Bangkok Democrat MP Korn Chatikavanij said that within the next few days the Democrats would form a working committee to closely trace the Shinawatra and Damapong families’ transfer of Shin Corp stocks and examine the tax questions that might arise.

“Although the proceeds from the sale of the stocks may not be taxable, we have to look at the whole thing as to whether it has gone through the due process of sound public policy or not,” Korn said.

In 2002, Bhanapot obtained 4.5 million Shin shares worth Bt738 million from Duangta Wongphakdi, a maid working in the Shinawatra household. The shares originally belonged to Pojaman. Bhanapot accepted the transfer of the stocks without paying tax on the grounds that they were given to him as a “gift” (thamjarnya).

Later, he acquired another 26.82 million shares at Bt10 apiece from Pojaman without paying tax because the share transfer was, once more, considered a gift.

Shin stocks were then trading at Bt150 each, and Senator Chirmsak Pinthong has calculated that Bhanapot should have paid Bt4.729 billion in tax, as of September 30, 2005, to the Revenue Department.

Klanarong Chanthik, former secretary-general of the National Counter Corruption Commission, said on Tuesday that he testified to the Constitution Court during the asset-concealment case against Thaksin in 2001 that Bhanapot got the shares as a gift, and not by purchasing them.

“Bhanapot also said he did not buy the stocks, but got them from Pojaman,” he said. “If that was the case, he should have paid income tax of 37 per cent.”

During the same period, Panthongtae and Pinthongta Shinawatra also took delivery of Shin stocks in a similar manner as a gift (sanehah) from their parents, without having to pay tax. Thaksin and Pojaman were then unloading the stocks to their children because Thaksin was going into politics and had won the 2001 election.

Panthongtae is pocketing Bt22.58 billion and Pinthongta Bt29.78 billion for their shares in the Shin sell-off. They do not need to pay tax because individuals selling stocks in the stock exchange are exempted from capital gains tax. This exemption is designed to promote investment in the local stock market.

A financial source said that in the case of Panthongtae and Pinthongta, it is quite understandable that they did not have to pay tax when they first took the transfer of the stocks, because as children of Thaksin and Pojamarn, they were entitled to the gift.

“But in the case of Bhanapot, I am not sure whether he should pay tax or not,” the source said.

“He was in a position to look after himself then. If he does not pay tax, why do all the people exercising stock options have to pay tax?”

Korn said a tax expert had told him that if the asset transfer was done on the basis of a gift, so as to avoid paying tax, the giver, and not the receiver, would have to pay tax.

He said the logic in this was that it looks like the giver is handing over an asset to another party as a gift in order to avoid paying tax, so the giver in this case has to pay the tax.

“But we have to take a look at the whole thing and check out the facts first,” he added.

A Finance Ministry official said one had to look at the date on which the Shin stocks’ sales contract was signed. “If the signing of the contract took place before the share transfer in the stock exchange, this must be considered as an over-the-counter transaction, which must be taxed,” the official said.

But Phaithoon Phongkesorn, a deputy director-general of the Revenue Department, disagreed. She said there was no need to pay tax in the event of signing the selling contracts in an over-the-counter market because the transaction has not yet happened, or the money has not yet been paid out or received.

“You have to see whether they have signed the contract or received the money. If they have not yet received the money because the transaction has not yet really taken place, they can do the transaction in the stock market to fulfil the legal terms without having to pay tax,” she said.