THE Bureau of Internal Revenue (BIR)-Davao padlocked three branches of a popular Chinese restaurant on Tuesday afternoon, October 3, for tax delinquency.
Rodrigo Lizada Rivamonte, Revenue District Officer, in a press conference on Tuesday said that they found basis to close the Ahfat Seafood Restaurants 1, 2, and 3 after its owner has incurred P31 million total value added tax (VAT) liability for three years 2015 to 2017.
“We conduct Oplan Kandado if there is 30 percent under-declaration. There are three other ways to close the establishments: first, the lack of registration; second, is the non-issuance of receipts and invoices, and the third one, is misdeclaration. We have been here in the past ten days and we have conducted covert surveillance wherein we have tried to monitor their daily sales and apparently it failed to comply with the 30 percent under-declaration,” he said.
He said that for 2017, there was a 64-percent under declaration, 67 percent under-declaration for 2016, and 64 percent under-declaration for the year 2015.
The 1997 Tax Code of the Philippines provides that under-declaration of sales, receipts or income in an amount exceeding 30 percent of that declared per return, and overstatement of the deductions claimed by an amount exceeding 30 percent is already construed as substantial and is thus a prima facie case of a false or fraudulent return.
“Roughly there is a total of P17.5 million under-declared basic taxes, and P31-million under-declared taxes for the three-year period,” he said.
He said that owners of the establishment failed to declare P63 million in the year 2015, P74 million in 2016, and P17 million in the first quarter of 2017.
He said that P31 million tax deficiency is from around P13 million for the year 2015, P14.2 million for the year 2016 and P 3.2 million for the first quarter of 2017.
Rivamonte said that for the restaurant to be re-opened the owners can pay the total assessed value. Or it can pay 110 percent of basic tax due, or ten percent of the total tax due, whichever is higher.
Rivamonte said that the management owes P17.5 million basic tax due and 110 percent of this is P19.6 million.
But BIR Regional Director Nuzar Balatero said that they will allow the management of the restaurant to pay P2.1 million in basic value added tax deficit for 2017 within five days so they can re-open, temporarily.
Balatero said that there is still an ongoing investigation for the year 2015, and 2016 taxes, and the owner is given a chance to provide the documents needed to defend themselves.
“A letter of authority was given to BIR to investigate for 2015 and 2016, which is why even if we have an extrapolated amount for liability we did not wait for them to pay (31 million) since it is under the letter of authority to determine the correct tax liability. Under the letter of authority the tax payer is given the chance to produce documents to support their expenses," he said.
He said that the BIR gave prior warning to the establishment owners before the closure.
He said that it took three years for them to do the inventory since they only conducted the ten-day surveillance after benchmarking: comparing taxpayers same line of business, according to their declaration of taxes.
“Ubos man kaayo so ang compliance and ang ginareport sa establishment mao nay recommendation to conduct ten-day surveillance (We noted low compliance so it was reported and the ten-day surveillance was recommended),” he said.
He said that the closure is an administrative move from the BIR to collect more taxes, but filing of criminal charges may also become the agency’s option in case the unpaid taxes reach a higher amount.
“Oplan Kandado will serve as a warning, they need to change their declaration so that they will be included in the inventory,” he said.
For Nilo Jesucristo, a worker in the Ahfat 2 for the past 18 years, said the closure of establishment will be a big loss for him and his family.
“Medyo natingala jud kay unsa na man panginabuhi namo, siyempre mawad-an jud mi ug panginabuhi, naa gud koy duha ka anak (I'm confused now. What will happen to our livelihood. We will lose our source of income, especially that I have two children),” he said.