MANILA -- Officials of a construction company faced tax evasion case after supplying inaccurate information in their income tax returns (ITR) and not paying other dues amounting to more than P68 million in 2006.
Sued under the Bureau of Internal Revenue's (BIR) Run After Tax Evaders (Rate) program were DSM Construction and Development Corporation president Dennis Masigan; vice president Eldrin Masigan; and corporate secretary Natalie Masigan. They are said to be residents of the posh Corinthian Gardens in Quezon City.
DSM Construction and Development is a domestic corporation located in New Manila, registered with the Securities and Exchange Commission, and engaged in general construction business.
BIR Commissioner Kim Henares said DSM has an income tax and value added tax (VAT) deficiency for 2006 amounting to P52,473,951 and P16,064,142 respectively, inclusive of increments, as civil liability.
The charges stemmed from the failure of DSM to report to the BIR the P80-million compromise settlement it received in full from Mega World Globus Asia Inc. in that same year.
The contract was for the architectural, interior, and finishing works of a condominium project called "Salcedo Park Twin Towers," a 47-storey, two-building project located at HV Dela Costa St., Salcedo Village, Makati City.
"At that time, the compromise settlement was considered as the 'construction industry's largest arbitration award' for unpaid billings claimed by DSM against Mega World on construction contracts with the latter corporation," said Henares.
Investigations showed that despite receipt of the settlement payment from Mega World, DSM deliberately failed to declare such payment as part of its gross income/receipts or sales, and reflected only a status of "No Operation" hence, no income were paid for that taxable year.
But the BIR said that since the amount received by DSM represented payment under outstanding construction contracts with Mega World, it is considered a sale of service subject to value added tax.
"The deliberate and willful failure of DSM to supply correct and accurate information in its 2006 ITR and pay the correct income tax as well as willful failure to file VAT return are patent violations of the Tax Code," Henares said.
The tax evasion complaint against DSM officials is the second case the BIR filed under its Rate program under President Benigno Aquino III's term.
The first tax evasion case was filed against a pawnshop owner, William Villarica, proprietor of W. Villarica Pawnshop chain, who has not been paying his taxes from 2002 to 2009 last July 15.
Earlier, the President said a conviction is as important as an arrest and would prove that his administration is serious in the campaign against smugglers and tax evaders.
Aquino wanted that cases will be filed against violators at least once a week. (JCV/Sunnex)