Cedric Lee faces P194-M tax evasion raps

MANILA, Philippines - Controversial businessman Cedric Lee is in trouble again after the Bureau of Internal Revenue (BIR) yesterday filed tax evasion raps against him.

 Lee, president of Izumo Contractors, was sued by the BIR for evading tax payments amounting to P194.47 million.

The BIR filed the complaint against Lee as well as Izumo’s chief operating officer John Ong and finance officer Judy Gutierrez Lee at the Department of Justice.

The case stemmed from information received by the BIR that Izumo, a construction firm located in the Ortigas business district, was not paying correct taxes.

An investigation conducted by the BIR showed that Izumo failed to provide accurate information in the company’s annual income tax returns from 2006 to 2009.

Izumo declared an income of P76.22 million during the three-year period but certifications secured by the BIR from the company’s clients showed it had earned more than P302.6 million, thereby underdeclaring sales by more than P226 million.

Among Izumo’s clients were the local governments of Tagudin, Ilocos Sur, Butuan, Davao del Sur, Pasay City and San Juan City.

Under Section 248 of the Tax Code, underdeclaration of taxable income by more than 30 percent constitutes fraud tantamount to tax evasion.

Lee, who is facing multiple charges for beating up comedian and TV host Vhong Navarro in January, has income tax deficiency of P194.47 million.

Izumo is a construction firm established in 1988.  Among its projects include the Davao del Sur Cultural Busines Center. Lee serves as chairman and president of the company.

Apart from Izumo, Lee also owns Colossal Mining Corp., Phil-Asia Dredging and Reclamation Corp. (PDRC) and Waste Management Inc. based on Securities and Exchange Commission records.

Waste Management has a contract with the province of Cebu to manage their sanitary landfill.

Lee is also the managing director and shareholder of Colossal Mining, the biggest iron sand concessionaire in the Philippines.

PDRC, on the other hand, is involved in the biggest dredging operation in Cagayan River.

PMA head slapped with tax case

Meanwhile, the spat between the BIR and medical professionals heats up anew with the government’s main tax collection agency suing the head of the Philippine Medical Association (PMA) for dodging taxes.

Outgoing PMA president Leo Olarte was slapped with a P2.93 million tax evasion case for failure to file income tax returns (ITRs) and VAT returns for taxable years 2006 to 2012 in violation of the National Internal Revenue Code.

A medical practitioner and a lawyer by profession, Olarte derives compensation from more than two employers. As such, he is not covered by the substituted filing system.

Based on the investigation conducted by the BIR, Olarte earned a total of P4.6 million during the seven-year period – P569,825 in 2006, P221,206 in 2007, P226,186 in 2008, P774,940 in 2009, P715,515 in 2010, P992,298 in 2011, and P1.19 million in 2012.

BIR records, however, showed that he did not pay any taxes during those years.

He was also found to have adopted the scheme of “end-dating” his records with the Integrated Tax System of the BIR to avoid detection of his non-filing of ITR and non-payment of income tax, thus preventing the computer system from generating so-called open cases against him.

Olarte belied the accusation of the BIR that he was delinquent in paying his taxes.

In an interview, Olarte said he never missed filing his annual income tax returns.

“I got a letter from the BIR last week asking me to submit some documents and I’m still preparing them. But I was never told that I would be charged with tax evasion,” he said.

Shame campaign

Earlier, the BIR placed advertisements in major newspapers apparently singling out doctors in its shame campaign to encourage more people to pay the correct taxes.

The advertisements drew outrage from the PMA.

Olarte described the BIR’s move as unfair because it portrays medical professionals as tax cheats.

The first ad showed a doctor riding piggyback on a teacher.

The doctor supposedly earned P1.07 million in income but remitted only P7,424 in taxes to the government while the teacher paid more than P221,000 in taxes on an annual income of P852,169.

BIR Commissioner Kim Henares insisted the ad merely stated a fact based on the tax returns filed by medical practitioners and teachers. It was not meant to single out doctors, she said. The ad also showed the huge disparity in income tax payments between doctors and teachers.

Henares urged the PMA to strictly police its ranks and make sure all its members are issuing receipts and complying with their tax obligations.

She said the BIR continues to receive complaints that several doctors are still engaged in unethical practices despite the agency’s intensified campaign against tax evasion. – With Sheila Crisostomo