BIR to padlock 40 firms

MANILA, Philippines - The Bureau of Internal Revenue (BIR) is targeting to padlock at least 40 business establishments by June under its Oplan Kandado Program, Deputy Commissioner Nelson Aspe said.

Under the program, business operations of non-compliant taxpayers will be suspended and their establishments will be temporarily closed if they will be found to have violated certain tax laws.

“To date, we have had 15 closures nationwide,” Aspe told reporters. He said that since the launch of the program last January, the BIR has recorded an increase in collection from business taxes such as value added tax (VAT) and percentage tax.

In order to sustain the program, Aspe said that BIR Commissioner Sixto Esquivias IV has already required one revenue district officer (RDO) to close one or two establishments every quarter.

“So by June, we can have 40 closures,” Aspe said.

Among those padlocked under the program by the BIR are: 1) La Suerte Grocery & Bakery in Magalang, Pampanga for failure to declare more than P50 million in income in 2008; 2) Charmy Food Phils. Inc., a manufacturer of soybean products in Pasig City, for not declaring P40 million in sales for 2005 to 2008; and 3) Arra’s Fine Dining, a Korean Restaurant in Makati City for understatement of its taxable sales in 2008 by more than P20 million.

If the violation persist and the evidence warrants, appropriate charges may be filed under the Bureau’s Run After Tax Evaders (RATE) Program, the BIR said.

The BIR expects to raise at least P10 billion from the program through an expected increase in tax compliance.

Under the program, grounds for closure include failure to file a VAT return, understating taxable sales or receipts by 30 percent more of the correct amount in the case of a VAT-registered taxpayer or failure to register the business.

Furthermore, the memorandum order stipulates that the closure of a business establishment shall last for at least five days and shall be in force until the violation is rectified by the taxpayer.

The closure order shall only be lifted by the BIR when there has been subsequent filing or amendment of returns with the payment of the tax as well as penalties.

Aspe stressed that the reopening of the establishment shall not release the taxpayer from the compliance requirements and from penalties prescribed under the Tax Code.