House passes bill penalizing tax racketeering

RG Cruz, ABS-CBN News

Posted at May 29 2023 11:57 PM

MANILA - Voting 276-0-0, the House of Representatives has approved on final reading House Bill 8144 that penalizes the crime of tax racketeering.

In a statement, Speaker Ferdinand Martin Romualdez said the proposed measure aims to update the Tax Code “to deter schemes that defraud the government of billions of pesos in taxes that are the lifeblood of the nation and which could otherwise be used for the benefit of our people.”

“These schemes are cleverly used by syndicates and bogus businesses. They may not be covered by the definition of tax evasion, which the tax law penalizes,” Romualdez said.

“We have to plug loopholes in the law to arrest the hemorrhage of tax revenue that should accrue to government coffers, instead of going to the pockets of a few criminally-minded individuals,” he added.

HB 8144 defines tax racketeering as a crime perpetrated by “any person who engages in any coordinated scheme or operation to evade or defeat any tax imposed under this Code through the fraudulent use of receipts, returns, and other records, with a minimum amount of P10 million in taxes evaded," according to a press release from the Speaker's Office.

In addition to other penalties provided by law, the bill said the offender will be imprisoned for 17 to 20 years and that conviction or acquittal would not be a bar to the filing of a civil suit for the collection of taxes.

If the violator is a corporation, nongovernment organization, association, cooperative or single proprietorship, the penalty will be imposed on its officers or employees and individuals without whose participation the violation could not have been committed. 

Accomplices or persons who cooperate in the commission of the offense will, in addition to other penalties provided by law, suffer imprisonment of 10 to 17 years.

People who, having knowledge of tax racketeering, take part subsequent to its commission, including profiting from it, will face imprisonment of six to 10 years, the bill states.

Any public officer who aids and abets the commission of tax racketeering will face perpetual disqualification from public office.

A person who "willfully attempts in any manner to evade or defeat any tax imposed under this Code, of knowingly distributes, acquires, uses or aids in the use of unauthorized, fake or falsified revenue official receipts, sales invoices, commercial invoices, letters of authority, tax debit memoranda and other accountable forms,” would face a fine of P5 million to P10 million (up from P50,000 to P100,000 under the present law) and imprisonment of six to 10 years (increased from two years but not more than six years), according to the proposed law.

"Given our government's critical reliance on tax revenues to fund public services, efficient and effective tax administration must be given paramount importance. While the National Internal Revenue Code of 1997, as amended , already defines various forms of tax evasion as criminal liabilities, this does not yet include the systematic and coordinated scheme to evade or defeat taxes," said Nueva Ecija 1st District Rep. Mikaela Suansing, principal sponsor of the bill and senior vice chair of the House Ways and Means Committee.

"The schemes involve fake firms, sometimes called ghost firms that issue fraudulent receipts which allow their supposed clients to claim additional tax deductions on their value added tax and corporate income taxes," she said.

Suansing explained that enforcement remains a challenge for the Bureau of Internal Revenue.

The bill introduces a broader set of acts and ommissions done to misrepresent tax deductions. 

The House will submit the bill to the Senate for action.