Key takeaways
- Each account name hides a different risk, and each needs different evidence to check it
- Fraud tends to occur when there is pressure, opportunity and rationalisation. The job of internal control is to remove the opportunity
- Every invoice must be backed by real goods or real work. Costs and input VAT without an underlying transaction are a legal risk
- A developer's tax burden is concentrated on the transfer day, and temporary rates must be checked in the year of actual transfer
The examples in this article are written to illustrate risk patterns and do not identify or accuse any person or entity. Warning signs are grounds for further review, not a conclusion that wrongdoing has occurred.
Account names that hide risk
| Account name | Hidden risk | Warning signs | Checkpoint |
|---|---|---|---|
| Trade receivables | Fictitious revenue, uncollectable amounts, or accruals booked to prop up the financial statements | Long ageing, concentrated in a few customers, growing faster than sales | Prepare an ageing analysis, confirm balances, and check receipts after the period end |
| Trade payables | Fictitious payables, empty purchases, duplicate payments | Balances outstanding for an unusually long time, incomplete documents | Confirm balances and match purchase orders, goods received notes and invoices (3-way match) |
| Cash | Embezzlement, fictitious cash balances, payments outside the system | Unusually high cash on hand that does not agree with the bank statement | Count the cash and reconcile the bank accounts |
| Inventory | Phantom stock, overvaluation, obsolete goods | DIO lengthening, stock never counted, stock value moving against sales | Count stock and test cost against net realisable value (NRV) |
| Accrued expenses | Accruals booked to adjust profit, or fictitious expenses | Round-sum entries at period end, reversed at the start of the next period | Check supporting documents and test transactions after the period end (cut-off) |
| Input VAT | Fake tax invoices, or refunds claimed beyond entitlement | Unusually high input VAT; large amounts from new vendors | Check the original invoices, confirm the vendor exists, and match them to real goods or services |
| Output VAT | Some sales issued without tax invoices, or VAT avoidance | Revenue in the financial statements does not match the PP 30 filings | Reconcile accounting revenue to VAT filings |
| Retained earnings | Retrospective adjustments to cover tracks, or incorrect dividends | Retained earnings adjustments with no explanation | Check adjusting entries, dividend resolutions and dividend WHT |
| Other income / advances received | Parking income to defer or accelerate profit | Unusual growth at period end | Check the revenue recognition conditions (TFRS 15) and the contracts |
Project owner's corner: what to look for and what to ask
- Every month, ask about the five risk accounts: director receivables and payables, cash, inventory, and input and output VAT
Internal auditor's corner: checkpoints
- Build a red-flag register by account name and score the risks every quarter
Fraud warning signs
The Fraud Triangle consists of Pressure, Opportunity and Rationalisation. The job of the internal control system is to remove as much opportunity as possible
| Format | How it is done | Warning signs |
|---|---|---|
| Fictitious revenue | Creating sales or customers that do not exist to prop up the financial statements | Receivables growing abnormally, customers that do not exist, sales surging at period end |
| Fictitious costs / expenses | Creating purchase invoices or expenses to extract cash or reduce tax | New vendors with no real existence, cash payments, incomplete documents |
| Fictitious customers / fictitious payables | Setting up sham counterparties to divert money | Address or tax ID duplicates an employee's; unusual receiving bank accounts |
| Fake tax invoices | Buying invoices to increase input VAT or costs | Vendor never delivered real goods, prices out of line with the market, unusual invoice numbers |
| Asset misappropriation | Employees or people with authority taking cash or assets | Cash shortages, reconciliations that do not balance, employees who refuse to take leave |
| Duplicate payments / ghost employees on the payroll | Paying suppliers or employees twice, or people who do not exist | Duplicate bank account numbers, employees with no attendance records |
| Window dressing | Deferring or accelerating recognition of items to make the financial statements look better | Many period-end adjusting entries, reversed at the start of the next period |
| Procurement fraud (bribery / bid rigging) | Taking kickbacks from vendors, rigging specifications | A single vendor with a monopoly, prices above the market, no price comparison |
Illustrative example: invoices for a consultant who does not exist
A department manager set up his or her own consulting company as a counterparty, then issued invoices for services every month with no real work done. It was detected when an internal auditor noticed that the new vendor shared an address with an employee and had no deliverables or contract to support it. Beyond the financial loss, a tax invoice for services never provided is an offence under the Revenue Code.
Lesson: a new counterparty, no real work and regular payments call for a check of identity and substance of the work
Project owner's corner: what to look for and what to ask
- Enforce segregation of duties: the person who approves ≠ the person who pays ≠ the person who records
- Sign off personally on high-value payments, and randomly ask about the origin of new counterparties every month
Internal auditor's corner: checkpoints
- Test counterparty identity: tax ID, address matching an employee, duplicate bank accounts
- Use data analytics to catch duplicate bills, amounts just under approval limits, and round-sum payments
- Test cut-off and period-end adjusting entries
Taxes that can turn into legal cases
Tax planning is using the rights and options the law provides. Tax evasion is concealing income, or creating fake expenses and invoices, with intent to pay less tax, which is a criminal offence.
| Tax | Main risk issues | Consequences of getting it wrong |
|---|---|---|
| VAT (7% rate including local tax, applicable until 30 Sep 2027 under Royal Decree No. 807) | Sales without tax invoices, use of fake or ineligible input VAT, PP 30 filings that do not match the accounts | Penalty based on the type of offence (up to 2 times the tax) and a surcharge of 1.5% per month. Fake invoices carry criminal penalties (Section 90/4) |
| WHT (withholding tax) | Not withholding or under-withholding, not remitting, late filing of PND 3 / 53 | The payer is jointly liable for tax not withheld, plus surcharge and penalties |
| CIT (corporate income tax, standard rate 20%) | Non-deductible expenses, incomplete revenue, intercompany transfer pricing | Additional tax assessment, penalties and surcharge; intentional evasion falls under criminal liability under Section 37 |
| PIT (individuals) | Benefits received by directors or shareholders but not taxed; salary and dividends mixed together | Additional personal tax assessment plus penalties |
Items to which the Revenue Department pays particular attention
- Revenue in the financial statements does not match the PP 30 filings and bank receipts
- Unusually high input VAT, or large vendors that are newly formed or clearly do not exist
- Non-deductible expenses, such as personal expenses, expenses with no provable recipient, or expenses unrelated to the business
- Large director receivables and payables with no interest or contract
- Company has continuous losses but keeps expanding, so it is asked about the source of its funding
- Transactions with group companies at prices that differ from the market
Illustrative example: buying tax invoices to reduce tax
A contracting business bought tax invoices from an invoice-selling company to increase input VAT and costs. Investigation found that the issuer had no genuine trade and that the money flowed back, so it became an offence under the Revenue Code. Where the value of the damage is high and money has been moved, it may also fall within a predicate offence under the anti-money laundering law, affecting both the company and its directors personally.
Lesson: costs and input VAT without real goods are not savings but a legal risk
Project owner's corner: what to look for and what to ask
- Every invoice must be backed by real goods or real work. Do not buy invoices, and do not accept invoices for which there is no transaction
- Have the accounting team prepare a VAT reconciliation and reconcile revenue to bank receipts every month
- Strictly separate personal money from company money
Internal auditor's corner: checkpoints
- Perform a three-way reconciliation: accounting revenue vs PP 30 vs bank receipts
- Test large and new input tax invoices: vendor identity, actual delivery, payment through the banking system
- Review non-deductible expenses and related-party transactions
Tax across the condo project cycle
Rates checked as of November 2026. Fee-reduction measures are temporary and change often; check the announcement in force in the year of actual transfer.
| Stage | Taxes and fees arising | Commonly missed issues |
|---|---|---|
| Buying land | Transfer fee, stamp duty or SBT on the seller's side, and annual land and building tax | Vacant land and land held for development may be taxed at higher rates than residential land, and this is a cost often forgotten in the budget. Check the assessed land-use category and any tax relief for projects permitted under the applicable law. |
| During construction | Input VAT on purchases from contractors and materials suppliers, and WHT: 3% on contract work, 5% on rent, 3% on professional services | Input VAT relating to sales of condominium units, which are not subject to VAT, cannot be refunded and must be added to project cost |
| Receiving booking deposits and down payments | No revenue arises yet for CIT, and sales of condominium units are not subject to VAT | If service fees are charged or furniture is sold under a separate contract, that portion may be subject to VAT, so the base must be clearly separated |
| Ownership transfer | Transfer fee of 2% of the appraised value (temporarily reduced to 0.01% only where the conditions are met; see below). SBT of 3.3% including local tax, calculated on revenue but not less than the appraised value. WHT of 1% under Section 69 ter. Revenue and cost of sales are recognised for CIT. | Common errors: cost of sales per unit miscalculated because the WIP pool is mixed with selling expenses; the wrong SBT base used; forgetting that once SBT is paid no stamp duty is due; and the WHT base should be confirmed with the land office official before transfer |
| After transfer | Land and building tax on unsold units, and income from common-area fees and common areas | Unsold inventory units remain a continuing land and building tax burden for the developer |
Transfer fee and mortgage registration reduction measures to check
The Cabinet approved on 30 June 2026 a reduction of the transfer fee from 2% to 0.01% and of the mortgage registration fee from 1% to 0.01% for residential property priced up to THB 7 million. The buyer must be an individual of Thai nationality, and the transfer and mortgage must be registered at the same time. The measure is effective until 30 June 2027. Check the conditions in the Royal Gazette before relying on it.
CIT issues for which developers are often assessed
| Issue | Substance | What is needed to protect against it |
|---|---|---|
| Expenses where the recipient cannot be proven | Fully non-deductible, and an item that officials often pick out for review | A receipt or tax invoice that clearly identifies the payee, and evidence of payment through the banking system |
| Entertainment expenses | Deductible only up to the statutory cap; any excess is added back | Keep entertainment expenses in a separate account from other expenses and calculate the cap every year |
| Donations | Deductible up to the statutory cap; any excess is added back | An acknowledgement certificate or receipt from an eligible recipient organisation |
| Surcharges, penalties and fines | Non-deductible in full | File on time |
| Tax borne on behalf of others (tax instead) | Generally non-deductible, unless the conditions the law allows are met | State in the contract who bears the tax, and calculate the gross-up correctly |
| Interest on project loans | Interest during the development period is generally capitalised into project cost rather than expensed immediately | A schedule of capitalised interest, broken down by project and period |
| Accumulated tax losses | Can be carried forward for no more than 5 accounting periods | An annual schedule of loss expiry. Developers that run losses for a long time before transfers begin often let losses expire before the first profitable year |
| Exchange differences | Realised and unrealised differences are treated differently for tax purposes | Keep exchange differences in a separate account and reconcile them at the end of every accounting period |
Outright sale versus long-term lease is covered in Customer advances and how the money is used, while the tax on intercompany transactions is covered in Related-party transactions and cash leakage
This content is management and internal audit guidance, not a legal or tax opinion for a specific case. Check the current law and consult an auditor, tax adviser or lawyer before making decisions in a real case.