2 multi-level marketing firms face tax evasion charges

Two multilevel marketing companies, Glo-Herbal and Forever Living Products, have been charged of tax evasion for arrears amounting to over P150 million.

The Department of Finance (DOF) reported yesterday that Glo-Herbal owner Gloria Tuyay, together with Benjamin and Gloria Kintanar of Forever Living products are facing tax evasion charges for under-declaration of taxable income for the year 2001 and 2002.

According to Finance Undersecretary Emmanuel Bonoan, Tuyay failed to present her book of accounts and other accounting records after repeated notices from the Bureau of Internal Revenue (BIR).

Bonoan said Tuyay was assessed tax deficiencies of more than P110.3 million for 2001 and P4.5 million for 2002. The Kintanars, he said, also withheld their accounting records and were assessed a total of P46 million in tax deficiencies.

Bonoan said Tuyay claimed to earl only P24.7 million in 2001 and P5.8 million in 2002. When the BIR reconstructed her income, however, Bonoan said the actual earning amounted to P132.8 million in 2001 and P6 million in 2002.

BIR commissioner Guillermo Parayno said Tuyay under-declared her income, in violation of the National Internal Revenue Code.

"The expenditure method of reconstructing income is based on the theory that if a taxpayer’s expenditures during a given year exceeds the reported income, and the source of expenditures is unexplained, such expenditures represent unreported income," Parayno explained. He said Tuyay spent about P157.5 million in 2001 and P12.5 million in 2002.

On the other hand, Parayno said that BIR records show that the Kintanar couple did not file any tax returns for the taxable years 1999 to 2001 despite Forever Living records showing that the Kintanars earned P78.50 million from 1999 to 2001.

"They were assessed a combined tax deficiency of P46 million based on third party information," Parayno said. "They also face charges of tax evasion for their failure to file tax returns and pay taxes."

"It should be clear by now that the Run After Tax Evaders (RATE) program is not a ningas cogon program," Bonoan said, adding that to date, the BIR had filed complaints against over 20 companies and individuals on a weekly basis.

"We do not intend to rest or slow down until all those in our list have been prosecuted," he said.

The BIR earlier said that it had over 800 entities and individuals in its list which officials said was being constantly updated as the bureau conducted its regular audit and verification.

The BIR has been encouraging delinquent taxpayers to volunteer payments "if they think they paid the wrong amount" and avoid the BIR audit which would lead to filing of tax evasion charges – a move that also uses up government funds for litigation expense.