March 1st, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) committed to the Bureau of Internal Revenue during a hearing of the Committee on Appropriations that he will propose a measure through the House tax panel that will punish the selling and issuance of fake receipts to pad gross expense and creditable input VAT. This, according to global tax experts, is called “ghosting the tax authority.”
“In support of attaining the revenue goals of the Bureau, we will draft that measure today,” Salceda told BIR OIC- Deputy Commissioner Maridur V. Rosario, who represented the Bureau in the briefing by the Development Budget Coordinating Committee today.
“We will draft legislation so that selling and buying receipts to pad your deductible expenses or input VAT is non-bailable, using the lifeblood doctrine. Tax ghosting is non-bailable.”
Salceda says that they will introduce legislation penalizing both the buyer and seller for tax fraud.
“Right now, the tax code imposes penalties and surcharges only on those who use fake receipts for tax fraud. Section 248 of the Tax Code imposes, in addition to the tax required to be paid, a penalty equivalent to twenty-five percent (25%) of the amount due. That’s not a lot,” Salceda added.
“That penalty is not enough of a deterrent, and if my conversation with DepCom Rosario is right, it’s still unclear whether the seller of fake receipts and other accessories to the crime are liable.”
Salceda explained that tax experts call the practice “ghosting the tax authority,” because “ghost companies” issue fake receipts to taxpayers to defraud the tax collection agency. Sometimes, Salceda adds, receipts from expenses not considered valid expenses are used to pad deductibles.
Salceda added that the practice is “fairly common among family corporations, some of whom use household expenses to pad reduce their corporation’s gross taxable income.”
“We will introduce both penal provisions and civil penalties, as well as tax administration provisions to make it easier for the BIR to identify which receipts are fraudulent.”
Pass EOPT to enact legislation
Salceda also appealed to the Senate to pass the Ease of Paying Taxes Law so that the House can consider introducing the amendment during the Bicameral Conference Committee.
“We will still try to pass our draft of this on third reading so that the House contingent will consider the amendment as being fully supported by the chamber.”
“We also want to hear stakeholders so that we can calibrate countermeasures fairly.”
“The converse of ease of paying taxes is difficulty of fraud. It should be easier to be an honest taxpayer, but it should be more difficult to defraud the government – so that the burden of funding social services does not fall too heavily on the honest citizen.”