Oro school charged with tax evasion-A A +A
Thursday, August 22, 2013
MANILA -- Tax evasion raps worth P14.5 million were filed with the Department of Justice on Thursday against the officials of Corpus Christi School in Cagayan de Oro City and an accountant for failing to pay the correct dues to the government in 2010.
Charged by the Bureau of Internal Revenue (BIR) were Alfonso del Fierro Jr. (president), Mark Alfonso del Fierro (chief financial officer) and Elpedio Cuay (independent accountant), who certified the 2010 financial statements of CCSI despite "essential misstatement" of facts related to the school’s landholdings and taxable income.
Records show that CCSI, which offers elementary and high school education, bought a 10,000 square-meter property in the city for P23 million on February 18, 2010.
CCSI, however, only declared a net income of P2.175 million for 2010 and a combined net income of some P15 million for the previous years.
"None of the P33.76 million expenses stated in the 2010 ITR (income tax return) of CCSI referred to the said land acquisition. Neither was there an increase in the value of the property and equipment of CCSI for the same year," the BIR said.
To arrive at CCSI's liability, the BIR used the expenditure method, which states that if one’s expenditures exceeded the reported income for a given year and the source of the funds to make the expenditures was unexplained, such expenditures represented unreported income.
As a result, the school allegedly under declared its income by 64 percent after comparing the undeclared acquisition of P23 million and reported income (tuition) of P35.94 million.
The BIR said CCSI is not exempted from income tax because it distributed dividends in 2007 and 2008.
Thus, it should be considered an ordinary domestic corporation subject to the 30 percent tax rate and not covered by preferential tax rate of 10 percent imposed on private educational institutions.
"Having declared revenues from tuition, documents will however show that CCSI realized additional income, which it did not declare in its 2010 ITR and financial statements, amounting to P23 million. This amount is more than 50 percent of the total gross income derived by CCSI from all sources, making CCSI liable to pay income tax at the rate of 30 percent," the BIR said. (Virgil Lopez/Sunnex)