Japanese company caught for tax evasion

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against TOSHIBA PLANT SYSTEMS & SERVICES CORP. (PHIL. BRANCH), its General Manager AIKO SUGAWARA and Resident Agent RODOLFO M. BAUSA for their willful failure to pay deficiency taxes for taxable year 2007 as defined and penalized under Section 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).

TOSHIBA, a foreign corporation organized and existing under Japanese Laws, is registered with the Securities and Exchange Commission primarily to construct, install, test and undertake related works for the San Roque Multi-Purpose Power Project in San Roque, Pangasinan with registered address at 107 Spain St., Brgy. Don Bosco, Better Living Subdivision, Parañaque City. It was first known by the name Toshiba Plant Kensetsu Co., Ltd. but the change from such name was never recorded with the BIR.

Records of investigation showed that TOSHIBA was issued a Letter of Authority (LOA) for the examination of its books of accounts and other accounting records for all internal revenue taxes covering taxable year 2007.

Despite the issuance of the LOA and three subsequent notices for the presentation of its books of accounts and other related accounting records, TOSHIBA did not submit the said required documents. The BIR thus filed criminal charges against TOSHIBA for its failure to comply with the requirements of the Subpoena Duces Tecum (SDT).

After the issuance of a Notice of Informal Conference with Notice of Proposed Assessment based on available evidence, the BIR was finally able to audit the subject taxpayer. During the audit, BIR investigators discovered that for 2007 TOSHIBA had unrecorded sales amounting to P20.18 million, accumulated sales as per BIR Form 2307 (Certificate of Creditable Withholding Tax Withheld at Source) of P58.74 million and unsupported carry-over losses from taxable year 2006 in the sum of P27.70 million. The said investigation resulted to a deficiency tax assessment against TOSHIBA amounting to P58 million, broken down into: Income Tax – P38.5 million; VAT – P18.7 million; and Withholding Tax – P0.8 million.

However, even with the issuance of a Preliminary Assessment Notice and a Final Assessment Notice that has become final and executory, TOSHIBA still failed to settle its tax liabilities. A Preliminary Collection Letter, Final Notice Before Seizure, Warrant of Distraint and/or Levy, and Warrant of Garnishment were also issued but to no avail.

Despite such repeated demands and the lapse of a considerable length of time, TOSHIBA has obstinately failed and adamantly refused to pay its long overdue deficiency tax assessments for 2007, to the prejudice of government.

The case against TOSHIBA PLANT SYSTEMS & SERVICES CORP. (PHIL. BRANCH), its General Manager AIKO SUGAWARA and Resident Agent RODOLFO M. BAUSA is the 118th filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of Revenue Region No. 8, Makati City.