JOCK67

My small company (myself and my wife) was investigated by the Revenue Department for making a loss in 2009. The reason they say I made the loss is because I increased the salary the company pays me by 3x the level it was at in 2007 and 2008. The reason I did this was because the company had secured a long-term consultancy contract in August 2008 which meant I was working continuously and longer and harder as a result and also to provide suitable salary for current outgoings (the previous salary had been kept minimal, not adequate to cover outgoings)due to the company only being established in 2007. Then due to the economic downturn in September 2009 the long-term agreement was replaced with a daily-hire agreement and revenue substantially decreased as a result. In 2010 I reduced the salary by 60,000 to keep it more in line with the workload and the reduced revenue.

They have assessed an additional tax payment due (but this isn't written in the official record of the investigation) based on 60,000 Baht x 12 months (720,000 Baht) x Corporate Tax Rate. I stated that this logic wasn't correct as Personal Income Tax had already been paid on the Salary (and at a higher rate than the Corporate Tax rate). I shouldn't pay tax twice on the same money. They said it doesn't matter.

They said that if I didn't pay then they would further investigate the comapny in respect to the benefits the company pays me as part of the salary package (health insurance, housing allowance, utilities allowance) and also why my wife's salary was so high (35,000 Baht) for the work she does (and why did she receive a 5,000 Baht increase in 2009) - the officer also kindly pointed out that this was more salary than she received after working for the Revenue Dept for 15 years, and why I had transferred my car into the company name (as a company car and asset)and why I was claiming yearly insurance and registration costs as expenses, and so on...

I asked my accountant to talk to them afterwards as this made no sense. The logic and basis of calculation of the additional tax wasn't based on anything other than their own judgement as to why the loss occurred and only took into account the salary and not the economic downturn and decreased revenue. I aksed my accountant to point out that in the 2009 half-year Profit & Loss forecast the company was due to make 1,000,000 profit and it was the substantially reduced revenue in the last 3 months of 2009 that had caused the problem. The officer said they didn't accept this and that if I didn't pay by the end of this month they would charge penalties and further investigate the company!

This is not a normal assessment and my accountant says it seems not fair, but they seem powerless to help. I do not want to pay tax twice on the same money when I have already paid them personal income tax. This is a lot of additional tax. I shouldn't need to seek the Revenue Dept's permission before I adjust salaries in my own company.

Any advice will be gratefully received. Thanks.

I borrowed money from my Company as a 'Loan to Director'. The Revenue Department say that this loan must incur interest and that when the loan is repaid with interest my company will need to pay Specific Business Tax on the Interest. Does my company have to charge interest on a personal loan? Why is SBT applicable - I read in the Revenue Code that SBT is applicable to financial companies who regularly provide loans as part of their normal business operation, in which case that should not apply to my company? If the company does charge interest on the loan how should this be calculated? Thanks for any advice on this.