On 29 Dec 2010, the Central Tax Court ruled the Thailand Revenue Department had no legal right to collect share benefits tax from the individuals involved in the Ample Rich Share Benefits tax case. This Insight has been updated for the ruling.

Thailand Taxation of Share Benefits

Section 39 of Thailand's Revenue Code defines Assessable Income to include:

• "Any benefits received that are ascertainable in terms of money".

And Thailand's Board of Taxation Ruling No 28/2538 prescribes:

• For individuals who receive shares under special arrangements, free of charge or at a price lower than the market price, such individuals receive "benefits ascertainable in terms of money" under Section 39 of the Revenue Code.

The Ample Rich Share Benefits Tax Case

Shares in a Thai telecommunications company listed on the Stock Exchange were transferred from a company in the BVI to individuals in Thailand and then on the next business day, from the individuals in Thailand to a company in Singapore, as follows:

• On Friday 20 Jan 2006, the company in the BVI transferred 329.2 million shares in the Thai telecommunications company to individuals in Thailand at a price of 1 Baht per share.
• On Monday 23 Jan 2006, the individuals in Thailand transferred the 329.2 million shares in the Thai telecommunications company to a company in Singapore on the Thai Stock Exchange at a price of 49.25 Baht per share.

The income earned by the individuals in Thailand from these two transactions for which no tax returns were filed and no tax was paid, was as follows:

Cost price of the shares		Baht .....329,200,000
Market price of the shares		Baht 16,213,100,000
Income earned		Baht 15,883,900,000

On 8 Dec 2006, the Revenue Department's new administration (instilled following the Military Coup of 19 Sep 2006) announced that it was pursuing income tax on the income earned by the individuals, and that it had issued tax assessments to the individuals, as follows:

Income earned - benefits income		Baht 15,883,900,000
Personal income tax liability @ 37%		Baht ..5,877,043,000
100% penalty		Baht ..5,877,043,000
Total personal income tax liability		Baht 11,754,086,000

That is, instead of pursuing tax on the income being capital gains income under Section 40 (4) (g) of the Revenue Code (everyone in Thailand knows that income received from sales of shares on the Thailand Stock Exchange is exempt from tax for individuals), the Revenue Department was pursuing tax on the income being benefits income under Section 39 of the Revenue Code and the Board of Taxation Ruling No 28/2538.

The individuals appealed the assessments to the Central Tax Court (which case became know as the Ample Rich Share Benefits Tax Case).

The Central Tax Court's Ruling

The Central Tax Court cited a recent verdict of the Supreme Court for Holders of Political Positions concerning a case involving the father of the individuals, which verdict included the Supreme Court's finding that the ownership of the shares in the telecommunications company had never really transferred to the individuals, but instead had always remained with the father, and on 29 Dec 2010 the Central Tax Court ruled that:

Despite the fact that the Tax Court has evidence of the individual’s ownership of the shares in the telecommunications company, as the Supreme Court finds that the ownership of the shares never did, in reality, transfer from the father to the individuals, then the Tax Court has to rule that the Revenue Department has no legal right to pursue the tax from the individuals, and the Tax Court cannot hold the individuals liable for the tax under the tax assessments.

​Note

This Central Tax Court case was decided on the basis of political agenda rather than on the basis of the tax law. The Thailand personal income tax law clearly prescribes that "benefits received ascertainable in terms of money" is assessable income and it also clearly prescribes that individuals who receive shares under special arrangements, free of charge or prices lower than market price receive "benefits ascertainable in terms of money".

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