The Bureau of Internal Revenue (BIR) probe of alleged tax violations by CATS Motors Inc. (presently Auto Nation Group Inc.) has moved forward with the luxury car importer having been notified of an audit.
“[A] subpoena for documents [has been]issued per Large Taxpayers Service,” Internal Revenue Commissioner Caesar Dulay told The Manila Times.
Sought for further details, BIR Assistant Commissioner for the LTS Teresita Angeles said the subpoena is also referred to as a letter of authority or LOA, which is used inform taxpayers that their books of accounts, records and other transactions would be examined and verified.
Angeles said that the LOA was issued after CATS failed to provide necessary documents requested by investigators.
“They did not submit yet their records for 2015 and 2016 requested by our investigators. That is why we issued subpoena so that they will be forced to present the documents,” Angeles said.
She did not provide further details on probe but said non-compliance with LOA would enable the BIR to file a case.
The Times has so far been unable to secure a comment from representatives of Auto Nation.
Dulay’s update on the CATS probe confirmed a statement made by Deputy Commissioner for Legal and Inspection Group Jesus Clint Aranas that the case had been transferred to the LTS from the bureau’s National Investigation Division.
He said the NID had handled the investigation from 2009 to 2011, after which the move to the LTS was ordered in 2012 by then BIR Commissioner Kim Henares.
In a memorandum dated January 20, 2013, the Legal and Inspection Group noted possible tax violations by CATS given discrepancies between suggested retail prices and the company’s market prices.
For instance, a Mercedes-Benz CLS 63 with a market price of P19.8 million was declared having sold for only P4.9 million.
“Owing to the magnitude of discrepancy between the market prices and the actual dealer’s suggested retail prices of the vehicles sold by the above taxpayer and in accordance with the provisions of Section 248 (B) of the National Internal Revenue Code of 1997 as amended, a prima facie evidence of tax fraud exists in the instant case,” the BIR memorandum states.
Last year, the Customs bureau also reported discrepancies in payments made by Auto Nation, claiming the company owed the government P233.6 billion in duties and taxes for 2015.
A tax expert has said the lack of manpower and industry expertise at BIR can be blamed for delays in the resolution of cases, including alleged tax violations of CATS.
“Investigation on CATS Motors is just one of the many backlogs and ongoing investigations inherited by Commissioner Caesar Dulay,” Abrea Consulting Group chief strategy officer Raymond Abrea had told The Manila Times.