BIR files 11 tax evasion cases vs couple in tax credit scam

MANILA, Philippines – The Bureau of Internal Revenue (BIR) has filed with the Department of Justice (DOJ) 11 tax evasion cases, including 10 cases against businessman Faustino Chingkoe and his wife Gloria.

BIR Deputy Commissioner Gregorio Cabantac said the cases stemmed from the fraudulent acquisition and sale of fake tax credit certificates (TCCs).

He said the move is part of the BIR’s plan to revive the filing of tax evasion cases against big-time tax evaders.

“This is part of a series of tax evasion cases we intend to file against big-time tax evaders, to help raise revenue for the country, even as we hold accountable those who skirt their obligation to pay correct taxes,” Cabantac said.

In their sworn affidavit before the Office of the State Prosecutor, members of the BIR Task Force alleged that three companies owned by the Chingkoes illegally transferred tax credit certificates to Pilipinas Shell Petroleum Corp. and Petron Corp.

Documents obtained by the Task Force showed that the tax certificates were already cancelled by the One-Stop-Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance (DOF).

The combined amount involved in the 11 tax cases or the possible revenue losses incurred by the government from the illegal acts was  P115 million.

Chingkoe and his wife are facing a string of tax evasion cases for allegedly defrauding the government of P2.5 billion through fraudulent use of TCCs. The amount is half of the P5.3 billion worth of TCCs being questioned by the government.

A TCC serves as a company’s claim for tax credits, which are given to firms that import raw materials for processing. Holders may use TCCs in paying taxes or sell them at a discount.

Fraud is committed when companies acquire the TCCs illegally or when companies not entitled to TCCs use them.

“Any income, even that made illegally such as by the sale of fraudulently secured TCCs, are subject to income tax. Because Chingkoe’s companies did not pay the appropriate tax on its income derived from the sale of TCCs to Shell and Petron, then these officials are liable for tax evasion,” Cabantac said.

The Chingkoe group of companies is believed to be the single biggest company involved in the tax scam. Petron Corp. and Pilipinas Shell Petroleum Corp. are only two of several companies that allegedly used the tax credits of the Chingkoe group.

Ernesto Hiansen, executive director of the finance department’s One-Stop-Shop-Center, resigned from office early this week, after holding the difficult position for more than 10 years.

Hiansen declined to comment on his resignation, saying “he would provide more details at the proper time.”

Officials at the DOF confirmed Hiansen’s resignation.

Sources said he resigned for personal reasons, but he would continue to serve as government’s witness in the multi-billion-peso tax-credit scam.

Hiansen, who joined the DOF in 1998, is the head of the center, established as the government’s response to mounting complaints against the inefficient tax credit and duty drawback system.

Malacañang has yet to announce Hiansen’s replacement.

Under Hiansen’s watch, the center handled many cases but the most controversial is the multi-billion-peso tax credit scam.

The Chingkoe group of companies was at the center of the scam in the 1990s, which allegedly defrauded the government of more than P2.4 billion through the illegal use of tax credits.

The task force found that a total of 593 tax credit certificates involving P2.4 billion had been fraudulently issued by the Chingkoe group of companies.

The Chingkoes are currently free on bail and have been able to travel in and out of the country, despite the cases filed against them.