hai Deputy Prime Minister and Finance Minister Pridiyathorn Devakula has formed a panel to investigate the entire Shin Corp deal in connection with alleged tax evasion by two children of the deposed premier Thaksin Shinawatra, before submitting the findings to the country's Assets Examination Committee (AEC), Thai media reported Saturday.

"For the time being, we would like to collect the tax (from the Shin Corp deal) first," Pridiyathorn was quoted by newspaper The Nation as saying.

Pridiyathorn has recruited Aran Thammano, a former permanent secretary of the Finance Ministry, to advise him in this particular case. Aran will chair the four-member panel to investigate alleged tax evasion by the two children of deposed prime minister Thaksin in the sale of Thai telecom giant Shin Corp shares to Singapore's Temasek Holdings.

Sirote Swasdipanich, director-general of the Revenue Department, has already sent tax bills to Panthongtae and Pinthongta, son and daughter of Thaksin, asking them to pay some 5.8 billion baht (157 million U.S. dollars) in owed tax.

If fines are included, the tax bills could exceed 10 billion baht (270 million U.S. dollars), depending on the negotiations between the brother and sister and tax officials.

According to reports, Panthongtae and Pinthongta on Jan. 20, 2006 bought 329 million shares of Shin Corp at 1 baht (0.027 U.S. dollars) per share from Ample Rich Investments Co., a company allegedly set up by Thaksin and registered in the tax haven British Virgins Islands.

On Jan. 23, the brother and sister sold the stocks to Temasek at 49.25 baht a share via the stock market, without paying any tax citing it was a market deal.

Thaksin had transferred his holdings in Ample Rich Investments to Panthongtae and Pinthongta, who are also its directors and shareholders.

Lawyers for Thaksin's two children claimed they did not have to pay tax because Ample Rich Investments had sold the stocks to Panthongtae and Pinthongta at below the market price of 47 baht a share. Besides, it was simply a switch of money from the left pocket to the right pocket because the two owned Ample Rich in the first place.

Benja Louicharoen, an adviser to the Revenue Department, then issued a letter to confirm that the Shin Corp transactions would not be subject to any tax because Ample Rich Investments was incorporated in a tax haven that did not have any tax treaty with Thailand.

On Tuesday, Sirote told the press that the department had decided to take action against Thaksin's children for tax evasion related to the Shin Corp share sale. The statement marked a U-turn in the department's policy as earlier this year it insisted the deal was tax-free.

Panthongtae and Pinthongta will be taxed on the profits earned from buying the Shin Corp stocks at 1 baht a share only to sell them to Temasek within days for 49.25 baht a share, which amounts to about 5.8 billion baht, not including fines.

Pridiyathorn has brought in Aran to help the government handle this case as Aran had ruled during his tenure at the Finance Ministry that directors or employees must pay tax upon receiving stocks from their companies even before selling it. That ruling held that stocks earned by directors or company employees should be considered taxable income.

Source: Xinhua