BIR: List tax evasion as a ‘heinous crime’

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The Bureau of Internal Revenue (BIR) said on Wednesday it will propose the inclusion of tax evasion in the list of non-bailable heinous crimes under the ‘economic sabotage’ category in a bill to be filed in Congress.

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The BIR made the statement following the order of President Rodrigo Duterte on Tuesday to arrest the owner of local cigarette manufacturer Mighty Corp. over accusations of economic sabotage.

“We are now crafting a proposal that would make tax evasion a heinous crime as should be categorized as economic sabotage,” BIR Commissioner Caesar Dulay said at a press conference on Wednesday.

Dulay said the proposal will have similar provisions as those in the Customs Modernization and Tariff Act, which categorize the tax evasion involved in the smuggling of goods worth P200 million and above as a non-bailable heinous crime.

“Tax evasion is a form of ‘economic sabotage’ and we are looking at a threshold figure of about, maybe P500 million, or P1 billion,” BIR’s Dulay said, referring to the minimum amount of the tax evaded being studied to categorize the act as a non-bailable heinous crime in the proposed bill.

“If that is the figure, then certainly it has affected [or will affect]the economy of the country and it should be considered as economic sabotage,” he said.

Asked if taxes owed by evaders could still be settled if such crimes were categorized as non-bailable, Dulay said: while “criminal cases can’t be compromised, the civil aspect of these criminal cases may be subject to compromise.”

‘Fake tax stamps’

On Tuesday, President Duterte said he has ordered the arrest of Mighty Corp. owner Alex Wong Chu King for the alleged use of P1-billion worth of fake cigarette tax stamps.

“Yes. I ordered his arrest. He’s the one behind the fake cigarette stamps,” Duterte has said.

“It’s not a matter of BIR… [but]tax laws. It’s falsification,” the President said.

The arrest order came after the Bureau of Customs seized fake cigarettes worth P2 billion, including Mighty products with fake tax stamps, in a series of raids conducted last week.

Mighty Corp. had denied any wrongdoing, saying it is not in the business of producing fake cigarette products.
Its owner appeared before the National Bureau of Investigation and agreed to cooperate with the investigation.
Meanwhile, Dulay said the BIR is still in the process of completing the necessary documents and evidence for the filing of a tax evasion case against Mighty Corp.

“The ideal is we finish it as soon as possible and we’re trying to hit the weekend, if we don’t hit any sticks on the wheel as you call it, so that we can validate it faster,” he said.

‘Good defense’
Reacting to Mighty’s claim that the Taggant readers used by the BIR and the BOC during the raid last week were malfunctioning, Dulay said Mighty has “a good defense if it has any basis.”

“That is why probably they have been talking with former BIR officials who know how it works. But my info is, in the warehouse, there are products with fake stamps and products with valid stamps so this was validated in the same warehouse,” he explained.

“That is also good strategy if you’re a manufacturer, so you can always claim ‘they are valid products’ so you mix them with the fake products in the hope that when you get caught, you have a defense right then and there. For example, the use of the Taggant reader says it is malfunctioning because there are valid and there are fake stamps,” he said.

However, Dulay added that as far as the validation is concerned, the BIR’s Taggant readers are good and reliable. (See related story ‘BIR device malfunctioned during raid’ – Mighty)

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2 Comments

  1. For tax evaders who are not as malicious as large corporations (especially doctors, lawyers, small business owners, freelancers, etc.), government should be more lenient and support an easy way of filing taxes like Taxumo.com.

  2. How about accepting bribe by BIR workers, how about aiding by doctoring and helping the tax evaders for a fee, improper assessment? or even payroll padding, employees working abroad but still in the payroll?

    Just honest application of existing laws is enough, but BIR have to do it without exemption, fully and completely.

    Impossible?