Bill imposing stiffer penalties for tax fraud clears House panel hurdle
MANILA, Philippines — The House ways and means committee approved on Tuesday a measure imposing graver penalties on tax fraud, which includes selling counterfeit receipts to reduce income tax and VAT liabilities under the veil of fictitious transactions.
Seen to strengthen the government's existing tax evasion laws, House Bill No. 7653 aims to make the act of “coordinated” tax fraud a separate crime with graver penalties under the National Internal Revenue Code, with prison sentences ranging from 17 to 20 years.
“When persons or corporations deliberately choose to employ illegal means and misrepresent expenses and records in order to avoid paying taxes, the government loses billions of revenues that could have funded much-needed public services for Filipinos,” Rep. Joey Salceda, ways and means committee chair, said in his sponsorship speech for the bill.
Acts that allow a person to avoid paying taxes, such as padding of deductions and inputting tax credits through the “systematic and fraudulent use of fake receipts and other records” cost at least P100 billion in lost government revenues, Salceda added.
“Such nefarious activities must be defined and criminalized since it constitutes economic sabotage, following the doctrine that taxes are the lifeblood of the state,” he said.
Tax racketeering is defined in the measure as “attempts to engage in any coordinated scheme or operation to repeatedly or consistently evade or defeat any tax imposed under this code through the fraudulent use of receipts.”
The bill also punishes accomplices in government with perpetual disqualification from public office, in addition to 10 to 17 years in prison.
The tax code currently penalizes tax fraud through fake receipts with a two-year prison term.
The BIR, which provided feedback during committee hearings on the measure, launched its campaign against the proliferation of fake receipts when it created the Run After Fake Transactions (RAFT) task force in April.
This was after the bureau in 2022 got a hold of an initial list of buyers of fake sales documents during a raid, which led to the filing of criminal charges with the justice department against the people allegedly behind the sale, including one accountant.
During the Tuesday hearing, BIR Commissioner Romeo Lumagui bared that the bureau has filed complaints against at least four corporations in an "initial filing of cases” with the Department of Justice.
Lumagui added that they are also currently preparing to file complaints against the individuals who purchased the fraudulent receipts.
He said the bureau is also intent on collecting the taxes the buyers did not pay in connection to their foiled attempt to pad their tax deductions.
“The primary objective of RAFT is to put an end to the purchase of ghost receipts for tax evasion purposes. What started out as a small-time operation several years ago, perhaps as early as 2009, has evolved into a widescale economic sabotage,” he added.
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