BIR belies report on alleged rise of illegally-traded cigarettes

BIR belies report on alleged rise of illegally-traded cigarettes

 

 

The Bureau of Internal Revenue highlights overwhelming growth in sin tax collection as an indication of the inconclusiveness of a report alleging the fast-rising illegal cigarette trade in the country.


In a report prepared by the International Tax and Investment Center and Oxford Economics entitled “Asia-14 Illicit Tobacco Indicator 2013”, it is alleged that of the 105.5 billion cigarettes locally sold in 2013, 18.1% is attributable to illicit consumption.


“The growth in collections on sin taxes disproves the allegations that the government is losing revenues through illicit trade.”


The BIR collected a total amount of Php100.9 billion in excise taxes from sin products in 2013, with the incremental revenue under the sin tax reform amounting to to Php51.1 billion. This total collection is 81.2% higher compared to 2012 of Php55.7 billion. Likewise, for the first three quarters of 2014, total collections reached Php78.3 billion which is 27.7% higher than the collection made in the same period of 2013, an excess of Php13.8 billion or 21.4% as compared to the goal of Php64.5 billion.


The BIR also belies the said report on the ground that the data used in the said report is incomplete and lacks proper attribution as to source.


As compared to the report, the BIR data of cigarette removals/consumption of 107.2 billion sticks (84.9% accounted for Domestic Consumption,1.8% for Importations/Inflows, and 13.3% for Exports/Outflows) is 1.7 billion sticks greater than the Oxford Economics’ reported data of 105.5 billion sticks inclusive of the alleged illicit 19.1 billion sticks.


Likewise, the 2012 BIR data of cigarette removals/consumption of 129.1 billion sticks is 20.4 billion sticks higher than the 2012 Oxford Economics’ reported data of 108.7 billion sticks removed/consumed inclusive of the alleged illicit 6.4 billion sticks.


The BIR is not discounting the fact that illicit consumption of cigarettes exists as it has become a worldwide concern.


“The Bureau, together with the Bureau of Customs, has been very consistent in its fight against smugglers of goods as this affect our revenues,” Commissioner Jacinto-Henares said. “We implemented various measures to counter illicit cigarette activities such as implementation of stamp tax on cigarettes. We have also acted on reports by sectors to address allegations of misdeclaration / underdeclaration, and we are strictly monitoring removals of cigarettes products to ensure that those that are sold in the market are properly taxed.”


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RIPS Scores Another Victory for DOF in Anti-Corruption Drive

RIPS Scores Another Victory for DOF in Anti-Corruption Drive
Revenue Integrity Protection Service to cause forfeiture of ill-gotten wealth
The Department of Finance’s (DOF) Revenue Integrity Protection Service (RIPS) scored yet another victory after the Office of the Ombudsman denied last 25 October 2014 a motion for reconsideration filed by a DOF employee found to be on the wrong side of anti-graft and corruption laws.
Jesse Javier Carlos, a tax specialist at the DOF’s One Stop Shop Tax Credit and Duty Drawback Center, was previously investigated by RIPS for violations of Section 7 of Republic Act 3019, or the Anti-Graft and Corrupt Practices Act, and Section 8 of the Republic Act 6713 Code of Conduct and Ethical Standards for Public Officials and Employees.
In a decision dated 24 January 2013, the Office of the Ombudsman found that Carlos had unexplained wealth and had most likely falsified his Statement of Assets, Liabilities, and Net Worth (SALN), an official document, constituting perjury. The Ombudsman found probable cause to charge Carlos for violation of the provisions of Republic Act 1379, a law forfeiting in favor of the state ill-gotten wealth of public officials.
Carlos, whose last gross annual salary was P 210, 480, was found to have an incongruent amount of assets and properties. Over ten (10) years, a period in which he would have earned a total of P2.46 million in income, he has acquired a disproportionately high amount of assets totaling P9.36 million. Among some of his assets are a property in Manila worth P1.1 million and a farm lot worth P4 million which he bought in cash.
Carlos defended himself by claiming to have total liabilities of P7.54 million in explaining his wealth. The Ombudsman found the claim dubious, as he failed to present creditors or any supporting documents, especially given that he claims to have P5 million in loans. The Ombudsman declared then in 2013 that Carlos’ unexplained wealth can be forfeited in favor of the state under RA 1379.

Further clarifying where Carlos erred, the Ombudsman pointed to section 2 of RA 1379 stating that, “whenever a public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary…said property shall be presumed prima facie to have been unlawfully acquired.”

In denying Carlos’ motion for reconsideration, the Ombudsman said, “a reasonable prudent mind would believe that respondent’s (Carlos’) non-declaration of assets and business interest appears to be intentional; meant to conceal his wealth.” The Ombudsman further stressed that Carlos has not reasonably explained and reconciled his assets and liabilities. Following the denial of Carlos’ motion for reconsideration, the government will work to forfeit the ill-gotten wealth under the process and parameters provided by RA 1379.

Launched in 2003, the DOF’s RIPS program systematically roots out corruption by investigating and eliminating erring and corrupt public officials and employees. As of 30 September 2014, RIPS has charged 226 public officers. 

Since the Aquino administration took office in 2010, RIPS has filed 113 cases—a marked change of pace from when the same number (113 cases) was filed over the 2003-2010 period. The DOF, through RIPS and other championed initiatives, is committed to protecting the nation’s coffers by ensuring public officers are held to the highest standards of integrity and excellence.
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Businessman charged with tax evasion for unexplained sources of income

Businessman charged with tax evasion for unexplained sources of income

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against RAYMOND ARROYO BABST (BABST) for Willful Attempt to Evade or Defeat Tax, and Deliberate Failure to File Income Tax Returns for taxable years 2009, 2010, and 2011, in violation of Sections 254 and 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Respondent BABST is registered with the BIR with registered addresses at 22 King Christian St., Kingspoint Subd., Brgy. Bagbag, Novaliches, Quezon City and No. 140 Libra Street, Cinco Hermanos Subd., Marikina City.

Based on information and documents gathered during the investigation, BABST purchased a Rockwell Condominium worth P2.9 million in 2006 and paid the corresponding Documentary Stamp Tax (DST) thereon in the amount P54,645.00. In 2007, he sold the same property for the same amount and paid the Capital Gains Tax (CGT) thereon amounting to P218,526.00. In 2009, he purchased a parcel of land and residential house in Marikina City for P3.16 million and paid the DST thereon in the amount P47,400.00. Despite these acquisitions, he did not declare any income for the said years.

In 2009, BABST started his distributorship agreement with Pepsi Cola Products Philippines, Inc (Pepsi Cola, Inc). As certified to by Pepsi Cola Inc., BABST made the following acquisitions amounting to  P3.53 million (2009), P20.09 million (2010) and P17.12 million (2011). In 2010, he paid various BIR taxes with an aggregate amount of P4,464.85.  In 2011, he sold his Vernida Condominium for P4.8 million and paid the CGT thereon in the amount of P288,000.00.

Using the expenditure method of investigation, investigators determined that BABST committed substantial underdeclaration of income as he was able to make the aforementioned purchases despite no record of income from any source. His net income for the past several years combined was in fact considerably short vis-à-vis his property acquisitions and stocks in trade from Pepsi Cola.

As a consequence of her acts and omissions, BABST was sued for an aggregate income tax liability amounting to P23.82 million, inclusive of surcharges and interests, broken down into: 2009 – P3.05 million: 2010 – P13.32 million; and 2011 P7.45 million.

The case against RAYMOND ARROYO BABST is the 320th filed under the RATE program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of the National Investigation Division.

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Delinquent taxpayers from Malabon and Valenzuela charged with willful failure to pay tax

Delinquent taxpayers from Malabon and Valenzuela charged with willful failure to pay tax

The Bureau of Internal Revenue (BIR) today filed separate criminal complaints with the Department of Justice against two (2) delinquent taxpayers from Malabon City and Valenzuela City for Willful Failure to Pay Taxes under the National Internal Revenue Code of 1997, as amended (Tax Code).

Charged for violating Section 255 of the Tax Code was TAN CHIONG SY CO. He is engaged in printing services of flexible packaging materials under the business name PRINTWORLD ENTERPRISES with business address at 169 Jose P. Bautista Avenue cor. Guava Road, Potrero, Malabon City.

TAN CHIONG SY CO was sued for deficiency tax liabilities for taxable year 2008 in the aggregate amount of P8.30 million, inclusive of increments,consisting of P5.90 million in Income Tax (IT), P2.40 million in Value Added Tax (VAT), Expanded Withholding Tax (EWT) - P7,370.89, and Compromise Penalty – P34,000.00.

Likewise charged for violating Section 255 in relation to Sections 256 and 253 of the Tax Code were YIN GANG MOTORCYCLE PHILS. LTD., INC. (YIN GANG MOTORCYCLE) and its responsible corporate officer – President RICHARD K. CHUA.

YIN GANG MOTORCYCLE is a domestic corporation with business address at No. 3 San Andres St., Canumay, Valenzuela City. It is engaged in the business of trading on wholesale basis, manufacturing and assembling of motorcycles, and importing of motorcycle parts and components.

YIN GANG MOTORCYCLE and its responsible corporate officer were assessed deficiency tax liabilities for taxable year 2007 in the sum of P8.60 million, inclusive of increments, broken down as follows: IT - P5.20 million; VAT - P3.40 million; Withholding Tax on Compensation – P9,542.88; and Documentary Stamp Tax – P22,358.75.

BIR Caloocan City records of investigation showed that the abovementioned respondents were served the requisite Preliminary Assessment Notices (PAN), Final Assessment Notices (FAN) and Formal Letters of Demand (FLD) but failed to file a valid protest to said assessments, hence making the same final, executory, and demandable.

The subsequent issuance of the Preliminary Collection Letters, Final Notices Before Seizure, Warrants of Distraint and/or Levy, Warrants of Garnishment, and Final Notices Before Filing of Criminal Complaints were ignored by the respondents, as the said tax assessments remained unpaid. The respondents’ obstinate failure and continued refusal to pay their long overdue deficiency tax assessments, despite repeated demands, constitute willful failure to pay the taxes due to the government.

The cases against TAN CHIONG SY CO, and YIN GANG MOTORCYCLE PHILS. LTD., INC. & its responsible corporate officer are the 317th and 318th, respectively, filed under the RATE program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. These are likewise RATE cases of Revenue Region No. 5, Caloocan City.

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Tuguegarao-based wholesaler charged with willful failure to pay tax

Tuguegarao-based wholesaler charged with willful failure to pay tax

The Bureau of Internal Revenue (BIR) today filed two (2) separate criminal complaints with the Department of Justice against a delinquent taxpayer from Tuguegarao City for Willful Failure to Pay Taxes under the National Internal Revenue Code of 1997, as amended (Tax Code).

Charged for violating Section 255 of the Tax Code was ELIGIO B. ESCOBAR (ESCOBAR). He is engaged in the business of wholesale of food and beverages under the business/trade name EB ESCOBAR STORE/WAREHOUSE with registered office address at 210 Gallibu St., Libag Norte, Tuguegarao City.

ESCOBAR was sued for deficiency tax liabilities for taxable years 2009 and 2010 in the aggregate amount of P10.40 million, inclusive of increments,broken down into: 2009 – P4.20 million (Income Tax - P1.90 million and Value Added Tax (VAT) - P2.30 million); and 2010 - P6.20 million (Income Tax -P2.70 and Value Added Tax (VAT) - P3.50 million).

BIR Tuguegarao City records of investigation showed that the cases against the abovementioned respondent stemmed from Letter Notices issued against him showing discrepancies in his income tax and VAT declarations with the BIR. He was served the requisite Preliminary Assessment Notices (PAN) with Details of Discrepancies, and Final Assessment Notices (FAN) with Details of Discrepancies. ESCOBAR failed to protest said assessments on time, hence making the same final, executory, unappealable, and demandable.

The subsequent issuance of Preliminary Collection Letters, Final Notices Before Seizure, Warrants of Distraint and/or Levy, and Final Notices Before Suit were ignored by the respondent, as the said tax assessments remained unpaid. The respondent’s obstinate failure and continued refusal to pay his long overdue deficiency tax assessments, despite repeated demands, constitute willful failure to pay the taxes due to the government.

The two (2) cases against ELIGIO B. ESCOBAR are the 315th and 316th, respectively, filed under the RATE program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. These are likewise RATE cases of Revenue Region No. 3, Tuguegarao City.

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