Thai Authorities Dismantle 1 Billion Baht VAT Fraud Ring

A sophisticated Value Added Tax (VAT) fraud operation, which has cost the Thai state over 1 billion Baht, has been dismantled by a joint force from the Economic Crime Suppression Division (ECD) police and the Revenue Department. 

Authorities announced on Monday the successful operation and detailed the intricate scheme used by the fraudsters.

In a press conference held at 11:00 AM, key officials including Maj Gen Natthasak Chaovanasai, Deputy Commissioner of the Central Investigation Bureau (CIB), Pol Maj Gen Thatphum Charuprat, Commander of the ECD, and top officials from the Revenue Department, unveiled the results of their crackdown.

The operation involved simultaneous raids on 14 targets across Thailand – 11 in Tak Province, two in Chiang Mai Province, and one in Bangkok. 

These coordinated swoops led to the apprehension of Samran (63), identified as the head of the large-scale criminal organisation, along with nine accomplices. 

The suspects face charges including "jointly issuing tax invoices without the right to do so," "jointly intending to evade or attempting to evade VAT or claim VAT refunds through false acts," and "intending to use fake or unlawfully issued tax invoices for tax credit." 
 

During the raids, officers seized a vast array of evidence, including over 100,000 documents, 20 mobile phones, and 30 computers with associated electronic equipment.

Pol Maj Gen Thatphum explained that the investigation was triggered by a complaint from the Revenue Department concerning Samran. 

It was discovered that Samran had established S & M Brotherhood Co., Ltd., ostensibly an import-export business. However, he allegedly exploited family members, relatives, employees, friends, and acquaintances by setting up over 20 VAT-registered shops and companies within the network.

These entities then engaged in a deceptive chain of transactions, creating the illusion of genuine trade without any actual movement of goods. 

Tax invoices were systematically circulated and recycled among the network's shops and companies, artificially inflating product prices and, consequently, the 7% VAT incurred.

The scheme culminated with S & M Brotherhood Co., Ltd., registered as an exporter, ostensibly purchasing these highly inflated goods from the final layer of network operators, complete with the exorbitant VAT.

The same consumer products were then "exported" to a neighbouring country, Myanmar, where the "buyers" were also part of the same criminal network. This created false export documentation, which was then used to claim substantial 7% VAT refunds from the Revenue Department.

"The goods exported by the suspect group were consumer products, which are not subject to export duties and are not liable for VAT," Pol Maj Gen Thatphum clarified. "This loophole allowed the export operator to claim VAT refunds based on the inflated input tax each month. This network exploited this to create fake transactions, inflate product prices, and claim excessively high VAT refunds from the Revenue Department."

The Revenue Department's investigation revealed that between 2021 and 2022 alone, this network illegally claimed over 150 million Baht in VAT refunds. 

Based on tax assessments, the total estimated damages inflicted upon the state by the entire network's illicit activities exceed 1 billion Baht.

With irrefutable evidence of their wrongdoing, authorities swiftly gathered all necessary proof to secure arrest warrants for those involved. The subsequent raids on the 14 target locations led directly to the arrest of Samran and his nine accomplices.

During initial questioning, some suspects have confessed to their involvement, while others maintain their innocence. All individuals have been handed over to investigators at ECD Sub-Division 2 for further legal proceedings.