Have you ever heard about cases of individuals that are not VAT registrants, but issue false tax invoices and sell these to companies that need tax invoices to back their non-receipt expenses (or under the table expenses)?

Most of these cases happen in the construction industry where the sub-contractors have no knowledge about tax and accounting and do not want to declare their revenue to the tax office.



When you hire this kind of sub-contractor, he presents you with receipts that equal the amount you’ve paid, but supplier's name on the receipt may not be his company. You may not pay much attention to this, as you note only that the total amount is the same as what you’ve paid.

But wait just a moment, what may have happened here is that the sub-contractor has obtained the tax invoice from a source that issues false tax invoices for sales, without doing any real business and without being a VAT registrant.

The sub-contractor may not even be aware that it is a false tax invoice.

In such a case, the following scenarios may unfold when the tax officer comes a-calling to audit your book and finds the false tax invoices:

1.You are considered to be underpaying VAT
(Since you happen to be over-claiming VAT with a false tax invoice)
This will result in a 100% penalty based on the VAT amount of the false tax invoice

2.You have used false tax invoices

The penalties for which will be:

2.1 A 200% penalty based on the amount of the VAT shown in the false tax invoice
2.2 This act is considered a criminal offence and could lead to imprisonment for three months to seven years
2.3 Criminal fine of 2,000 baht to 200,000 baht.

3.Surcharge 1.5% per month of the tax under paid counted from the month in which the false tax invoice has been discovered for.

Do we have to bear the above tax liabilities if we happen to use false tax invoices by innocence, being simply unaware of the fact that it is false?

I have posed this question to the tax auditor and the answer is: whether this was an intentional move or an innocent one will be judged on the basis of your payment transaction: If the cheque you have issued bears the same name as in the tax invoice, you may be deemed innocent; but if they are different, this may be considered proof that the use of the false tax invoice was intentional.

Do you have to pay 300% penalty? The answer is... not necessarily, as according tor the Revenue Department’s Regulation No. Paw. 81/2542, if one offence committed by a taxpayer violates more than one provision of the law, the taxpayer will be penalised only once based on the maximum penalty.

This means, in this case, as per the law, you are about to pay 200% penalty. However, you should not rely too much on this provision as the tax auditors may well impose double penalty, and if you are offered a choice between a 200% penalty with imprisonment or a 300% penalty without imprisonment, guess what you will choose?

The best solution is of course, prevention: to not be in this position at all. Be wary, and check the tax invoice you receive carefully. If it looks suspicious, and the names on the cheque and the invoice don't tally, you can go to the tax office website www.rd.go.th and check the tax I.D shown in the tax invoice to make sure that the issuer is a VAT registrant.

Sirirat C. is the managing Director of NAT accounting firm. Phuket: 076-212-989 Bangkok: 02-513-7151 Pattaya: 038-378-178 www.thaiaccounting.com