Criminal offenses against the tax code

Always file and pay the correct taxes and ensure that all information declared is accurate” is wisdom worth repeating as non-compliance can have disastrous consequences.

According to Article 253 of the Tax Code, anyone who violates the provisions of the Code or causes someone to commit an offense, as well as those who voluntarily assisted them, will be held liable. If the offender is a public officer or employee, he will receive the prescribed maximum penalty and will be “perpetually barred from holding any public office, from voting and from participating in any election”.

Persons who attempt to evade or evade tax will be punished with a fine of not less than 500,000 Pula but not more than 10 million Pula. They will also be imprisoned for six to ten years.

If the offender is a corporation (such as a corporation, partnership, or association), the president, partner, general manager, branch manager, treasurer, accountable officer, and accountable employees of the violation will all be held responsible. In addition to the penalties imposed on responsible natural persons, the legal person must pay a fine of at least 50,000 pula but not more than 100,000 pula.

Criminal Offence

Some of the offenses considered criminal offenses are: failure to file tax returns; non-payment of taxes; deliberate and substantial under-declaration of income by more than 30%; concealment or transfer of assets or income; non-remittance of withholding taxes; deliberate and substantial overstatement of the amount of deductions by more than 30%; claiming personal expenses as business expenses; claim of false deductions; use of a false certificate authorizing registration, tax clearance or other accounting forms; failure to register with the Bureau of Internal Revenue (BIR); keep more than one set of books of account and make false entries in the books and records.

The case of Pharmaly

A start-up with no track record has signed a 10 billion peso contract with the Ministry of Health to procure COVID-19 medical supplies. Senior tax lawyers and accountants working with the right to know, now! The coalition discovered “50% overstated cost of goods” and “a possible 30% tax deficit”.

As such, Pharmally, its officers and the employees involved may be held liable. The Senate Blue Ribbon Committee has already recommended the deportation and filing of criminal charges against Chinese businessman Michael Yang, a financier and guarantor of Pharmally.

Ghost of past taxes

Ferdinand “Bongbong” Marcos Jr. is another timely deal. The Court of Appeal convicted him of failing to file income tax returns (ITRs) from 1982 to 1985, when he served as vice-governor and then governor of Ilocos Norte. He was ordered to pay his insufficient income taxes owed with interest, as well as a fine of 2,000 pesos per count of non-declaration of RTI from 1982 to 1984. For his 1985 RTI, he must pay 30,000 pesos for his failure to report plus surcharges. This complicates his bid for the presidency, as groups cite this alleged criminal offense as grounds for disqualification. As mentioned earlier, public officials convicted of tax evasion will be “perpetually prohibited from holding public office, voting and participating in any election”.

Marcos’ camp issued a certification from the BIR stating that it had already paid the penalties in 2001. The plaintiffs responded with two certifications stating “no record of compliance/payment of fine” from the Quezon Regional Magistrate’s Court City (QC RTC) and QC Registrar of the RTC.

The 1st division of the Elections Commission (Comelec) dismissed the consolidated disqualification cases. Although petitioners can always appeal to Comelec en banc and the Supreme Court, taxpayers should not disregard Comelec’s decision by stating that failure to file tax returns is not a serious offence.

Many of us dream of a better Philippines, but only a few take seriously our civic duty to pay the right taxes and vote for good leaders who are hopefully honest taxpayers.

Tax season is fast approaching. April 15 is the deadline to file our annual ITRs. Are you ready? Email us at [email protected] for a free annual tax health check to learn about your level of tax compliance and readiness for ITR filing and/or appropriate tax audit settlement. INQ

This article reflects the personal opinion of the author and not the official position of the Management Association. The author is a member of the MAP Ease of Doing Business Committee, founding chairman and senior tax advisor of Asian Consulting Group, and co-chairman of the Paying Taxes–EODB Task Force.

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