Tax Judgment EP2 Tax Offset

Q : Is Revenue Department officer allowed to offset tax liability and surcharge from a tax refund eligibly received for the tax payment?

A : No, the Revenue Department officer (“Officer”) is not entitled to do so. Due to the fact that the function of tax surcharge is to punish a taxpayer for the non-performance or incomplete payment of tax, the tax surcharge is not regarded as a kind of interest pursuant to the Civil and Commercial Code (“CCC”). As a result, the Officer is not entitled to offset the tax surcharge from a tax refund prior to offsetting from the tax liability (Principle obligation) pursuant to Section 329 paragraph 1 of the CCC.

Nevertheless, the Officer is required to offset the tax liability from the tax refund at first. If there is a remaining amount of the aforesaid tax refund, it shall be applied to offset the tax surcharge from the remaining tax refund due to the fact that the tax liability is regarded as the main debt which must be firstly settled pursuant to Section 328 paragraph 2 of the CCC. Section 329 paragraph 1 of the CCC.
In addition, Revenue Department has already issued the guideline for the Officer stating that the tax refund shall be offset against the tax liability at first. If there is a remaining amount of the aforesaid tax refund, it shall be applied to the settlement of the tax surcharge and fine respectively pursuant to Revenue Departmental Order No. Por. 98/2543 (2000).

The Supreme Court Judgment No. 9145/2560 (2017) A tax surcharge pursuant to Section 27 of the Thai Revenue Code is not an interest pursuant to Section 329 of the CCC. Thus, the tax refund for which the plaintiff was eligible could not be offset against the tax surcharge at first. It is a case of a debtor who is obliged to do several similar acts of performance towards a creditor. Accordingly, when the several secured debts are due simultaneously, the tax debt establishing the tax obligation and forms the base of the surcharge shall be regarded as the main debt and shall be settled at first pursuant to Section 328 paragraph 2 of the CCC. As such, the defendant must completely offset the value-added tax refund which the plaintiff was eligible against the tax liability prior to offsetting the tax surcharge.