By Benjamin Pulta
MANILA – The Bureau of Internal Revenue (BIR) on Thursday filed a criminal complaint before the Department of Justice (DOJ) against a local firm and its corporate officers for the misuse of value-added tax (VAT) exemption privileges on palm olein oil importations, resulting in more than PHP262 million in outstanding tax liabilities.
The BIR officials filed a complaint against Lobelle Commodities Corporation for transactions involving its importation of palm olein oil during the 3rd and 4th quarters of the taxable year 2020.
The company failed to pay the VAT due on the importations despite not meeting the legal conditions for exemption, in violation of Section 254, in relation to Sections 253(d) and 256 of the National Internal Revenue Code of 1997, as amended.
The law exempts palm olein oil imports from VAT only when used in the manufacture of finished feeds for animal consumption and when certified by the Food and Drug Administration (FDA) as unfit for human consumption or as not suitable for the production of food for human consumption.
The BIR investigation found that Lobelle is not engaged in manufacturing, making it unlikely that the imported palm olein oil was intended for qualified feed production.
It also found out that the imported palm olein oil was later sold to other entities that were likewise not engaged in the manufacture of finished animal feeds.
The FDA further stated that it had no record of any requests from Lobelle Corporation for certifications related to the importation of palm olein oil in 2020.
The BIR determined that the importations of palm olein oil were subject to VAT, saying the exemption is a specific tax privilege that must be used only for the purpose allowed by law and cannot be claimed when the statutory conditions are not met.
The BIR further explained that the repeated importations and non-payment of VAT, despite the absence of a legal basis for exemption, indicate a willful intent to evade the taxes due to the government.
“Tax exemptions are granted for specific purposes under the law. They cannot be used loosely or claimed when the conditions are not met,” BIR Commissioner Charlito Martin Mendoza said.
“When exemptions are abused, the government loses revenue, and compliant taxpayers are put at a disadvantage. We will pursue criminal action where warranted, especially against schemes that erode the revenue base and undermine fairness in the tax system,” he added.
Meanwhile, the BIR also filed two separate criminal complaints before the DOJ against two individuals, Junn Ryan Tolentino Pucan, owner of JRT Pucan Meat Stall, and Romy Cruzada Claveria, owner of Yarikata Construction, for willful failure to pay internal revenue taxes totaling more than PHP8 million for 2019.
The BIR investigation and records revealed that Pucan and Claveria have substantial unpaid taxes, penalties and surcharges, which they deliberately failed to settle despite repeated notices and opportunities to comply.
Despite receipt of the BIR’s notices, and after the assessment had become final and executory, Pucan ignored the government’s demand to pay his income tax liabilities.
Claveria, meanwhile, filed his VAT return without paying the tax due thereon and, despite receiving the BIR’s notices, ignored the government’s demand to pay his self-assessed and self-declared VAT.
“BIR notices and demands for payment should not be ignored. Taxpayers are given opportunities to respond, explain, or settle their liabilities. But when an assessment becomes final and executory, continued refusal to pay may lead to criminal action,” Mendoza said. (PNA)
