During the no-confidence debate yesterday (24 March), People’s Party MP Wiroj Lakkhanaadisorn accused Prime Minister Paetongtarn Shinawatrea of tax fraud, alleging that she did not pay taxes when receiving shares from members of her family.

Wiroj alleged that Paetongtarn has a history of avoiding taxes when receiving shares from family members, noting that her asset account shows that she owes 4,434.5 million baht to her brother, sister, uncle, aunt-in-law, and mother for the cost of shares in several companies she bought from them and that a condition was set in the promissory notes that she would pay them for the shares when asked. The notes did not set an interest rate and did not say when she needs to pay them.

Wiroj accused Paetongtarn of trying to avoid paying taxes by using the promissory notes to disguise gifts as purchases, since she would need to pay taxes if she was given the shares as gifts but would not be taxed if she bought them. Using promissory notes also mean that her family members would not have to pay income taxes since they did not receive money for the shares.

According to an amendment to the Revenue Code, which came into effect in February 2016, a gift given by a parent to a child is exempt from taxes, provided its value is less that 20 million baht.   A gift from siblings or relatives who are not parents, children, or spouses is exempted up to 10 million baht.

Wiroj noted that the promissory notes were issued after the amendment came into effect. Although such notes are commonly used between trusted business partners to lend money without requiring a guarantee, Wiroj said that the Revenue Department usually investigated any company that issued too many to see whether they were trying to avoid taxes by hiding profits. The Supreme Court also ruled that when the practice is done for purposes of tax avoidance, it takes advantage of the rest of the society.

Wiroj argued that if the use of promissory notes in this manner was normalized, it could facilitate bribery or money laundering. He questioned whether Paetongtarn was adhering to the ethical standards cabinet ministers are subjected to, and said that a complaint against the Prime Minister would be filed with the National Anti-Corruption Commission. He added that MPs who voted in favour of keeping her in office would also be in violation of ethical standards.

In her own defense, Paetongtarn told parliament that she had submitted her asset accounts to the NACC and that it is in the process of being vetted, and she was willing to disclose any information the NACC might request. She also said that her family’s finances had been vigorously investigated since the 2006 military coup and that they had always been transparent.

She claimed that the 2016 share transfer was part of company restructuring, and that she used the promissory notes because she did not know the amount of money required. She also said that her family debts had been declared to the NACC.

Paetongtarn added that using promissory notes for restructuring a company is normal, and that it required a lot of imagination to think that promissory notes could be used for bribe or drug trafficking as such documents were issued legally and could be investigated. She claimed that she used promissory notes because she could not pay in cash at the time and had come to an agreement with her family that she would pay them by next year. Tax evasion was not possible, she said, since evidence of all share purchases was already included in the asset account she submitted to the NACC.