The
government has ordered the armed forces to sign all weapons and equipment
procurement contracts in Thailand to ensure proper taxes are paid.
Any military
procurement deals with companies registered locally or abroad are now required
to be signed in-country so that 7% value-added tax and a 1% withholding tax can
be applied to the transaction, a navy source said.
In recent
years, weapons deals were often signed abroad and tax payments were not
factored into procurement budgets, making it difficult for the Revenue
Department to collect tax from the deals, the source said.
The navy was
the first branch of the armed forces to abide by the department's new
regulation, the source said.
The navy now
clearly separates value-added tax payments from the costs of weapons or
equipment in its procurement contracts, the source said.
If a firm is
locally registered, it is responsible for paying tax to the Revenue Department.
But the new
tax regulation has put a big dent in the navy's budget, forcing it to downgrade
the specifications of new weapons and equipment purchases.
On the
purchase of two medium-sized frigates, which cost about 15 billion baht each,
the navy had to pay taxes of more than 1 billion baht for each ship, the source
said.
That left
only around 28 billion baht left to buy the two ships.
The cabinet
had earlier approved a navy proposal to buy the two frigates at a cost of
around 30 billion baht.
Because of
the 2-billion-baht shortfall, "the navy has had to reduce the
specifications of the frigates, including downgrading the weapons and equipment
to be fitted on the ships", the source said.
"But we
must abide by the law and do the right thing, as the tax we pay will go to the
state's coffers and be used in other state projects."
Navy chief
Adm Surasak Rounroengrom said the navy had strictly abided by the new tax
regulation, insisting that procurement procedures had been conducted in a
transparent manner.
The navy was
willing to be scrutinised to prevent any misunderstanding about its procurement
schemes, he said.
During last
month's censure debate, the opposition attacked Defence Minister Sukumpol
Suwanatat for his role in a navy project to modernise combat systems on two of
its frigates.
Sirichok
Sopha, Democrat MP for Songkhla, attacked the minister over the navy contract
awarded to Saab AB to upgrade combat systems on the HTMS Naresuan and HTMS
Taksin.
The Democrat
MP charged that ACM Sukumpol had altered the terms of reference for the scheme
just 12 days after assuming the defence portfolio.
The navy
later denied the allegations.
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