Toyota loses $315m tax case
TMT must pay tariffs from 2015 dispute
Toyota Motor Thailand (TMT) Co has lost a 2015 import tariff dispute in which the car maker was ordered to pay 11.63 billion baht (US$315.5 million) in missing taxes in connection with its move to import parts to assemble Toyota Prius cars in Thailand.
The Supreme Court's Division of Taxes on Thursday upheld the Appeal Court's ruling that found TMT had wrongfully declared its Prius cars assembled in 2013 used locally made parts, making it eligible for a 10% tax as agreed under the Japan–Thailand Economic Partnership Agreement (JTEPA) rather than the usual 80% import duty.
As the company failed to agree with the Customs Office in Laem Chabang Port's request for it to pay taxes totalling 11.63 billion baht, it brought the dispute to the Central Tax Court on June 10, 2015.
The court ruled in favour of TMT but the Appeal Court later reversed that.
According to the Customs Office, 7.58 billion baht of the requested amount covered the import duty, 2.02 billion baht the excise tax, 202 million baht the interior tax and 1.82 billion baht the value added tax.
The Supreme Court agreed with the Appeal Court that the parts used in assembling the hybrid cars were complete pieces, which explained why TMT was not eligible for the 10% tax rate.
Following the ruling, a source at TMT said the company respects the decision and will comply.
The company understood this case represents the first interpretation of the part of the FTA regarding import duty privileges that have been on offer since 2010, said the source.
The Customs and Revenues departments later adopted the agreement and issued new regulations to validate these tax privileges intended for parties eligible to receive them.
Earlier last year, TMT was also named in a controversy involving law360.com, a website published by the legal news service based in New York City.
In May last year, Law360 said US authorities were ramping up their Foreign Corrupt Practices Act investigation of Toyota, with federal prosecutors impaneling a grand jury in Texas as they seek evidence the carmaker bribed top Thai judges to overturn a $350 million tax judgement, citing a US law enforcement official.
Senior attorneys for TMT were suspected of funnelling bribes through a private Thai law firm to Supreme Court judges to influence the decision on the tax judgement.