For substantially under-declaring its 2006 and 2007 gross receipts from its customers, a sub-contracting corporation was charged with tax evasion by the Bureau of Internal Revenue (BIR) today at the Department of Justice for four (4) counts of willful attempt to evade or defeat taxes and four (4) counts of willful failure to supply correct and accurate information in its Income Tax Returns and Value-Added Tax Returns covering taxable years 2006 and 2007, all in violation of Sec. 254 and Sec. 255 of the National Internal Revenue Code of 1997, as amended.
Charged was BEST SELLER MANUFACTURING CORPORATION (Best Seller), a domestic corporation registered with the Securities and Exchange Commission primarily engaged as a sub-contractor of footwear parts and accessories. Its principal place of business is located atNo. 2 Esguerra St., Grace Park,CaloocanCity.
Also charged was General Manager CHARLIE YAO (a.k.a. Yao Ching) in his capacity as responsible corporate officer of the company.
Sometime in 2008, the BIR received a confidential information denouncing Best Seller for underdeclaration of gross receipts from contracts it entered into with its customers covering taxable years 2006 and 207.
In the course of its investigation, the BIR noted that Best Seller declared in its Audited Financial Statements gross receipts from its contracts of P1,919,969.30 and P3,564,300.97 in 2006 and 2007, respectively.
However, data gathered by the BIR from the company’s customers, including Chowking, Olympian Rubber Products Co., Inc., Universal Robina Corporation and Monde M.Y. San Corporation, showed total gross receipts amounting to P17,138,856.29 in 2006 and P23,701,644.64 in 2007.
A comparison of the above-cited figures disclosed underdeclarations of more than 30% of what was declared in the financial statements amounting to P15,218,886.99 and P20,137,343.67 for 2006 and 2007, respectively.
Under Sec. 248 (B) of the Tax Code, an under-declaration of taxable income by more than 30% of what was declared constitutes prima facie evidence of a false or fraudulent return or fraud tantamount to tax evasion.
As a result of its scheme to underdeclare its gross receipts in its audited financial statements, Best Seller effectively lowered its taxable gross receipts.
Considering the discovered underdeclarations, the BIR assessed Best Seller deficiency Income Tax of P12.65 million for 2006 and P15.33 million for 2007 and deficiency VAT amounting to P4.36 million for 2006 and P5.37 million for 2007, for a total tax liability of P37.71 million.
The case against BEST SELLER MANUFACTURING CORPORATION and its responsible corporate officers is the sixty-third (63rd) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.