Revenue officers used as a tool to harass civil society, tax audits requested, but questioning made to dig up detail of operation and employment

Translated from iLaw https://ilaw.or.th/node/6084

On 11 February 2022 at 13.00, representatives from civil society organizations conducted a press conference about the attempt to conduct tax audits on various CSOs working for human rights and being critical of the current administration. Such inquiry is viewed as an attempt to scrutinize and was made within and outside the purview of revenue officers

Revenue officers admitted to instructions from above to scrutinize pro-democracy NGOs

Jon Ungphakorn, Director of the Internet Law Reform Dialogue (iLaw) said that it has been widely known that the Government of General Prayut Chan-ocha has been trying to restrict opinions critical to the government and movement to demand democracy. At present, the government is trying to introduce a law to control CSOs putting them under the purview of the government. Such law shall restrict freedom of association of CSOs which operate for social development without seeking profits.

In the past three months, the Revenue Department has conducted tax and financial audits on these organizations including an inquiry made into the relationships between the organizations and their funders such as the National Endowment for Democracy (NED), an independent funder of the US government with financial support from the Congress to promote democracy around the world.

Such audits have not been conducted spontaneously or as a usual business by the Revenue Department. Rather, they have been done so at the behest of the government. Even the revenue officers admitted that they had received an order from above to conduct the examinations. Such tactic has been used since the time of the NCPO government to target organizations which advocate for rights and freedoms and democracy.

“We therefore demand that the government stop interfering with the operation of the Revenue Department and allow it to cooperate as usual. The RD should not be used as a political tool and the government should stop harassing or making an effort to control CSOs which operate legitimately and legally without seeking profits. CSOs’ independence in a democracy must be respected.”

Digging up financial info, interfering and infringing on right to association

Supawadee Petrat from the Thai Volunteer Service (TVS) said that TVS has been operating for 40 years and there has never been any tax audits conducted by the Revenue Department. TVS is registered as a foundation according to the Civil and Commercial Code and is regularly required to file a report to the Office District. But on 29, the Revenue Department’s officers have visited TVS and asked to conduct an audit and to give us advice on taxation. In the past 40 years, TVS has been receiving foreign funding and in the past six years, it has received support from the Thai Health Promotion Foundation to work with young people who can help with social development and raise their awareness about human rights.

“During the inspection, the officers tended to focus on funding from NED and asked for detail of how the funding has been used for employment. They further scrutinized how NED’s funds have been used for making posters. When I asked them if they conducted this audit with other organizations, they said no, and they only do it with the organizations according to the instructions received. Before they were gone, they also asked to see transfer slips of the funds received from NED. We reiterated that such action was tantamount to an interference and an infringement on the right to association.”

She also noted that these audits could be related to the NPO Bill which is yet to come info force. The government has used irrelevant agencies to conduct such scrutiny. If this NPO Bill is enacted, it will certainly usher in a devastating impact on the people’s movement which has been instrumental in holding the government to account and determine the future of the nation. The effect will not be felt exclusively by the CSOs, but the whole movement.

Field audits as a push for NPO Bill, revenue officers used as spies

Chiranuch Premchaiporn from the Foundation for Community Educational Media (FCEM) (Prachatai) said that as a registered entity, the Foundation is required to file every year its balance sheets, income and expense reports and financial reports foundation with the District Office. It is our normal obligation to ensure transparency to the public. The current tax scrutiny happens concurrently with the effort made by the government to push through the NPO Bill whereas other CSOs have not been subject to such stringent scrutiny.

“In our view, this is an act of blatant harassment, the weaponization of the Revenue Department which should normally stay away as much as possible from politics.

“We assert that this scrutiny is an act of interference and an infringement of the right to association. The Revenue Department has summoned FCEM for a meeting without saying to which laws they invoked their power. They even threatened us in the letter that if we fail to meet them as requested, we will face a consequence. I would like to reiterate that we have never evaded (our responsibility) or assumed our organization is above the law. We are a registered entity, and every staff member of ours pays their taxes and their social security contributions properly. We assert that we will not tolerate such harassment. What they are doing now is the exercise of power beyond what is provided for by law. She also seconds the idea that the state is using the Revenue Department as a spy to surveil the operation of civil society. “

Auditing TLHR, Demanding taxes paid for public donations

Montanaa Duangprapa from the Thai Lawyers for Human Rights (TLHR) or the Rights for Justice Foundation (RJF) said that in November 2021, the officers from the Bangkok Revenue Department Region 7 have made an unannounced visit to the office of TLHR.

“The visit coincided with a visit to our office by foreign missions in Thailand. The vehicles of the revenue officers trailed behind the motorcade of the diplomats. Later, they showed to us a letter authorizing a tax audit pursuant to Section 88/3 of the Revenue Code (which in fact applies to a tax audit of for-profit organizations). The revenue officers also inquired about the Foundation’s structure and our operation, the information of which is publicly available in our website. They even asked about the number of staff and the rental detail of the Foundation before leaving in an hour.

“Later, they asked from us financial documents from 2019-2021, our tax returns, and bank statements between 2019-2021, balance sheet of 2020. Even though we have filed all these documents, they now wanted to have them again. As to the tax returns in 2021, they are being prepared. During the meeting with TLHR’s staff, they have informally asked if they could collect from us a 2% tax of the public donation and foreign funding, although out staff insisted that these were all public donations which were tax-exemption.”

Weaponizing revenue officers to harass not compatible with the atmosphere in a democracy

Koriyoh Manusae, President of the Human Rights Lawyers Association said that the audits were conducted abnormally, and this happened under the government which has inherited its powers from the NCPO and is advocating for the NPO Bill. HRLA is registered with the Department of Provincial Administration and contains no prohibitions. The Revenue Department has no power to invade our privacy and to surveil our activities and funding sources. Public donations are tax-exemption.

“But our staff pays their taxes according to the law and HRLA files its financial reports every year with transparency. By repeatedly requesting for documents, it can cause us a nuisance and it is not compatible with an environment in a democracy. Rather, it is blatantly an act of harassment against the right to freedom of association.”

Amarin Saisanegchan from the ENLAW Foundation (EnLaw) said that his organization has been operating for 20 years and in 2013 has registered as a foundation and has been filing the reports requested by law. EnLaw was perhaps one of the first organizations to receive a letter concerning tax audits since November 2021.

“They claimed they wanted to advice us on taxation. Initially, we assumed it was just a random inspection. And it was the first time in 20 years that we have been subject to an audit as such. During the audit, the officers often asked about issues not related to the audit or about advice on taxation, but rather on which staff members have been paid by which funders and an inquiry about detail of our activities.”

Yingcheep Achanon, Manager of the Internet Law Reform Dialogue (iLaw) said that until now, CSOs have been filing their tax returns transparently. iLaw was the last organization to receive such letter and the tax audit took place on 8 February 2022. He has heard from colleagues that during the audit, the revenue officers have asked for information not related to the audit such the employment.

“Or in the case of the Thai Lawyers for Human Rights (TLHR), they prepared a memo and denied our request for make a copy of it. iLaw has prepared all the documents as requested and asked to videotape the whole meeting, but the officers said that if we kept filming, they would not conduct the tax audit. It is bizarre that when we requested for documenting detail of our meeting, they suddenly decided to not conduct the audit with us. “

He insists that his organization always welcomes any request to conduct such audit.