GMA orders closure of 300 firms with P4-B undeclared VAT

Let the tax crackdown begin.

President Arroyo gave yesterday Bureau of Internal Revenue (BIR) Commissioner Rene Bañez the green light to shut down and prosecute about 300 tax-evading and cheating firms.

She gave the go-signal for Bañez to begin reorganizing the BIR and increase the bureau’s ability to meet its annual revenue targets.

Mrs. Arroyo ordered Bañez to close down and garnish the assets of firms that violated the Value Added Tax (VAT) Law.

"I am instructing Rene Bañez to close the firms, file charges against them and, of course, also file criminal cases for tax evasion and also to garnish their properties and accounts so that we can collect P4 billion (in unpaid taxes)," she said.

Mrs. Arroyo also ordered Justice Secretary Hernando Perez to assign a dozen state prosecutors from the Department of Justice (DOJ) to the BIR for this purpose.

"Because he (Bañez) does not have enough lawyers to file cases almost simultaneously against 300 respondents, I have asked (Perez) to devote 12 lawyers of the DOJ and its attached agencies to this drive and tomorrow we will be meeting with them," the President said.

She said the BIR and DOJ personnel tasked with catching and prosecuting these tax law violators "have already started working together today and, maybe tomorrow, we will have a report of progress done for the general public, so you can see what we are doing."

In a still unnumbered executive order, the President also invoked her powers, as provided for in the Administrative Code of 1987, to appoint all deputy commissioners, assistant commissioners, regional directors, revenue data center heads and other holders of director-level positions "upon recommendation of the BIR commissioner and approval by the Secretary of Finance."

The President announced her orders for the prosecution of the tax-evading and tax-shaving firms on the eve of her scheduled meeting with BIR officials led by Bañez at the BIR head office in Quezon City today.

The announcement came while the President was at the National Bureau of Investigation (NBI) headquarters along Taft Avenue in Manila, where a suspect in a P200 million tax payment diversion case uncovered by the BIR was presented to her: "Tomorrow, I will go to BIR because there is another set of anomalies that the BIR has uncovered and we will be running after (it). These (cases cover) under-declarations of VAT by at least 300 firms (amounting) to P4 billion," she said.

"Commissioner Bañez has discovered anomalies at the Large Taxpayers’ Unit, so that is one of the reforms we will do and, I believe, from there he (Bañez) could collect bigger addition to tax collections," the President said after her SONA.

The proposed EO on the "transformation" of the BIR came in the wake of initiatives in Congress by Speaker Jose de Venecia Jr. to abolish the BIR and create in its place an Internal Revenue Management Administration (IRMA) empowered with tax collection clout and run like a corporation.

Bañez accused of plunder

Meanwhile, Rep. Aniceto Saludo Jr. (Lakas, Southern Leyte) has accused Bañez of defrauding the government of billions of pesos.

In a privilege speech, Saludo described the BIR chief as the country’s "top tax fixer, plunderer, economic saboteur."

The lawmaker from Leyte said he has evidence showing that the BIR, under Bañez, waived some P6 billion in taxes in favor of the Fort Bonifacio Development Corp. (FBDC), a member of the Metro Pacific Group.

"BIR, under the leadership of Bañez, failed to appeal the decision (before the Court of Tax Appeals). They slept on the job. They simply did not do anything to protect and defend the public interest," Saludo said.

In another instance, Saludo added, the BIR used a P1.1 billion special allotment release order (SARO) issued by the Department of Budget and Management (DBM) to pay for the documentary stamp liabilities of the FBDC: "This particular tax scam is economic sabotage at its vilest and wickedest... The government, which should not pay taxes at all, had been duped into issuing a SARO worth P1.18 billion representing tax payments for and in behalf of FBDC, a private corporation."

Saludo also accused Bañez of impropriety, noting that the BIR chief would take leaves of absence to be with businessman Manuel Pangilinan, Bañez’ former boss at the Philippine Long Distance Telephone Company (PLDT), where Bañez was vice president and tax director before joining the BIR.

He said Bañez accompanied Pangilinan on foreign trips to negotiate the takeover of PLDT by the Gokongwei group. Saludo said he has video footage and photographs as proof of Bañez’ trips with Pangilinan "with Bañes figuring prominently in them."

Tax diversion scam

Government has uncovered a multi-million dollar scam initially involving P200 million worth of tax money diverted to fictitious bank accounts. This scam has alarmed officials of widespread diversion of tax money paid by large corporations through accredited banks.

The diversion was discovered during the course of the BIR investigation into so-called "stop-filers." According to finance officials, the government will try to build up a case of plunder – an offense punishable by death – against the scam’s perpetrators.

Finance Secretary Jose Isidro Camacho told reporters the BIR was ordered to expand its probe and look into tax payments made through accredited banks, beginning with government-operated Land Bank of the Philippines (LandBank), Development Bank of the Philippines (DBP), and Philippine National Bank (PNB). – With Jess Diaz and Des Ferriols