HOUSE Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) filed House Bill No. 7653, which criminalizes tax racketeering on top of “usual tax evasion,” as a “means of empowering the Bureau of Internal Revenue in prosecuting more systematic cases of tax fraud.”
Salceda describes the scheme as “large-scale use” of fraudulent or fictitious tax receipts to pad deductions or input tax credits.
“According to estimates by tax authorities, as much as P100 billion in revenues are being evaded due to the padding of deductions and input tax credits through the systematic and fraudulent use of fake receipts and other records,” Salceda said.
In March 17, 2023 alone, the Bureau of Internal Revenue announced the filing of charges for evasion of taxes worth P25.5 billion against corporations using fictitious receipts, following a December 2022 raid on the corporations Buildforce Trading Inc, Crazykitchen Foodtrade Corp., Decarich Supertrade Inc., Redington Corporation. BIR alleges that these corporations have been operating for more than three years.
“These corporations do not have any legitimate business activity, and were set only to sell fictitious sales invoices or receipts to their buyers for the latter’s claim of false and anomalous purchases. These receipts or invoices are called “ghost receipts,” and economists have called the practice “ghosting the tax authority.””
“According to the BIR, the fraudulent operations of these corporations have resulted in some P17.63 billion in foregone income taxes and total deficiency value added tax amounting to P7.91 billion, for taxable years 2019-2021.”
Salceda cites that while the crime of tax evasion is punished under the Tax Code, it does not define the systematic and coordinated evasion of taxes, “which in every essential manner is economic sabotage, going by the doctrine that taxes are the lifeblood of the State.”
“Schemes such as these should be distinguished from the usual attempt to evade taxes precisely because they constitute a systematic attempt to dismantle the credibility of the entire tax system, and could not be committed without networks of accomplices across the business sector and among tax authorities,” Salceda said.
