BIR slaps Rappler with P133.84-M tax evasion raps

The Bureau of Internal Revenue (BIR) slapped Rappler Holdings Corp. with a tax evasion complaint, citing deficiencies amounting to P133.84 million.

In a statement, the bureau said it filed a criminal complaint before the Department of Justice against Rappler Holdings, its president Maria Ressa, and Treasurer James Bitanga for “willful attempt to evade or defeat tax and for deliberate failure to supply correct and accurate information in its annual income tax return and value-added tax returns for taxable year 2015” in violation of the National Internal Revenue Code of 1997.

The BIR noted that Rappler Holdings purchased common shares from Rappler Inc., amounting to P19,245,975.00, and subsequently issued and sold Philippine Depositary Receipts (PDRs) on various dates to two foreign judicial entities for a total consideration of P181,658,758.67.

“Rappler Holdings used the same common shares it purchased from Rappler Inc. as the underlying asset/share of the PDRs,” the taxman said.

“The purchase of shares and the subsequent issuance of the PDRs for profit that transmitted economic rights (e.g. financial returns or cash distributions) derived from the equity of Rappler Inc. to the PDR holders is proof that Rappler Holdings is engaged in purchase of securities and resale thereof,” it said.

For dealing in securities, Rappler Holdings is subject to income tax and value-added tax, the BIR claimed.

However, the company’s annual income tax return and VAT returns for 2015 showed that no income tax and VAT have been paid by Rappler Holdings for the income it gained in the PDR transactions.

“As a consequence of its acts and omissions, the aggregate tax liability of Rappler Holdings amounted to P133,841,305.75,” it said.

The tax deficiency brakes down as into P91,320,481.08 in income tax and P42,520,824.67 in VAT.

Certified Public Accountant Noel Balandiang of R.G. Manabat & Co. was likewise charged for violating the Tax Code for signing and certifying the financial statements of Rappler Holdings despite the “clear omission and misstatement of his client's actual taxable income,” it said.

In a separate report, Rappler said the complaint was filed three days after BIR agents to its office in Pasig City to serve a letter “scant with details.”

Rappler said it received on March 5 letters of authority signed by BIR Commissioner Caesar Dulay authorizing Revenue Officer Ed Al Renzi Salles, Intelligence Officer Rosanna Berba, and Group Supervisor Editha Quilantang to examine Rappler’s “book of accounts and other accounting records for ALL INTERNAL REVENUE TAXES for the period from January 01, 2014 to December  31, 2015.” 

The BIR then required Rappler to present a total of 47 documents and records for examination, the company said.

“No documents have been submitted as of today, which means no examination has been made whatsoever by the BIR. Without this examination, there is clearly no basis for a tax evasion complaint,” it said.

Citing its lawyers, Rappler said  respondents under normal procedure are usually given 30 days to reply.

“This is clear intimidation and harassment. The government is wasting its energy and resources in an attempt to silence reporting that does not please the administration,” Ressa was quoted saying in the report.

She also labeled the complaint as “ludicrous” and urged the taxman to “check its own records.”

Rappler said it has been paying taxes “accurately, promptly, and diligently,” with no less than the BIR commending it as one of the top 500 corporate taxpayers of Revenue Region 7.

On Janury 15, the Securities and Exchange Commission (SEC) revoked the certificates of incorporation of Rappler Inc. and Rappler Holdings Corp. for supposedly violating the foreign ownership restrictions on mass media companies. 

According to the SEC, Rappler violated the Constitution and laws when it allowed Omidyar Network, one of the Philippine Depositary Receipt (PDR) holders of Rappler, to exercise control over its corporate affairs as provided for in their internal agreement, in exchange for a fund infusion of $1 million.

The BIR said the case against Rappler Holdings is the 133rd filed under the Run After Tax Evaders program. —Ted Cordero/VDS, GMA News