Thailand’s wealthy elite drive a huge market for luxury super cars. Bangkok is home to many Rolls Royces, Bentleys, Lamborghinis and Ferraris. Cars that, frankly, make the Mercedes, Porsche, BMW and Audi cars of this world look middling. This week an investigation team at Thailand’s Department of Special Investigation (DSI) sent a report on the illegal registration of 5 Porsche cars to the anti corruption agency with suspicions that Thai customs officials may have assisted dishonest car importers to evade import taxes and other levies on the vehicles. It highlights a black market that was blown part in 2013 when corrupt registration practices led to over 100 luxury cars being seized. The scandal created confusion within the lucrative trade for reputable and established car importers as well those abusing the law. The investigation is still ongoing with calls for the taxation levels to be reduced being examined.

An ongoing investigation into the scandal of cars imported into Thailand and false tax declarations has recommended that Thailand’s anti corruption agency look at the activities of some customs officials involved. The scandal, which came to light in 2013, saw many buyers get deals that were too good to be true, often buying cars for ฿7 million ($223,000) below the proper price but who, like the owners of these 5 Porches, may ultimately lose their cars altogether, cannot sell them and cannot drive the expensive beauties on Thailand’s roads.

In 2017, Thailand had a huge auction which drew worldwide attention when over 300 luxury cars, seized by Thai authorities, were auctioned off. It was a scene of razamatazz and beautiful Thai girls shown with beautiful cars and exquisite prices. It followed a call from UK police who prompted a further 100 cars to be withheld as many had been found to have been stolen in Britain and shipped to Thailand before ending up being impounded by customers authorities. The reason for this is a huge black market that had developed in luxury cars in Thailand. This week, it was all more down to earth when a DSI investigation team recommended that Thailand’s anti corruption agency investigate some officials in relation to the registration of 5 Porsche cars for their part of in a scheme to reduce or evade taxes that should have been paid. It is accepted that on this model of car alone, that the price differential could be as much as  ฿7 million ($223,000) compared to a car where full import and sales taxes are paid as opposed to one that is processed illegally through customs while designated as automobile parts. This is the essence of the scam which was blown open in 2013 and is still being investigated by Thai authorities today. It is reported that over 134 cars have been seized. The owners of the 5 Porsche cars, the subject of the most recent investigation, have been told to be prepared to lose heir cars, that they may not drive them and that they cannot sell them on until the matter is resolved and paperwork corrected. They have, however, been absolved of any blame in the matter.

Thailand is is home to some of the wealthiest people on the planet. In this elite part of Thai society, life is all about beautiful homes, beautiful people and flash cars. German cars are among the most popular with brands such as Audi and Mercedes at the top of the lists but for Thailand’s elite, even these cars are middling with Bangkok being a vibrant market for Bentleys, Rolls Royces, Lamborghinis and Ferraris. But nothing is quite as flash, particularly for single men, as a Porsche car. The German engineered cars are legendary for quality engineering and speed.

Luxury car rackets in Thailand

In the last decade, there has been huge controversy in Thailand concerning luxury cars and rackets where those with enough cash could buy them cheap, no questions asked. It was big business, a cash business, not quite within the law and consequently descended into the hands of those with criminal minds. Like all illegal shortcuts in Thailand, it did not end well. In 2013, Thailand’s Department of Special Investigation, the equivalent of the FBI in Thailand, launched a probe into the industry. The outcome was shocking. Expensive cars at the upper range from Ferraris to Lamborghinis were seized by Thai police as they were found to have improper documentation. In an earlier scandal, some years before, sports cars were found to actually be fake models. This 2013 scandal revolved around schemes to avoid paying import duties and taxes on the expensive cars properly due to Thailand’s Revenue authorities.

Thai taxes on imported cars are very high

In Thailand, these taxes are very high and deliberately set by previous Thai governments to discourage ostentatious displays of wealth by those who have more in society. Taxes on imported cars can be over 300% of the purchase price abroad. Hence the temptation by some dealers and agents to circumvent the rules and classify cars as manufactured in Thailand, a practice that had echoes of days of old when such activities were normal. Today some famous car brands, even those from the past, are still manufactured in Thailand. The problem was that these, ultra high end cars could not be and were not assembled locally. They were, in fact, imported as finished products. Hence the issue of improper documentation which stated that the cars were imported parts.

Thailand’s DSI completes its investigation into 5 Porsche cars and asks for corruption probe

Last week, following an extensive investigation into this particularly abuse and specifically in relation to 5 Porsche cars, the Department of Special Investigation (DSI) referred its findings to Thailand anti corruption agency tasked with investigating corruption at an official level. The DSI is reported to have called for the National Anti Corruption Commission to probe the affair and in particular the activities of the officials involved in this one case although there are believed to be many more.

Anti corruption agency must look at the actions of customs officials in relation to the imported cars

The Director General of the DSI, General Paisit Wongmuang, confirmed that his agency had asked the body to look further at the findings of an investigation completed by Police Captain Surawut Rangsai, who is the head of the police team probing the importation of the 5 Porsche cars. There are believed to be many cases similar to this since the controversy over such practices blew up six years ago. It is believed that these five cars were among the over 100 vehicles seized since the scandal broke. The anti corruption agency must now look at the actions of the officials involved to establish if they may have worked in concert with the businesses and people importing such vehicles without paying the full range of taxes required by Thai law. The taxes include not only import duty but also value added tax and other sales taxes.

Some luxury car importers were undercutting the market by not paying proper taxes on imported cars

It is understood that the lax practices by some car importers in declaring the value of the cars and their status led some of the importers to aggressively compete to sell the cars to unknown customers at prices far below genuine importers who were properly declaring their activities to Thailand’s Revenue authorities.

Difference in price could be as much as ฿7 million or $223,000 per luxury car sold in Thailand

It has been reported that Police Captain Surawut Rangsai has hinted that officials working with Thailand’s customs agencies may have actively worked with some unscrupulous car importers to produce documentation specifying imported Porsche cars as parts to be assembled in Thailand rather than finished cars. The incentive to do so is quite strong. A newly imported and properly documented Porsche can sell in Thailand for over ฿10 million while some car importers were believed to be offering similar new cars from Germany for as little as ฿3 million. It is believed that the investigation, in this instance, has absolved the owners of the cars of any blame in the matter.

Sting in the tail for owners who may lose their cars but now cannot sell or drive them on Thai roads

However, the Department of Special Investigation has issued guidance to Thailand’s Department of Land Transport that any transfer of ownership of the vehicles should be blocked as potential purchasers would be subject to deception. The investigative team have confirmed that no action is being taken against the owners of the cars. They purchased the Porsche cars believing that they had simply found a good deal and accepted that the paperwork was legitimate. The police are also believed to be insisting that the vehicles cannot be driven on Thailand’s roads.

This is, obviously, of very little use or benefit to the owners of the expensive cars. They are being encouraged to take legal action against the sellers. In all, the investigation team behind the probe have yet only processed their enquiries into 14 of 134 cars initially seized when the scandal came to light in 2013. It sounds very much like a slow nightmare for everyone involved.

Government minister has called for a look at the huge level of taxes on imported cars in Thailand

Thailand’s ultra rich import well over 10,000 luxury cars in to Thailand each year, many from Europe. The controversy has highlighted the huge levels of taxation imposed on the vehicles. This has been questioned by Thailand’s Justice Minister and Deputy Prime Minister Prajin Juntong. He has suggested that the widespread tax evasion, detected by authorities, indicates the the tax level may be too high thereby encouraging what emerged as effectively a black market. The Minister called for a reduction in the tax take from such vehicles and a special committee is now believed to be examining the issue. As the investigations have gone on, there have also been some highly reputable car importers who have had newly imported cars held as investigating police attempted to get to the bottom of the correct international prices for luxury cars which have included new Rolls Royce and Bentley models which sell very well in Bangkok. In 2017, one large and reputable car importer claimed that they had lost over ฿700 million in missed sales opportunities due to the extensive and thorough probe by Thailand’s DSI.

Auction of luxury cars in 2017 was an eye opener

In July 2017, Thailand’s customs authorities auctioned off a stunning array of cars seized by the organisation. The auction received worldwide attention and prompted calls from police in the United Kingdom to withhold some cars on display which had been identified as vehicles stolen in the that country. The luxury cars had been transported to the Thai kingdom for resale before being seized by Thai authorities in various circumstances. It is thought that the burgeoning black market for luxury cars made such scams possible in the first place. To put it simply, the demand for luxury vehicles among Thailand’s elite and billionaire class made such a criminal enterprise possible.

While up to 100 cars of the 400 on sale were withdrawn, the rest sold like hot cakes and raised nearly $15 million for Thai authorities. One man paid $385,000 cash for a Rolls Royce Phantom and beamed with delight for photographs sitting in his latest purchase. It is clear from the total amount raised from the remaining 300 luxury cars that were sold that there were many wealthy bargain hunters, paying hard cash, who were not disappointed.

A politically incorrect economic success: Thailand is home to some of the world’s richest people