BIR charges transport company for evading payment of common carriers’ tax
The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against GERMAN ESPIRITU LINER, INC. (GERMAN ESPIRITU), its President CECILIO GERMAN and Secretary/Treasurer ERLINDA GERMAN for willful attempt to evade or defeat taxes, and deliberate failure tofile Quarterly Percentage Tax Returns (PTRs) for taxable years 2010, 2011 and 2012, in violation of Sections 254 and 255 in relation to Sections 117 and 128 of the National Internal Revenue Code of 1997, as amended (Tax Code).
GERMAN ESPIRITU is a corporation duly-registered with the Securities and Exchange Commission organized primarily for the purpose of rendering transportation services for the public. Its office address is at URESA Subdivision, Wakas, Bocaue, Bulacan. GERMAN ESPIRITU is a grantee of Certificates of Public Convenience and operates as a public transport for passengers along the route of Bulacan (Bulacan) to Cubao (Quezon City) and along the route of Bulacan (Bulacan) to Divisoria (Manila).
GERMAN ESPIRITU initially filed PTRs and paid percentage taxes (PT). However, for taxable years 2010, 2011 and 2012, the bus company did not file PTRs and did not pay PT. Instead, it filed VAT returns and paid the corresponding VAT Payable. Moreover, GERMAN ESPIRITU left blank the space provided for “LINE OF BUSINESS” in all its VAT returns filed with the BIR.
By repeatedly and deliberately not disclosing itself as engaged in the business of transport of passengers in its VAT returns filed with the BIR, GERMAN ESPIRITU took advantage of the creditable VAT system as a scheme to evade the payment of correct internal revenue taxes wherein it deducts Input VAT (from purchases) from its Output VAT (from gross receipts) resulting to payment of nominal and insignificant amounts of VAT instead of the mandated percentage tax. Under Section 117 of the Tax Code, persons (includes juridical persons) who transport passengers for hire and other domestic carriers by land for the transport of passengers are required to pay percentage tax equivalent to three percent (3%) of their quarterly gross receipts.
As a result of GERMAN ESPIRITU’s fraudulent and willful acts, it evaded its obligation to pay proper internal revenue taxes in the total amount ofP4.20 million, inclusive of surcharges and interests, summarized as follows: 2010 – P1.11 million; 2011 - P1.63 million; and 2012 – P1.46 million.
The case against GERMAN ESPIRITU LINER, INC., its President CECILIO GERMAN and Secretary/Treasurer ERLINDA GERMAN is the 225th filed under the RATE program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of Revenue Region No. 5, Caloocan City.