Filipino Tax Evaders – Top Tax Evasion Cases

All government projects, programs as well as its operations rely on taxes. Funding for these usually comes from the taxes being collected from individuals and corporations. Based on statistical data in ASEAN countries, the Philippines is deemed to have one of the highest income tax rates or even the highest in the region.  Even if that is the case, high tax rates does not automatically mean that the collection for taxes is relatively high. Reasons for minimizing tax collection like tax evasion usually happen not only here in the Philippines but even in other countries around the world. Tax evasion is an unlawful practice which has the effect of reducing the government revenue needed for the provision of infrastructure, public services and public utilities. This unlawful practice has been happening since the establishment of the taxation system. According to one study Tax evasion is caused by the lack of knowledge of people of the taxation system that is being implemented, ineffective collecting schemes of the government, and the non satisfaction of the people on how government is spending the taxes being paid by them.

Top individuals that have committed tax evasion in the Philippines

Macario Lim Gaw

He is a billionaire who owns the Mega Packing Corp., Macro Liquid Petroleum Gas Co. Inc. and MGE Taxi Transit Corp. He faced 5.5 billion unpaid taxes because he paid only 9.9 million and 418 million in 2007 and 2008 respectively for 10 lots of properties sold to a firm involved in a Philippine Game and Amusement Corporation (PAGCOR) project in 2007. He earned more than 4 billion and paid only the 6% capital gains after declaring the properties as capital assets while Henares, the BIR Commissioner argued that he should declared them as ordinary assets because it was sold after a period of time. He also used a multiple Tax Identification Numbers so there was an obvious attempt to evade taxes. This was the biggest tax case filed by the government.

Manny Pacquiao

Manny Pacquiao

The BIR filed a tax case against the boxer turned senator for his failure to pay P2.2 billion in taxes from his boxing matches in the US from 2008 to 2009. The amount has ballooned to over P3 billion due to surcharges and interest. The BIR said the tax liabilities rooted partly from Pacquiao’s failure to present proper documentation of his tax payments to the Internal Revenue Service (IRS) of the United States.

Carlo J. Caparas

Caparas is a movie director and a National Artist was charged with 540 million tax evasion case for unpaid taxes from 2006-2009. Within that period, the Philippines Charity Sweepstakes Office paid him a total of 850 million for directing several television productions. He did not file his income tax and value-added tax returns for 2006-2009.

Julio and Pricilia Cruz

They are the owners of the Club Manila East were filed with tax evasion case in September 2010 by the BIR following a non-declaration of 783 million of form of cash investments to two corporations, Manila East Holdings Corporation and J.S. Cruz Construction and Development Corporation, from 1992 to 2004. They claim that the amount they invested in two corporations were personal loans and the couple’s own savings. However, there were no evidences to prove their claims. The couple is now facing an 854 million tax evasion charge, which include surcharges and interests.

Claire dela Fuente

The BIR revived the 417 million tax evasion case against her. She is the treasurer of the Philippine Corinthian Liner Corporation that failed to pay quarterly income taxes from 1997 to 2004. Dela Fuente argued that the company did not pay taxes because it was non-operational during that period. However, records submitted to the Land Transportaion Office, SSS, Pag-IBIg and PhilHealth indicate that the company was operating during that period. Senior Assistant Chief State Prosecutor Gana Jr. approved the filing of charges against the singer in her capacity as vice president and treasurer but former DOJ Secretary Alberto Agra reversed the decision.

Gloria V. Kintanar

Gloria is an independent distributor of Forever Living Products Philippines Incorporated. She was found guilty of evading P15 million pesos in back taxes. She failed to file income tax returns for the years 2000 and 2001 despite earning commissions from Forever Living. Kintanar is the first person in the Philippine history to be imprisoned because of tax evasion.

In the Philippines and even in other countries, tax evasion is seemingly being one of those problems that cannot be solved for a very long time. You can battle tax evasion by improving the policies, amending the tax law and improvement of the tax collection system, but this is still not enough, Filipino people are naturally obstinate making it difficult to ask them to cooperate. The government must also implement the law and the collection of taxes seriously and punish evaders immediately. Another way of beating tax evaders is changing the culture of the Filipino people and educating them and answer their questions like why they are paying taxes, why this amount, where the money goes and the like, it can encourage them to pay. Filipino people deserve to know where their taxes are going. The government should be transparent on how they are spending those funds they have garnered. If that is done then the people will pay all of their taxes, especially if they know that it will not go to waste and will be used for the betterment of the public. In the case of tax evasion, the saying “prevention is better than cure” must be applied. And, lastly the government must implement the law and the collection of taxes seriously and punish evaders immediately.