MANILA, Philippines — The Bureau of Internal Revenue on Wednesday informed senators that it is looking into the taxes paid by pandemic suppliers who bagged contracts worth a total of P42 billion with the Department of Budget and Management.
"Investigation of identified 45 suppliers is being undertaken by concerned revenue district offices per memos of the commissioners dated September and November," BIR said in a written response to senators who began plenary debates on the 2022 budget this day.
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The P42-billion fund in question was transferred by the Department of Health to the DBM's procurement service in 2020 and led to the awarding of contracts to Pharmally Pharmaceutical Corp and other firms. A Senate panel has been holding hearings on some of those contracts.
Pharmally clinched a lion's share of these deals last year, edging out more established and better capitalized suppliers to bag deals worth nearly P10 billion as of September 2021.
In its 2020 Income Tax Return, the firm claimed a tax credit of P96.09 million and listed an overpayment of P589,163, according to documents submitted by the BIR to the Senate blue ribbon committee.
Meanwhile, another top supplier Xuzhou Construction Machinery Group, admitted to senators last month that it has not paid income taxes in the country despite bagging contracts worth P2.23 billion with the PS-DBM.
According to BIR, withholding taxes remitted by the PS-DBM for 2021 so far is at P736.99 million while P1.07 billion was withheld in 2020.
Drilon: Why leave the probe to regional offices?
Senate Minority Leader Franklin Drilon said he was "surprised" that the investigation was being conducted by BIR's regional offices.
"Can we have a special tax audit of these companies since these are very substantial amounts? You know that when you give this to regional offices nothing will happen," he said partially in Filipino. "Can't this be done by the head office [with] a special team?"
It was Drilon who followed up on the issue as the Senate, in plenary, tackled next year's budget, noting that this was the first opportunity in some time to address questions to public officials who have been barred by President Rodrigo Duterte from attending the chamber's hearings on Pharmally.
Sen. Sonny Angara, who read out BIR's response as the 2022 budget's sponsor, said that "it would be very complicated" to conduct a centralized investigation because the firms in question are spread out across districts.
"I have been long enough in the bureaucracy to know that the situation described...is not impossible to remedy in order to make the examination more efficient," Drilon replied.
"I cannot understand and I cannot accept the proposition that you spread out the examination to all the regional offices when, in fact...a special tax fraud investigation can be done."
Angara said these reports will be consolidated by the commissioner and submitted to senators once complete. He added that the soonest possible timeline for submission is by the end of the year. — Bella Perez-Rubio