GDS: Tomas’ complaint “erroneous, misplaced”

CEBU, Philippines - For lack of merit, the GDS Security and Detective Agency Inc. asked the Cebu City Prosecutor's Office to dismiss the criminal complaint the Cebu City government filed against them over alleged tax fraud.

In its joint counter-affidavit, GDS maintained that the complaint filed by the city against it has no legal and factual basis.

"There is therefore no untruthful statement made in the Application for renewal of business permit of GDS Security and Detective Agency, Inc for the year 2015.  Further, there is no intention on the part of the board to commit fraud or falsify what was declared in the application of renewal of business permit for the year 2015, since the declaration was made in good faith and in honest belief that the said declared amount is true and correct based in the method of computation introduced by the BIR (Bureau of Internal Revenue)," the affidavit reads.

The affidavit was filed last February 7.

Last month, Mayor Tomas Osmeña accused the security agency of violating the National Internal Revenue Code of the Philippines and Article 172 (falsification by private individual) of the Revised Penal Code.

Osmeña alleged that GDS falsified its application form for renewal of its business permit by declaring that the firm's gross sales or receipts amounted only to P14,241,096.27 for the year 2015.

GDS was only assessed a total of P106,808.22 as business tax for that year.

Osmeña said he noticed that there is also inconsistency between what GDS declared on its gross sales and that appeared on its Annual Income Tax Return and Statements of Income, in which the company declared P19, 379, 913 as its sales services for the year 2015 as a result of the alleged under-declaration of its gross sales.

Osmeña contended that it is impossible for GDS to declare such gross income when in fact it actually earned more from its services to different clients including the city government, which shelled out more than P32 million in 2015 for its contract with the company.

But GDS said there is no violation since the agency based its gross sales/receipts on the ruling of Commissioner of Internal Revenue in the Revenue Memorandum Circular No. 39-2007.

GDS said that the complaint is "erroneous and misplaced."

Based on the BIR memo, GDS said that the security agency has no control or dominion over the portion of the payment received from its client as it is earmarked as salaries of the security guards.

"The security agency does not own the funds such that it cannot use it for any other purpose like payment of rentals, utilities, taxes and other expenses," GDS said.

GDS said it relied on the memorandum of BIR which said that only the money that goes to the Security Agency excluding the amount intended for the salaries and wages of the security guards is taxable.

GDS said all security agencies are using the memorandum as basis in computing their gross sales/ receipts.

GDS said it has not been assessed or notified of any violations of BIR. (FREEMAN)