Tax Crimes
(MCJ 405- Economic Crimes)
Presented by: Edwin P. Deatras
Mike Del Mundo
Learning Objectives
Define and explain what is Tax Evasion
Discuss Tax Revenue
Discuss examples of Tax Evasion
Differentiate between Tax evasion and Tax avoidance
Common Types of Tax Evasion
Define Tax Amnesty
High- Profile Tax Evasion Cases
Republic Act No. 7642
Tax Evasion
Tax evasion is a criminal act where a person or an entity deliberately fail to
pay their tax liability.
Tax evasion is an illegal activity in which a person or entity deliberately avoids
paying a true tax liability. Those caught evading taxes are generally subject to
criminal charges and substantial penalties.
Key Take away
Tax evasion can be either the illegal non-payment or underpayment of actual
tax liabilities due.
Tax evasion can be determined by the IRS regardless of whether or not tax
forms were filed with the agency.
To determine tax evasion, the agency must be able to show that the
avoidance of taxes was willful on the part of the taxpayer.
Understanding Tax evasion
Tax evasion occurs when a person or business illegally avoids paying their
tax liability, which is a criminal charge that’s subject to penalties and fines.
Tax Revenues
What is revenue?
Income of a government from
taxation, excise duties,
customs, or other sources,
appropriated to the payment of
the public expenses.
“ public revenues are public
funds”
Government revenues refer to all receipts the government gets,
including taxes, custom duties, revenue from state-owned enterprises, capital
revenues and foreign aid. Government Revenues in the Philippines increased
from Php 246,762 million to Php 259,702 million.
Government revenues in Philippines averaged of Php 41,319.99 million
yearly from 1959 to 2018 or 2.437 trillion.
Source: Trading Economics
Tax Revenue
Cover compulsory contributions to finance government activities. Taxes are
computed at the rate established by law to a defined base such as income,
estate, imports, etc.
TAX REVENUES
Major Tax Revenues of the Philippines
Property Tax
Income Tax
Amnesty Tax
Estate, gift and inheritance tax
Residence Tax
Immigration Tax
Excise Tax
License and Business Tax
Wharfage Tax
Franchise Tax
Import Duties
Documentary Stamps
Charges on Forest Products
Immigration Tax
Includes all taxes and charges imposed upon immigrants under the
immigration law.
The Philippine Travel Tax is PHP1,620.00 (approximately $35.00) All
passengers departing from the NAIA (Ninoy Aquino International Airport) are
expected to pay the Airport Terminal Fee of PHP750.00 (approximately
$17.00). No one is exempt from paying the Airport Terminal Fee
Tax Revenue
Excise Tax
are those covering imports and exports such as specific trade and
compensating taxes on alcohol, sugar, etc..
Franchise Tax
imposed for any special right or privilege granted by a government.
Wharf-age Fees
Wharf-age charges relative to imports and exports.
A charge assessed by a shipping terminal or port when goods are moved
through the location. accommodations provided at a wharf for the loading,
unloading, or storage of goods.
Tax Avoidance
The arrangement of one's financial affairs to minimize tax liability within
the law. Under tax avoidance, taxpayers use legal means to pay lower taxes.
refers to the use of legal methods to minimize the amount of income tax owed
by an individual or a business. This is generally accomplished by claiming as
many deductions and credits as are allowable. It may also be achieved by
prioritizing investments that have tax advantages, such as buying tax-free
municipal bonds.
(Ex. Making charitable contributions)
Key Takeaways
Tax avoidance is any legal method used by a taxpayer to minimize the
amount of income tax owed.
Individual taxpayers and corporations can use forms of tax avoidance
to lower their tax bills.
Tax credits, deductions, income exclusion, and loopholes are forms of tax
avoidance.
These are legal tax breaks offered to encourage certain behaviors,
such as saving for retirement or buying a home.
Tax avoidance is unlike tax evasion, which relies on illegal methods
such as underreporting income.
Understanding Tax Avoidance
Taxpayers can take advantage of tax avoidance through various
credits, deductions, exclusions, and loopholes, such as:
Claiming the child tax credit
Investing in a retirement account and maxing out your annual contributions
Taking the mortgage tax deduction
Putting money into a health savings account (HSA)
Difference between Tax Evasion and Tax Avoidance
Tax Evasion
NOT PAYING TAXES
Using legitimate tax deductions
Setting up tax deferral plans
Taking tax credits
Tax avoidance
MINIMIZING OF TAXES
Not reporting income
Reporting more expense than you can
Not paying taxes owed
Understanding your tax amount owed.
Common Types of Tax Evasion
Tax Fraud
In this type of tax evasion, tax prepares may act fraudulently and
falsely report financial information.
Abusive tax
Schemes involve the creation of domestic and foreign trusts to capitalize on
financial secrecy laws of certain overseas jurisdictions. This way, tax evaders
hide their financial activities to avoid taxes illegally.
Employment Tax Fraud
Employers must withhold Social Security, Federal, Medicare, and
Unemployment taxes from their employees’ salaries. Failure to withhold these
amounts can be regarded as tax evasion.
Bankruptcy Fraud\
Under bankruptcy laws, financially distressed organizations can reduce
and manage debt to survive.
The Internal Revenue Service IRS cannot demand payment of tax liabilities,
although it can demand you file returns and perform tax audits. Since this is a
powerful legal tool, certain businesses abuse bankruptcy filings to avoid
paying taxes despite being capable of discharging their tax liability.
Corporate Fraud
Certain corporate professionals commit fraudulent acts to avoid tax payments.
For instance, they may underreport income, claim excessive credits, overstate
their deductions or employ complicated financial arrangement to obscure their
transactions.
Smuggling
is importation or exportation of foreign products by illegal means.
is resorted to for total evasion of customs duties, as well as for the importation
of contraband.
A smuggler does not have to pay any customs duty since smuggled products
are not routed through customs-tax compliant customs ports, and are
therefore not subjected to declaration and, by extension, to the payment of
duties and taxes
High- Profile
Tax Evasion Cases
Dunkin Donuts' Philippine franchisée faces tax evasion case
Golden Donuts Inc (GDI) is partly owned by a member of the Prieto family,
GDI and its officers should be prosecuted for evading more than 1 billion
pesos ($19.26 million) in income and value added taxes in 2007, the Bureau
of Internal Revenue said in the complaint it filed with the Department of
Justice.
BIR files P30 billion tax suit against
Mighty Corporation
Manila had accused Mighty Corp of using
counterfeit tax stamps to avoid paying 37.88
billion pesos in taxes, and threatened it with
criminal charges.
BIR sues Mark Taguba, Kenneth Dong for
tax evasion
The Bureau of Internal Revenue (BIR) filed tax evasion charges
against Customs fixer Mark Taguba and businessman Kenneth Dong before
the Department of Justice (DOJ) .
The bureau sued Dong for not paying P11,406,940.60 of taxes and Taguba
for P850,574,228.77.
BIR sues Richard Gutierrez for P38.57M tax evasion
THE Bureau of Internal Revenue (BIR) has slapped P38.57 million tax
evasion cases against actor Richard Gutierrez and his production company, R
Gutz Production Corp. (R Gutz), with the Department of Justice (DOJ).
ABS-CBN agrees to pay P152.44-M to BIR to settle tax case
Broadcast network ABS-CBN Corporation has agreed to pay P152.44
million as part of a compromise agreement approved by the Court of Tax
Appeals in its tax deficiency case.
Small town lottery firm slapped with P960-M tax case
The Bureau of Internal Revenue has filed a tax evasion case against a
Batangas-based small town lottery firm, the first tax case under President
Rodrigo Duterte.
Batangas Enhanced Technology Systems Inc. was accused of evading
P959.96 million in taxes including interest. Its past presidents Benedicto
Bulatao and Rolando Montecillo and treasurer Jessie Cantos were included in
the charge.
An investigation showed that the company "substantially under declared its
correct taxable income" over nine years from 2007 to 2015.
P2.2-billion tax evasion
The biggest and most controversial is
the P2.2-billion tax evasion case filed
against Sen. Manny Pacquiao.
If you received a Letter of Authority (LOA) under the RATE (Run After Tax
Evaders) program, it means the BIR found some evidence of fraudulent
activities which you may have intentionally or unintentionally done.
Example:
a. Failure to file tax return/s
b. Failure to pay taxes
c. Deliberate under declaration of income or over declaration of expenses
d. Hiding or transferring of assets or income
e. Keeping more than one set of books of accounts
Tax amnesty
is a limited-time opportunity for a specified group of taxpayers to pay a
defined amount, in exchange for forgiveness of a tax liability (including
interest and penalties) relating to a previous tax period or periods and without
fear of criminal prosecution.
Republic Act No. 7642
REPUBLIC ACT NO. 7642
AN ACT INCREASING THE PENALTIES FOR TAX EVASION,
AMENDING FOR THIS PURPOSE THE PERTINENT SECTIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED.
Section 1. A new paragraph (c) is hereby added to Section 252 of the
National Internal Revenue Code, as amended, to read as follows:
chanroblesvirtualaw library
"(c) The fines to be imposed for any violation of the provisions of this
Code shall not be lower than the fines imposed herein or twice the
amount of taxes, interests, and surcharges due from the taxpayer,
whichever is higher."
Sec. 2. Section 253 of the National Internal Revenue Code, as
amended, is hereby further amended to read as follows: cha nroblesvirtualaw
library
"Sec. 253. Attempt to evade or defeat tax. — Any person who willfully
attempts in any manner to evade or defeat any tax imposed under
this Code or the payment thereof shall, in addition to other penalties
provided by law, upon conviction thereof, be fined not less than
Thirty thousand pesos but not more than One hundred thousand
pesos and suffer imprisonment of not less than two years but not
more than four years."chan robles virtual
