Online news provider Rappler and its two executives were charged with tax evasion before the Court of Tax Appeals for violation of the National Internal Revenue Code of the Philippines.
The Department of Justice filed on Monday one count for violating Section 254 of Republic Act 8424, or the NIRC for attempting to evade or defeat tax, and on Wednesday three counts of willful failure to supply correct and accurate information in violation of Section 255 also of RA 8424.
The DOJ recommended a bail of P60,000 for violating Section 254 and P24,000 for violating Section 255.
The filing came after the Assistant State Prosecutor Zenamar Machacon-Caparros found probable cause to indict Rappler Holdings Corporation, its president Maria Ressa, and certified public accountant Noel Baladiang.
The case arose from the complaint filed by the Bureau of Internal Revenue, which alleged that RHC’s 2015 tax returns did not reflect the total gains of almost P162.5 million which it realized from the issuance of its Philippine Depositary Receipts (PDRs) to NBM Rappler L.P. and Omidyar Network Find LLC.
In her resolution, Caparros ruled RI (Rappler Inc.) shares for the purposes of underwriting PDRs for resale to interested buyers, RHC acted as a middleman whose profits were taxable under the Tax Code.
“By not declaring such profits in its returns, the RHC has violated the Tax Code,” the resolution stressed.
The DOJ explained that a PDR is a security, which grants the holder the right to the delivery or sale of the underlying shares of stocks.
In its complaint, the BIR alleged that on various dates from 2014 to 2015 RHC purchased a total of 119,434,438 common shares from RI at P1 per share.
Thereafter, the BIR indicated that RHC issued PDRs against most of the RI shares that it held to NBM Rappler and Omidyar.
With the subscription price for the PDRs at P181.6 million, the BIR said RHC gained close to P162.5 million from the transaction, which was not declared in its tax returns.
This means that RHC owes the government around P108 million in taxes including P91,320,480.99 in income tax including surcharge and interests as well as P17,138,467.78 in value added tax excluding surcharge and interests.
Nonetheless, Caparros absolved one of the respondents, RHC treasurer James Bitanga, “upon Ressa’s certification that Bitanga was an inactive and nominal treasurer who did not participate in the management and operations of RHC.”