BIR files tax evasion raps vs Cedric Lee


Posted at Mar 27 2014 11:22 AM | Updated as of Mar 27 2014 10:46 PM


MANILA, Philippines (2nd UPDATE) - The Bureau of Internal Revenue on Thursday filed tax evasion raps against controversial businessman Cedric Lee and his company Izumo Contractors.

"We're running after Izumo for a total income tax deficiency of P194.7 million, inclusive of surcharge and interest," BIR Commissioner Kim Henares said in a press conference.

Henares said the BIR filed a criminal complaint with the Department of Justice against Izumo president and CEO Cedric Lee, Chief Operating Officer John K. Ong and Chief Financial Officer Judy Guitierrez Lee for willful attempt to evade tax and deliberate failure to supply correct and accurate information in the annual income tax return for taxable years 2006 to 2009.

Lee is one of the men accused of beating up actor Vhong Navarro last January.

Izumo is a general contractor with office address at 8th Floor Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon City.

The BIR said it had received confidential information that Izumo was not declaring income realized from its business.

The BIR received certifications from several city and provincial governments regarding their income payments to Izumo - totalling P302.63 million from 2006 to 2009.

This is broken down as follows:
City Government of Butuan – P80.64 million (P48.02 million – 2006; P32.63 million – 2007);
City Government of San Juan – P59.76 million (P46.31 million – 2006; P13.45 million – 2007);
City Government of Pasay - P12.36 million (2008);
Provincial Government of Davao del Sur - P113.33 million (2009); and
Municipal Government of Tagudin, Ilocos Sur – P36.54 million (P18.46 million – 2008; P18.08 million – 2009).

Henares noted that Izumo only P76.22 million in income during that period.

"If you compare it, what did Izumo declare in its ITR? They declared P5.54 million in 2006, P9.14 million in 2007, P21.34 million in 2008 and P40.20 in 2009, for a total of P76.22 million. However, if you add all these contracts that we have certification for, it equals to P302.63 million. So there's a gross underdeclaration," she said.

"Izumo deliberately failed to declare its correct taxable base by substantially underdeclaring its taxable income by P88.79 million or 1,602% in 2006, by P36.93 million or 404% in 2007, by P9.49 million or 44% in 2008, and by P91.20 million or 227% in 2009 ."

Under Sec. 248 (B) of the Tax Code, under-declaration of taxable income by more than 30% is considered substantial and constitutes a prima facie case of fraud tantamount to tax evasion.