BIR files P1.7B tax evasion rap vs manufacturing firm

MANILA, Philippines – The Bureau of Internal Revenue (BIR) has filed a P1.7-billion tax evasion case against a metal and plastic products manufacturer.

In its complaint, the BIR alleged that Gammon Metal Products Inc. (Gammon) “willfully attempted to evade or defeat the payment of tax and deliberate failure to supply correct and accurate information in its income tax returns (ITR) and Value Added Tax (VAT) returns during taxable years 2007 and 2008.

Also included in the complaint was Joaquin Chua, president of Gammon who signed the ITR and VAT returns.

Investigation showed that Gammon’s suppliers did not file tax returns for 2007 and 2008. The suppliers were in fact non-existent and thus, sham companies, the BIR said.

“Gammon failed to substantiate its claim of purchases from said suppliers when asked by the BIR, prompting the latter to disallow the VAT input taxes claimed by the company from said purchases in question,” the BIR said.

The simulated transactions with sham companies resulted in the over-claim of VAT input taxes, causing substantial underdeclarations of taxable incomes in 2007 and 2008.

The total tax liability of Gammon is P1.7 billion, including surcharges and interests.