The Bureau of Internal Revenue (BIR) today filed criminal charges with the Department of Justice against GLOBE MALLOW INTERNATIONAL ENTERPRISES CORPORATION (GMIEC) and its responsible corporate officers – President GENOVEVA M. GOZUM and Treasurer GENE M. GOZUM – for willful attempt to evade income tax by overstating its Cost of Sales by P40.87 million in 2006, P137.46 million in 2007, and P45.09 million in 2010, willful attempt to evade Value Added Tax (VAT) by overstating its purchases by the same amounts for the same taxable years, willful failure to supply correct and accurate information in its 2006, 2007 & 2010 Income Tax Returns (ITRs) by overstating its expenses and willful failure to supply correct and accurate information in its VAT Returns by overstating its purchases for taxable years 2006, 2007 and 2010, all in violation of Section 254 and Section 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).
GMIEC is a domestic corporation with office address at No. 98 Dioquino Compound, 20th Avenue, Cubao, Quezon City. GMIEC is in the business, among others, of producing, fabricating, buying, selling, distributing, and marketing all kinds of goods, commodities, wares and merchandise. It has different branches/stores in various malls.
Using Summary Lists of Purchases and documents from the BIR LN Task Force, investigators discovered that GMIEC overstated its cost of sales in its ITRs for taxable years 2006, 2007 & 2010 and over-claimed input taxes in its VAT returns for the same taxable years by reflecting fictitious purchases amounting to P223.32 million. The sham purchases were confirmed by GMIEC’s alleged supplier CLARISSA VICTORIA L. UMALE, proprietor of Fine & Fancy Fabrics Center, who executed an affidavit denying having had any transaction with GMIEC.
Efforts by the BIR to verify the said “fictitious” purchases with GMIEC failed as the latter did not respond to BIR notices leading BIR Investigators to the conclusion that GMIEC has no evidence to support its alleged purchases like checks and official receipts. Under the Tax Code, for an expense (purchase) to be deductible, among others, it must be supported by receipts, records or other pertinent papers.
The scheme of GMIEC and respondents Gozum of claiming simulated purchases or overstating its purchases reduced the income tax and VAT liabilities of GMIEC, to the prejudice of the government.
GMIEC is being sued for a total tax deficiency amounting to P226.99 MILLION, including surcharges and interest, for taxable years 2006, 2007 & 2010, broken down as follows: P166.30M – Income Tax; and P60.69M – VAT.
The case against GLOBE MALLOW INTERNATIONAL ENTERPRISES CORPORATION (GMIEC) and its responsible corporate officers – President GENOVEVA M. GOZUM and Treasurer GENE M. GOZUM – is the eighty-eighth (88th) filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.