Despite President Duterte’s avowed policy to go after tax evaders and make them pay by whatever means necessary, the government has yet to successfully prosecute tax-evasion cases, much less obtain a final conviction against a tax evader.
Instead, of the close to 500 tax- evasion cases filed by the Bureau of Internal Revenue (BIR) during the previous administration, a considerable number has already been dismissed at the level of the prosecutor at the Department of Justice (DOJ).
Internal Revenue Commissioner Caesar R. Dulay said he was “astonished” that many of these tax-evasion cases filed under former Internal Revenue Commissioner Kim Henares are being dismissed by the DOJ prosecutors for lack of probable cause.
“The policy is that if they don’t pay and they don’t apply to settle, then the commissioner can authorize the filing of criminal cases against them,” Dulay told the BusinessMirror.
“We’re just waiting for the DOJ resolutions on these cases, but sometimes we’re astonished that some of these cases are suddenly being dismissed,” he added.
Dulay said that, out of the 496 cases filed under the Run After Tax Evaders (RATE) campaign before the DOJ, 329 are either at the preliminary investigation stage or up for resolution, while the rest has been resolved. The BIR has yet to list how many of those resolved cases were filed in court and how many were dismissed and are subject to a motion for reconsideration by the BIR.
“We’re still collating cases under motion for reconsideration, but one dismissed case is PhilRem [Service Corp.] or Salud and Michael Bautista with an assessment of P35 million,” Dulay said.
A source from the BIR said it would be hard to prove tax evasion, even in cases of a fraudulent return filed by the suspected tax evader, which can be corrected with the simple expedient of having the taxpayers’ accountant testify to having committed a bookkeeping error.
“Even in cases of a fraudulent return, the presumption that there was an intent to evade taxes could be overturned because the taxpayer’s accountant could testify that there was a mere mix-up in the recording of when the reported income was received, accrued or realized,” the source said.
Justice Undersecretary Eric Balmes told the BusinessMirror the DOJ has assigned a CPA/lawyer as an assistant secretary in the person of George Artha to help in prosecuting these tax-evasion cases.
BIR Officer in Charge for the Enforcement and Advocacy Service Felix Velasco said that, with the dismissal of the criminal charges at the level of the DOJ prosecutors, the BIR is left with either the filing of a civil case or the summary remedies of distraint and levy to be able to collect on the tax-deficiency assessments.
Despite these efforts to prosecute tax evaders, the government has yet to obtain a final conviction against one, and it appears that President Duterte’s very own style of enforcing the law is not only useful in the war against drugs, but also in efforts to collect the correct taxes.
In one of his off-the-cuff remarks, Mr. Duterte said he would ask the police to knock on the doors of suspected tax evaders and ask them why they are not paying the correct taxes.
President Duterte said he would ask Dulay to prepare a list from which a police operation akin to “Oplan Tokhang” will be rolled out for tax evaders.
“I will send the police to see you and ask why you have not been paying taxes. I will ask the media to accompany the police so the police can ask in front of the media why they have not been paying the proper taxes and why they are deceiving the Republic of the Philippines,” Mr. Duterte said in an impromptu speech in August.
President Duterte added that those suspected tax evaders who would land on Dulay’s list will be put in the Bureau of Immigration’s watch list to restrict their right to travel.
“If you’re rich and don’t pay the correct taxes, you cannot travel anymore. I will tell the Immigration to stop you because you committed a violation. I will order the BIR to file cases and once it’s pending in court, the freedom of movement is restricted,” he said.
Dulay said he has yet to complete the list, but is readying one just in case Mr. Duterte, indeed, asks him for the list of suspected tax evaders.