DOJ starts probe into Rappler’s alleged tax evasion

MANILA, Philippines — The Department of Justice (DOJ) has started preliminary investigation on the P133.8-million tax evasion charges filed against top executives of online news outfit Rappler.

Assistant State Prosecutor Zenamar Machacon-Caparros yesterday gave Rappler president Maria Ressa and treasurer James Bitanga until May 7 to submit their answers to the complaint filed by the Bureau of Internal Revenue (BIR) last month.

The BIR filed the complaint against Rappler Holdings Corp. (RHC) and its officers on March 8 after investigation showed possible tax liability of the online news company.

The tax agency specifically accused Rappler of violating the National Internal Revenue Code (NIRC) for allegedly attempting to evade or defeat tax as well as for failing to supply correct and accurate information in its 2015 income tax return (ITR) and value added tax (VAT).

The aggregate tax liability of RHC amounted to P133.8 million representing P91 million in ITR and P42.5 million in VAT.

The BIR said its probe showed RHC purchased common shares from Rappler Inc. worth P19 million, issued and sold P181.6 million worth of Philippine Depositary Receipts (PDRs) to two foreign firms.

It said the RHC used the same common shares it purchased from Rappler Inc. as underlying share of the PDRs for profit and transmitted economic rights to PDR holders.

The BIR said the RHC is subject to income tax and VAT, being a dealer in securities. However, the annual ITR and VAT returns for 2015, according to the BIR, did not reflect any ITR and VAT from the PDR transaction. 

Rappler’s foreign owners reportedly donated their shares to local stockholders in compliance with a constitutional requirement.

Rappler said the cases were part of the harassment being committed against the company by the Duterte administration for reporting negatively about the government.

The tax case was filed after the Securities and Exchange Commission cancelled Rappler’s license for alleged violation of the constitutional ban on foreign ownership in media companies. 

Meanwhile, the DOJ will resume today the hearing on the cyber libel complaint filed by the National Bureau of Investigation and businessman Wilfredo Keng against Ressa and other Rappler staff.

Ressa appeared before the DOJ yesterday to subscribe to her counter-affidavit, which her lawyers will submit to the prosecutors this afternoon.

Seven other respondents – former Rappler reporter Reynaldo Santos Jr., who wrote the article in question, and directors Bitanga, Manuel Ayala, Nico Jose Nolledo, Glenda Gloria, Felicia Atienza, Dan Albert de Padua and Jose Maria Hofilena – are also expected to appear at the hearing to file their answers.

The respondents have been accused of committing libel as provided under Republic Act 10175 or the Cybercrime Prevention Act of 2012.

The complaint filed by Keng for violation of the Cybercrime Law stemmed from the article “CJ using SUVs of ‘controversial’ businessmen” that Rappler published on May 29, 2012.

Rappler reported that the late former chief justice Renato Corona, who was then facing an impeachment trial, had been using a black SUV whose plate number was allegedly issued to Keng.

The news website also reported about Keng’s alleged involvement in human trafficking and smuggling.