Toyota is under investigation in Thailand for allegations that consultants hired by the world’s largest carmaker tried to bribe local officials in a tax dispute, according to Thai authorities, court documents and a person who knows the matter.
A probe followed submission last month in which Toyota revealed that it had reported “possible violations of anti-bribery laws” relating to its Thai subsidiary to the U.S. Department of Justice and the Securities and Exchange Commission.
Toyota is one of the largest foreign investors in Thailand, where it manufactures a wide range of cars, vans and pickups for the local market and for export. The country is Toyota’s largest manufacturing hub in Southeast Asia. Before the Covid-19 pandemic, car sales was strong in the market, where it has a 31 percent share.
This month, the Thai Court of Justice said in a statement that it would take action against any of its judges found to have taken bribes. The statement, which the court described as a move to “clarify the facts” in a newspaper report on a foreign website, directly relates to a tax dispute in which Toyota was involved.
“If the Court of Justice has received information or has expressly found that any judge has committed an act of corruption in his or her capacity, whether bribery or not, the Court of Justice will resolutely investigate and punish any act that invalidates judges, undermines court neutrality, or society [to] lose faith in the Thai justice system, ”it says.
According to the court, the case involved a tax dispute of 10 billion Bt ($ 320 million) between Toyota Motor Thailand and tax authorities over the import of parts for its Prius hybrid model.
The affair dates back to 2015, when local customs authorities accused Toyota’s Thai subsidiary of underestimating taxes by claiming that imported Prius vehicles were made up of completely demolished kits or imported parts that were later assembled in Thailand.
The discounted tax rate under the Japan-Thai Free Trade Agreement would have been applied to the CKD, but if the cars had been fully assembled before import, they would have attracted a much higher rate.
Toyota appealed the customs authorities ’decision to introduce higher tariffs in 2015, but lost.
The Thai Court of Justice said that it accepted the petition to reconsider the case, but that it has not started the hearing yet.
In its regulatory filing last month, Toyota warned that U.S. investigations into its Thai subsidiary could result in civil or criminal sanctions, but the company did not disclose any details about the allegations.
In a statement, Toyota said it was cooperating with investigations and declined to comment on the tax dispute in Thailand. “We take all allegations of illegal activity seriously and are committed to ensuring that our business practices comply with all applicable government regulations,” it says.
The SEC and DOJ declined to comment.