THE Department of Justice has cleared of tax evasion charges a money remittance firm at the center of the money laundering controversy involving $81 million in Bangladeshi money stolen by hackers.
In a resolution signed by Assistant State Prosecutor Karla Torres Cabel, the DoJ said it found no basis in the complaint filed by the Bureau of Internal Revenue against Philrem Service Corporation as well as its two officers -- president Salud Bautista and treasurer, Michael Bautista -- for their alleged failure to pay gross receipts tax from 2005 to 2014 as well as the percentage tax returns in violation of the country’s National Internal Revenue Code.
In its complaint, the BIR said Philrem’s line of business when it was registered with the BIR was for “other land transport operation not elsewhere classified” but it added that the firm amended its primary purpose of business with the Securities and Exchange Commission to become a money remittance firm of currency from abroad.
Philrem also registered with the Bangko Sentral ng Pilipinas to act as a remittance agent starting in 2005 but the BIR said the company still did not update its registration with the revenue agency.
“As a money remittance firm and classified by the Bangko Sentral ng Pilipinas as a non-banking financial institution, Philrem is subject and should be taxed for its gross receipts. The gross failure of Philrem to register, declare and pay the gross tax receipts showed a clear intent and purpose on its part to evade the payment of the correct amount of taxes,” the BIR complaint said.
The BIR then assessed Philrem’s liability in gross receipt taxes at P3.33 million in 2005, P6.61million in 2006, P 6.27 million in 2007, P5.46 million in 2008, P3.17 million in 2009, P2.59 million in 2010, P2.7 million in 2011, P1.85 million in 2012, P1.94 million in 2013 and P2.32 million in 2014.
But in its resolution, the DoJ. aside from faulting the BIR for its unreasonable haste in filing the case without giving the respondents enough time to answer and respond to the investigation it conducted on their alleged failure to pay taxes, also said that Philrem has consistently been paying a higher rate of tax in the form of 12 percent of the Value Added Tax instead of the five percent required of gross receipt tax since 2010.
“It appears the respondents were not given enough time to comply with the directive of complainant BIR to present its books for examination and verification. There is also no valid service of preliminary assessment notice, formal letter of demand and assessment notice to respondents since complainant BIR filed the complaint merely two days from the respondent’s receipt of letter of authority,” the resolution said.
Therefore the crucial element of willfulness to evade the payment of tax by the respondents cannot be imputed against them, the DoJ said.
As to Philrem’s change of business line, the DoJ said the company never concealed its move contrary to the BIR’s claim that it engaged in misrepresentation when it continued to operate as a money remittance firm even if it was registered as a land transport company with the BIR in 2005.
“Respondent Philrem filed the corresponding certificate of registration as a duly registered remittance agent with the Bangko Sentral ng Pilipinas and amended articles of incorporation to reflect its change of primary purpose to remittance of money from abroad to different parts of the Philippines,” the DoJ said adding that the company updated its tax records with the BIR when it filed its application for registration information update.