The Finance Ministry is pondering whether it will exempt value-added tax (VAT) on imported goods that are re-exported in order to plug tax refund loopholes used for fraud, says a ministry source.
The idea has been debated by the ministry's policymakers after rampant VAT refund fraud cost the government 5.3 billion baht in lost revenue.
The VAT refund is meant to assist exporters by waiving the tax for imported items when they are re-exported. However, some groups have exploited it by falsifying tax refund claims for their own benefit.
Large-scale fake VAT refunds included bogus metal export companies filing falsified documents with the Revenue Department's Bang Rak district and Samut Prakan Area 1 offices to claim VAT refunds for 4.3 billion baht in 2012-13. The case led to three high-ranking department officials being ousted and another forced to quit.
Sathit Rangkhasiri, a former finance chief inspector-general who was transferred from director-general of the Revenue Department on suspicion of being connected to the VAT refund scam, is among the first batch of 45 officials recently removed under Section 44 while being investigated for corruption by the government. The Finance Ministry has failed to recover any money in the case.
The source admitted ending the VAT refund for re-exported goods could lead to illegal domestic sales, so measures are needed.