MANILA (2nd UPDATE)- The Bureau of Internal Revenue has filed a P1.12-billion tax evasion case against Golden Donuts Inc. (GDI), the exclusive Philippine franchisee of international brand Dunkin' Donuts.
Also charged were the firm's officers Miguel Prieto, Walter Spakowksi, Pedro Paraiso, and Jocelyn Santos.
In its complaint filed before the Department of Justice (DOJ) on Friday, the BIR placed the total tax liability of the company to P1,118,331,640.79, inclusive of surcharges and interests, covering taxable year 2007.
The BIR said “sales invoices issued by various suppliers were intentionally altered, in a desperate attempt to conform to substantiation requirements.”
President Rodrigo Duterte slammed “Prieto-owned Dunkin’ Donuts” last year for evading payment of correct taxes.
“To aggravate GDI’s non-compliance, some invoices did not contain the TIN (tax identification number) of GDI. Through this scheme, GDI was able to claim the altered invoices as deductions from its income and as input VAT credit in the amount of P99,297,036.47 and P11,915,644.38, respectively,” the complaint stated.
The complaint further alleged Golden Donuts “substantially” under-declared its sales by 39 percent, as shown by comparing the declared donut sales in its annual income tax return with the royalties declared by the franchisees in their respective 2007 annual income tax returns.
An under-declaration exceeding 30 percent of that which is declared is considered “substantial” and constitutes prima facie evidence of a false or fraudulent return under the National Internal Revenue Code.
“Moreover, audit conducted revealed that royalty income amounting to P133,190,904 should be treated as an active income subject to regular corporate income tax. Analysis of the royalty income shows that by the nature or source of royalty income, it should not be treated as passive income subject to final withholding tax as what GDI did,” the complaint stated.
The case against Golden Donuts is the 131st filed by the BIR under its Run After Tax Evaders (RATE) program under the Duterte administration.
In a statement, Golden Donuts categorically denied the accusation and said it is "prepared to answer the tax evasion case in the proper forum."
"While GDI has yet to receive a copy of the complaint filed on Friday, it appears from the news reports that the complaint was filed based on an alleged 39% underdeclaration of sales which arose from the attribution of sales of franchises to GDI. All GDI franchisees are business entities separate from GDI that are responsible for paying their own taxes," the company said.