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The process to seize or attach and sale by auction to recover tax arrears by the Revenue Department

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The process to seize or attach and sale by auction to recover tax arrears by the Revenue Department

According to Section 12 of the Revenue Code, it specifically stipulates the rules relating to the power to seize or attach and sell by auction the assets of a person liable to pay taxes in Thailand by the Director-General of the Revenue Department, the provincial governor or district chief; without any requirement for an order or warrant of seizure issued by the court like in general civil cases. In other words, there is no need to go through the prosecution process and wait until the lawsuit is enforced in accordance with Civil Procedure Law. Therefore, it could be considered that the law gives the authority as a special case to facilitate the recovery of tax arrears in order to be promptly used for the development of the nation.  

Section 12 of the Revenue Code prescribes as follows:  

 “Section 12 Tax payable or remittable under this Title, when it is due but not paid or remitted, shall be deemed as tax arrears.

In order to recover tax arrears, the Director-General shall have the power to seize or attach and sell by auction the assets of a person liable to pay or remit tax in Thailand, without the requirement of a court summons or order. The Director-General may delegate such power to a Deputy Director General or a Head of a Regional Revenue Office.

In any other province apart from Bangkok, the provincial governor or district chief shall have the power of the Director-General under paragraph 2 within such province or district. However, the district chief shall have the power to order a sale by auction only upon receiving permission from the provincial governor.

The procedure for seizure and sale by auction shall be in accordance with the Civil Procedure Code, mutatis mutandis. For an attachment, the regulation prescribed by the Director-General with approval from the relevant Minister shall be followed.

Fees, expenses incurred and tax arrears shall be deducted from money received from the sale by auction. The remaining shall be returned to the owner of the assets.

A person liable to pay tax under paragraph 2 shall include a partner with unlimited liability in a juristic partnership.”

As a result, in the case where the taxpayer is entitled to pay a certain amount of tax debt and the payment is due, if it is not paid or remitted to the Revenue Department, the amount of tax that the taxpayer is entitled to pay or remit will become tax arrears, where the Revenue Department can immediately exercise its power under Section 12 of the Revenue Code. 

Question: If the taxpayer makes a partial payment of tax, will there still be a risk of seizure or attachment?

In the case where the taxpayer submits a tax return and makes only partial payment of tax, the unpaid portion of tax payable is considered to be tax arrears according to Section 12 of the Revenue Code. In addition, the taxpayer is also entitled to pay a surcharge under Section 27 of the Revenue Code, and the Revenue Department shall have the power to seize or attach and sell by auction the assets of a person liable to pay or remit tax, in accordance with Section 12 of the Revenue Code, in reference to the ruling of the Revenue Department No. KorKhor 0811/3519 dated 3 May B.E. 2543 (2000).

Question: If the taxpayer does not file a tax return, what is the risk?

In the case where the taxpayer does not file a tax return, the Revenue Department will know the amount of tax arrears only after the tax assessment has been carried out. Thereafter, the Revenue Officer will issue a tax assessment letter to the taxpayer demanding that he/she/it pay taxes within a specified period. At this stage, the tax arrears will be recorded into the system, and the tax delinquent processing department of the Revenue Department will continue collecting tax arrears based on such. If the tax arrears are not paid within the specified period, the payment shall be enforced by virtue of Section 12 of the Revenue Code, without the requirement of an order or warrant of seizure issued by the court in reference to the ruling of the Revenue Department No. KorKhor 0811/1433 dated 18 February B.E. 2545 (2002).

Question: During the appeal of the tax assessment, will there still be a risk of seizure or attachment?

 If the taxpayer disagrees with the tax assessment, the appeal must be submitted within 30 days from the date of receipt of the assessment according to Section 30 of the Revenue Code. Nonetheless, the appeal is not a deferral of tax payment. As a result, the application for a stay of tax collection must be submitted together with the appeal request to the Revenue Department; by stating the reasons and necessity to request for the tax deferral. In addition, collateral in accordance with the condition prescribed by the Revenue Department must also be submitted. The said collateral could be a bank guarantee; title deed, by registering the mortgage with the Revenue Department; or government bond. If the taxpayer appeals against the tax assessment but does not request for a stay of tax collection by providing the said collateral, or applies for a stay of tax collection but the Director-General of the Revenue Department does not approve; the Revenue Department will proceed treat the tax payer as a tax delinquent. Subsequently, if the payment has not been made, the Revenue Department will seize or attach and sell by auction the assets of the person liable to pay or remit tax, by virtue of Section 12 of the Revenue Code, in reference to the ruling of the Revenue Department No. KorKhor 0811/17426 dated 25 December B.E. 2541 (1998).   

If the prescription period of tax arrears has expired but the debtor has entered into an acknowledgement of debt agreement, the Revenue Department shall have the right to enforce repayment of debt in accordance with Section 12 of the Revenue Code within two years from the date set forth in the acknowledgement of debt agreement; by assuming that the debtor has renounced the prescription period under Section 193/24 and Section 193/35 of the Civil and Commercial Code, in reference to the ruling of the Revenue Department No. KorKhor 0702(km.05)/2729 dated 17 December B.E. 2551 (2008)  

Question: Can the Revenue Department enforce a freeze on bank accounts and bank overdraft limits in order to pay the tax arrears?

If the Revenue Department issues an attachment order to the bank of the tax debtor and the bank does not comply with such attachment order by not remitting money to the Revenue Department, the Revenue Department will issue a further warning for the bank to comply with the attachment order. If the bank still fails to comply with the attachment order, the Revenue Department will prosecute a criminal charge against the bank in accordance with Section 35 bis of the Revenue Code, as well as a civil lawsuit enforcing the bank to remit money, in reference to the ruling of the Revenue Department no. KorKhor 0811(km)/452 dated 25 March B.E. 2542 (1999).

However, in the case where the tax delinquent has a bank overdraft limit, the Revenue Department could not order the bank to withdraw the overdraft limit to enforce the debt repayment, by virtue of Section 12 of the Revenue Code. This is because the overdraft limit creates a debt’ it does not give a right to claim the payment by way of the assets of the person liable to pay or remit tax, in reference to the ruling of the Revenue Department no. KorKhor 0811/Kor.130 dated 6 August B.E. 2544 (2001).

Question: Can the Revenue Department enforce a money attachment by ordering a third party to bring the money, which the debtor is entitled to receive, to pay the tax arrears?

In the case where the tax delinquent is hired by an employer, the Revenue Department has the power to issue an attachment order to halt or delay payment of wages that the new employer must pay to said tax delinquent/debtor. In addition, if the tax delinquent has provided collateral for the employment contract, the Revenue Department also has the power under Section 12 of the Revenue Code to attach the collateral, in reference to the ruling of the Revenue Department no. KorKhor 0811/7405 dated 26 July B.E. 2544 (2001).

In conclusion, if the taxpayer has tax arrears with the Revenue Department, it is necessary to study and prepare payment in order to prevent unnecessary damages from the recovery of tax arrears through the process of enforcement under Section 12 of the Revenue Code. If you have any questions or would like us to provide advice on this issue, please do not hesitate to contact us.

Author: Budhima Kerdsiri