BIR padlocks Mandaluyong restaurant for tax evasion

MANILA, Philippines – The Bureau of Internal Revenue (BIR) has ordered the closure of a Chinese restaurant in Mandaluyong City for failing to pay proper taxes.

The agency, the government’s main revenue earner, ordered the temporary closure of Han Nan Food Corp., more popularly known as Han Pao Tea House.

The move is part of the BIR’s Oplan Kandado Program which seeks the closure of businesses of non-compliant taxpayers.

BIR Commissioner Sixto Esquivias IV said the agency ordered the closure because Han Pao failed to comply with the 48-hour notice and five-day value added tax (VAT) notice issued and served by the BIR. The notices gave Han Pao the opportunity to explain and settle its tax violations.

The BIR alleged that the restaurant had under-declarations of sales by 205.44 percent in taxable year 2007 and 176.26 percent in 2008 amounting to a total of roughly P27 million.

Han Pao is the 18th business establishment closed by the BIR nationwide.

Among those earlier padlocked under the program by the BIR are: La Suerte Grocery & Bakery in Magalang, Pampanga for failure to declare more than P50 million in income in 2008; Charmy Food Phils. Inc., a manufacturer of soybean products in Pasig City, for not declaring P40 million in sales for 2005 to 2008; and Arra’s Fine Dining, a Korean restaurant in Makati City for understatement of its taxable sales in 2008 by more than P20 million.

The BIR expects to raise at least P10 billion from the program through an expected increase in tax compliance.

Under the program, grounds for closure include failure to file a VAT return, understating taxable sales or receipts by 30 percent more of the correct amount in the case of a VAT-registered taxpayer or failure to register the business.

Furthermore, the memorandum order stipulates that the closure of a business establishment shall last for at least five days and shall be in force until the violation is rectified by the taxpayer.

The closure order shall only be lifted by the BIR when there has been subsequent filing or amendment of returns with the payment of the tax as well as penalties.

The BIR said the reopening of the establishment shall not release the taxpayer from the compliance requirements and from penalties prescribed under the Tax Code.