OPINION: Expressway Debate Far from over in Bangkok.

Aug. 2--The increase in the expressway toll to 42 baht from 40 has been a hot issue in recent weeks. The expressway authority was at pains to explain that the change was not an increase in the toll, but that the value-added tax on the toll was going to be passed on to drivers.

The expressway authority had long absorbed the VAT on behalf of commuters, but now that it was losing money the policy had to change.

The two-baht increase prompted a group of famous lawyers to stand up for the rights of commuters and take the expressway authority to the Administrative Court to ascertain whether the toll was subject to VAT.

The lawyers submitted the following reasons why the increase should be rescinded: (i) the provision of expressway services can be interpreted as the provision of letting out immovable property services, which is exempt from VAT; and (ii) the business of providing expressway services is already subject to the house and land tax and therefore should not be subject to VAT.

Surprisingly, a senior judge keen on tax cases has since confirmed the lawyers' opinion. His personal view was that the VAT exemption on the provision of letting out immovable property services could be interpreted to apply to the expressway toll.

Specifically, Section 587 of the Civil and Commercial Code defines "hire of property" to mean "a contract whereby the lessor agrees to let the hirer have the use or benefit of property for a limited period of time and the hirer agrees to pay rent therefore". House and land tax is basically charged on the house and land including any construction. By implication, the expressway toll could be regarded as income derived from letting out immovable property and thus not subject to VAT.

In the event that the Administrative Court upholds the argument outlined above, it would cause a major change in the interpretation of the VAT law. In short, the same exemption would apply to all businesses whose activities are similar to that of the expressway authority: the provision of services in hotels, serviced apartments, car parks and warehouses would all fall within the VAT exemption category.