Amnesty for a P1.5-billion tax case

"If the case of Pepsi is included, will this also mean the same for Maria Ressa?"


Last month, the Senate and the House of Representatives passed a tax amnesty measure that could become a law in time for the tax filing period in April next year.

The measure aims to grant general amnesty to those with unpaid internal revenue taxes for 2017 and previous years. It also includes estate taxes, tax delinquencies and certain cases of tax evasion.

My gulay, there are certain misgivings on how the amnesty would treat cases that are currently in litigation or for where formal complaints have been filed.

Last Nov. 26, for instance, the Manila Standard carried a news item about allegedly unpaid taxes of almost P1.5 billion that the Bureau of Internal Revenue had been trying to collect from Pepsi Cola Philippines since 2015.

The BIR assessed Pepsi for unpaid taxes from July 2009 to December 2010, totaling more than P1.498 million. This includes deficiencies in income tax, withholding tax on compensation, value-added tax, expanded withholding tax and documentary stamp tax.

But Pepsi ran to the Court of Tax Appeals for succor. It filed a petition for review claiming that the assessments were null and void for having been issued beyond the three-year period allowed by law. It also contended that the assessments had no factual and legal basis. The tax court is still hearing the case.

The amnesty law is supposed to cover cases in 2017 and prior years. So will this include Pepsi’s alleged tax deficiencies in 2009 and 2010? If yes, how much does the BIR hope to recover from Pepsi’s purported tax deficiency?

Pepsi Cola is a multi-brand manufacturer of softdrinks, beverages, juices and energy drinks. It is co-owned by Lotte Chisung, one of the biggest beverage firms in South Korea and a Pepsi bottler in that country. It is the biggest single stockholder of Pepsi Philippines, which used to be controlled by the Lorenzo family.

Obviously, the South Korean government has been investigating top officers of Lotte Chilsung for tax evasion and some other serious charges.

It may just be strange coincidence but the parallelism concerning the troubles of Pepsi Cola in the Philippines and in South Korea is rather striking.

In October 2016, for instance, Lotte Chairman Shin Dong-bin and several relatives were indicted among others for alleged tax evasion amounting to $76 million. Based on the December 2017 exchange rate of P52.70, this comes up to a whopping P4 billion plus.

Prosecutors also interrogated Shin’s 95-year-old father and Lotte founder Shin Kyuk ho on suspicion of evading up to P600 billion Korean won in taxes through questionable transfers of assets to his wife and his daughter.

Although acquitted in December 2017 on the tax evasion case, the father was sentenced to four years on embezzlement and breach of trust. He however was allowed to remain free due to poor health and advanced age. The son got a 20-month prison term—but the sentence was suspended for two years.

In February this year, another Seoul court sentenced the Lotte chairman to three months imprisonment on charges of bribery for giving $6.5 million to a friend and adviser of then South Korean President Park Geun-hye in exchange for favors.

Last month, a Korean appeals court upheld the sentence.

It may be pure speculation, but some are wondering whether the tax issues involving Lotte’s top officials are somehow connected to the tax problems of the local firm.

In this regard, perhaps we can also ask if the alleged tax offenses of Rappler CEO Maria Ressa would be included in the amnesty.

* * *

If you look at history during the Spanish colonial days, you would see that the Spaniards did not also like the Chinese. They discriminated against them. The reason was that Chinese businessmen had cornered retail businesses.

This drove the Spaniards to round off all the Chinese in Manila to confine them at the Parian Gate at Intramuros. Soon enough, the Chinese captives were sent to Laguna where they were massacred.

The Sinophobia persisted.

Many Filipinos became envious of the prosperity of the Chinese. The discrimination continued for decades such that the Chinese were confined to the Binondo District.

Still the Chinese prospered, because of their hard work, patience and perseverance.

Compared to the Chinese, we Filipinos are generally lazy. We also like saying “bahala na.” For them, however, there is no substitute for hard work. Soon enough, they were able to send their children to Ivy League schools in the US.

Now these Chinese families are billionaires.

Don Albino Sycip, the father of Washington Sycip, who was then chairman of China Bank, was my good friend. He would tell me stories about the Chinese and why they prospered. There was an unwritten code that Chinese should help each other in times of need.

Another friend, the lawyer Leonardo Siguion Reyna, told me that when he was counsel of a big Chinese bank he had to quit as member of the executive committee that approved loans. The committee said yes to loans without collaterals in violation of central bank rules and regulations.

I am not at all surprised why descendants of Chinese immigrants now control the economy.

* * *

If there is one thing newspapers can do to stop widening the gap between the rich and the poor, it is to stop the display of conspicuous consumption.

Society pages contain almost the same people getting together for some fancy celebration.

Topics: House of Representatives , Senate , Pepsi Cola Philippines , Bureau of Internal Revenue , Leonardo Siguion Reyna
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