Dunkin’ Donuts must be Henares’s favorite

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Emeterio Sd. Perez

Emeterio Sd. Perez

CAUTION.This piece is specially written for the eyes of Commissioner Kim Henares of the Bureau of Internal Revenue, since she has proudly proclaimed she would go after tax evaders and those who paid taxes less than what they should have paid the BIR.

She has singled out though Filipino boxing champion Manny Pacquiao in her tax collection drive. Has she not missed anyone yet?

The limitation, of course, applies only to readers of The Manila Times who are not as curious as Due Diligencer in how much Golden Donuts Inc. (GDI) earned for their every bite of Dunkin Donuts. GDI is the local franchise holder of the American food brand.

Due Diligencer is posing here a few queries that only Henares and her chosen expert, and hopefully honest, tax examiners could properly explain. She need not worry about the repercussion of any explanation she could provide Due Diligencer. She is assured that the queries revolve around the use of percentages in GDI’s 2007-2007 financial reports.


Did Due Diligencer pick GDI in random for this piece? To tell Henares the truth, it did not. Having been told that GDI has been making over a billion pesos a year in selling Dunkin’ Donuts, it got curious how on earth a company could make billions selling donuts despite the competition posed to it by Mister Donut and the few “small others” such as Country Style, a Canadian brand which Due Diligencer first tasted while vacationing in Canada in 2001.

But before the story behind the percentages GDI used in computing franchise fees and royalties, Due Diligencer would try to analyze the company’s 2007 financial filing that shows its revenues climbed 12.92 percent to P1.17 billion from P1.04 billion in 2006. Of said revenues, sale of goods—meaning Dunkin Donuts—topped P1 billion at P1.03 billion, up 13.17 percent from P911.49 million. The other contributors to GDI’s revenues in 2007 and 2006 were royalties, P133.19 million, up 18.4 percent from P112.492 million; and franchise income, which dropped 39.30 percent from P16.22 million.

In 2007, GDI reported tax expense which increased 11.6 percent to P31.987 million from P28.66 million, resulting in net income of P64.792 million, up 52.31 percent from P42.54 million.

Until here, everything appears in order and does not need elaboration.

But Henares and her favorite examiners, who probably belong to the same yellow fever tribe, may be riding only on Pacquiao’s popularity to boost their tax drive. As “birds of the same feather” because they are all after “Other People’s Untaxed Money,” they might want to explain the percentages contained in notes to GDI’s financial reports such as the following:

Note 21.2 on “License Agreement” provides for the “payment to DBI (Dunkin’ Brands Inc.) equivalent to 1 percent of the total net sales of the company and those of its sub-licensees.”

Then said note listed franchise fee of P23.67 million in 2007 and P20.99 million in 2006. Computed at 1 percent as stated in the agreement, GDI and its sub-licensees must have grossed P2.37 billion in 2007 and P2.1 billion in 2006, or a total of P4.467 billion. These numbers, of course, do not appear in GDI’s financial statements.

GDI, on the other hand, reported “sale of goods” of P1.03 billion and P911.490 million in 2007 and 2006, or total sales of P1.94 billion in two years.

Subtracting GDI’s total sales from the grand total of P4.47 billion would result in the retailers combining for P2.52 billion.

On the other hand, GDI reported royalties of P133.19 million in 2007 and P112.49 million in 2006. These translate to P4.46 billion worth of Dunkin’ Donuts at 3 percent and P2.02 billion at 6.6 percent of sub-franchisees’ sales in 2007 and 2006.

Will Henares, as the government’s chief tax collector, not limit her efforts to collect more taxes from Pacquiao but include others as well. For a start, she might want to explain the discrepancies in the results of Due Diligencer’s computations and those contained in GDI’s audited financial reports.

Due Diligencer is giving Henares a chance to respond before it analyzes BIR’s own findings on GDI’s alleged P1.5-billion tax deficiency and the stockholders of the company that holds Dunkin Donuts’ Philippine franchise.

esdperez@gmail.com

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6 Comments

  1. your article is interesting if your intention would only be about sending data and information to the BIR and not by a speculation that manny pacquiao is being singled out…as a matter of fact, there were other high profile personalities/entities chased by the BIR along with the honorable congressman…

    isn’t it that manny pacquiao is given leniency after a few years of waiting by the agency for the documents he is required to submit…remember it was the year 2008 and 2009 chased by the bureau…TRY ANALYZING THIS MATTER before you come into conclusion that he is being singled out…

  2. I don’t think the issue is Pacquiao’s tax payment. He has to pay taxes if indeed he has not.

    The issue is the “TIMING” of BIR. Why did they have to bring up Pacquiao’s tax issues right after he won his last fight? Why couldn’t they just do it secretly & not through media. Waiting a week or two after everyone has had savored his win would have been more prudent. Pacquiao’s winning brought us much hope all the devastations that we had experienced these past months.

    Why KIM? Aren’t you a Filipino too?

  3. The main point here is that all those people had undergone we might say the highest quality or form of education but their actions does not reflect any of it. This tax issues is only a single rotten tomato inside a basket filled with rotten tomatoes that is starting to destroy all the efforts and sacrifices of all the people who did their best to improve this nation. The problem here is the system that we people were accustomed to. We kind a do things not because we want to do it but because we want something in return. For most of us that something is power and then money. If we will never change this mindset and behavior that we have,it is better for this country to totally perish. We young people could no longer stomach what you old people are doing. You are all acting as if you never were into formal schooling and as if you never were a kid. Try to take a second of your life and think of what you have been doing. This is for all the people out there who claims that they are good..

  4. dustin, kapag mahina ang utak mo hindi aabot kahit magsalita ka na parang tama ka. pakiintindi mo ang sinasabi ni paquiao. mahina isip kasi ang mga neotards kamukhamo at ng amo mo. magtanong ka rin sa mga nagbabayad ng tax sa america.

  5. Mr. Due Diligencer,

    You may want to take a look of the tax payment too of the Franchise owner of Mr. Donut and of course the KFC (Ramcar Food Group) and see how they DON’T REMIT VALUE ADDED TAXES they collected from their customers. Never mind how they manage income taxes, but it might be as big as their unremitted VAT too. The franchise owner of this brand would appear to be small or medium corporation but in reality it’s just one family.

    Goodluck! This is the kind of TAXPAYER that Kim Henares must be prioritizing in her run after tax evaders program.

  6. Why do people like you always question something that is totaly legitimate. Pac was asked to verify the taxes he paid in america for his fights there. To verify you need to show origional documents, not photo copies. He has had 2 or 3 years to get this information & he didnt do it. Instead of criticisng henares criticise pacquiao for not doing the right thing. If he produces the correct docvcuments & they veryify his claims then it will be alright. If he had already done it his bank accounts wouldnt have been frozen. I just cant work out why you criticise the wrong people all the time. But you know your ignorant readers will back you because pac is rich & famous & such a good man so hinares is an easy target. You ought to be ashamed of yourself.