Facts of the Case
Company A was incorporated with registered capital of THB 3,000,000, held equally by three shareholders:
- Mr. A – subscribed THB 1,000,000 and fully paid
- Mr. B – subscribed THB 1,000,000 and fully paid
- Mr. C – subscribed THB 1,000,000 but paid only THB 200,000
As a result, Mr. C remained indebted to Company A for unpaid share capital of THB 800,000 from the date of incorporation, 15 January 2023.
On 1 June 2025, the Revenue Department issued a summons to audit and assess Company A’s tax liabilities. Company A was unable to fully settle the assessed taxes. The Revenue Department therefore exercised its authority to collect the outstanding tax amount from Mr. C, as a shareholder with unpaid share capital.
In doing so, the Revenue Department demanded payment of:
- THB 800,000 (unpaid share capital), and
- Interest at 7.5% per annum, calculated from the original due date
This occurred despite the fact that Company A had no agreement or internal policy to charge interest on the unpaid share capital owed by Mr. C.
Key Question
Can the Revenue Department legally assess interest on unpaid share capital of a shareholder, even when the company itself does not charge such interest?
Revenue Department’s Position
The answer is yes.
The Revenue Department may assess interest on unpaid share capital by relying on provisions of the Civil and Commercial Code (CCC), in conjunction with tax law enforcement powers.
Relevant Legal Provisions
1. Civil and Commercial Code – Shareholder Obligations
- Section 1122 of the CCC clearly states that:
A shareholder who fails to pay share capital by the due date must pay interest from the due date until full payment is made.
This obligation arises by operation of law and is not dependent on any contractual agreement.
- Section 1123 of the CCC further provides that:
If a shareholder fails to pay the amount due, the directors may send a formal notice demanding payment together with interest.
Importantly, this provision does not imply that interest can only be charged if expressly stated in the notice. The absence of a demand letter or interest notice does not deprive the creditor of the right to claim default interest.
2. Statutory Interest Rate
Where no specific interest rate has been agreed:
- Section 7 of the CCC provides that statutory interest applies at 7.5% per annum, unless otherwise stipulated by law.
- Section 224 of the CCC further confirms that monetary debts in default accrue interest at 7.5% per annum during the period of default.
Accordingly, Mr. C is legally required to pay interest at 7.5% per year on the unpaid share capital from the due date.
This interpretation is supported by Supreme Court Judgment No. 3874/2017, which confirms that default interest on unpaid share capital arises automatically under the law.
Interaction Between Tax Law and Civil Law
Although the Revenue Department enforces tax obligations under the Revenue Code, it regularly relies on the Civil and Commercial Code and other relevant laws when determining rights and liabilities.
This approach is consistent with the Revenue Department’s practice in a wide range of cases, including those involving:
- Classification of transportation activities
- Determination of contractual substance
- Identification of legal obligations arising by operation of law
Conclusion
The Revenue Department is entitled to assess both unpaid share capital and statutory interest from a shareholder when a company is unable to pay its assessed tax liabilities.
Even in the absence of a contractual agreement or internal policy charging interest, shareholders remain legally obligated to pay interest on unpaid share capital under the Civil and Commercial Code.
This case highlights the importance of ensuring that share capital is fully paid upon incorporation, as unpaid capital may create significant legal and tax exposure for both the company and its shareholders.
