIGURES

As we all know, only a few rich people can afford supercars. For that reason, tax dodging on an item of high value can only be achieved with the influence of those involved.

Many luxury cars have been seized in several raids over past decades. Of course, the fact that so many people are involved in supercar tax evasion means the benefits from the fraud must be so huge that it tempts people to take the risk, robbing the state of billions of baht of revenue.

But the fact is: Tax dodgers could never make it without the help of state officials, in particular those at the Customs Department and other state agencies.

FALSELY DECLARING LOW CAR PRICES TO EVADE TAXES

The supercar tax is extraordinarily high, totalling 328% of the price of each imported car with an engine size exceeding 3,000cc. It's a combination of several kinds of duties and taxes including import tax, excise tax, VAT tax and another tax collected by the Interior Ministry.

[Details on the taxes: The import tax is 80% of CIF (cost, insurance and freight) value, and excise tax that is based on the size of a car's engine. In the case of a car with an engine size over 3,000cc, it is subject to a 50% tax rate based on the CIF price plus import tax. There is also another tax collected by the Interior Ministry, and 7% VAT. Cars with lower engine sizes are subject to a lower tax rate.]

This explains why some companies intentionally declare lower car prices when registering vehicles with the state.

ONE TRICK: IMPORT ALL THE PARTS, ASSEMBLE IN THAILAND

Apart from falsely declaring car prices, some tax dodgers choose to import car parts, marking them as "used parts" to be assembled in the country.

In doing so, a car of this type which is categorised as a second-hand vehicle is subject to only 30% import tax.

But it is known that the companies are actually importing brand new fully assembled cars.

The vehicle is taken apart only for import registration and to benefit from huge tax savings.

A total of 7,123 cars are being probed by the DSI to see if they belong in this fraudulent category.

POLICE COOPERATION NEEDED TO ACT AGAINST INFLUENTIAL FIGURES

More importantly, a source in the Customs Department said customs needs cooperation from police in raids against supercar tax evasion.

This is because those involved are influential figures, otherwise it would not be possible to act against them or make a raid.

DEATH THREATS AGAINST OFFICIALS TO MAKE THEM COOPERATE OR GO AWAY 

It is known that some customs officials who levied taxes on imported supercars faced death threats that prompted them to ask for transfers.

TAX FRAUD LIKELY BEGAN AT THE CUSTOMS DEPARTMENT

But it's clear that such tax fraud must begin at the Customs Department with a helping hand from some other agencies. Besides, I find unconvincing the claim by customs officials that they have no knowledge of real CIF prices of an imported car and have to accept the sum that appears on invoices.

Such a claim only shows, at best, the incompetence of customs officials. At worst, it's likely the officials intentionally turn a blind eye to the fraud, reaping gains from tax-dodging gangsters.

TRICKS POLITICIANS & BUSINESS LEADERS USE TO EVADE TAXES

Take a recent high-profile case involving luxury passenger vans.

Such vans are popular among politicians and business leaders.

Importers used an easy trick to have the vehicles classified as cargo vans, which are subject to lower taxes, by installing a removable extra seat.

With the extra seat, importers were able to claim their vans were cargo carriers and avoided hundreds of thousands of baht in tax.

As you can see, fraud is facilitated with such easy tricks.

This is why it's very difficult to wipe out tax-dodging attempts while luxury cars are in high demand.

http://www.bangkokpost.com/opinion/opinion/1264651/supercar-tax-dodging-game-far-too-easy

https://www.facebook.com/customsdepartment.thai/

http://en.customs.go.th/

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