TAX INJUSTICE IN THE INCOME TAXATION OF ORDINARY PARTNERSHIPS: A JURISPRUDENTIAL ANALYSIS UNDER THAI TAX LAW AND CONSTITUTIONAL PRINCIPLES

Abstract

This article focuses on analyzing the problem of unfairness in the collection of personal income tax on partners of ordinary partnerships and unincorporated joint ventures in Thailand. These entities are required to pay tax at the business level, and when profits are distributed to the partners, such income must again be included in the calculation of personal income tax without the right to claim a tax credit for taxes already paid. This results in double taxation, which conflicts with the principles of ability to pay, tax fairness, and the rule of law. The analysis is conducted from a legal perspective and through comparison with tax systems in other countries, namely the United States, Germany, Malaysia, Singapore, and the United Kingdom, in order to propose solutions to the problem of double taxation in business. The findings indicate that the United States has a partnership and LLC structure that allows partners to directly receive foreign tax credits and investment credits, effectively reducing the burden of double taxation. Germany, Malaysia, Singapore, and the United Kingdom employ pass-through systems for partnership income, but foreign tax credits and investment credits are not passed directly to the partners, with only international tax credit mechanisms available within treaty frameworks. The practice of double taxation in Thailand may be inconsistent with the principles of equality and justice under Section 27 of the Thai Constitution, which stipulates that taxation must be fair and lawful. This article therefore proposes solutions such as legislating to allow partners to claim tax credits or formally adopting a pass-through tax system for ordinary partnerships, as well as making effective use of double taxation agreements. These measures aim to uphold the rule of law and strengthen the competitiveness of Thai businesses in the global arena.