Neri faces tax evasion raps

By Ina Reformina, ABS-CBN News

Posted at Nov 04 2010 12:09 PM | Updated as of Nov 05 2010 01:19 PM

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Neri faces tax evasion raps 2

MANILA, Philippines (2nd UPDATE) - The Bureau of Internal Revenue (BIR) filed tax evasion charges at the Department of Justice (DOJ) against former National Economic and Development Authority (NEDA) and former Social Security System (SSS) chief Romulo Neri for under-declaration of his income or revenues earned from various corporations for taxable years 2008 and 2009.

BIR Commissioner Kim Henares told reporters in a news conference on Thursday that this legal action against Neri, who figured in the ZTE broadband deal controversy under the Arroyo administration, stemmed from a hearing conducted by the Senate Committee on Finance where it was revealed that Neri was able to sell his stock options.

Neri, along with three other officials of the SSS, were subjects of a Senate inquiry after it was made public that they received "excessive and unwarranted bonuses and allowances, including the exercise of stock options" of at least P127 million.

Computations made by the BIR show that Neri under-declared his income by P9,999,392 or by 88% in 2008, and by P18,788,307 or 54.92% in 2009.

The BIR said this resulted to a tax deficiency of P6,290,012 for 2008 and P11,977,719 for 2009, for an estimated aggregate tax liability of P18,267,732, inclusive of surcharges and interests.

So far, these under-declared income or revenues are an offshoot of Neri's stock options at Philex Mining Corporation where he sat as board member from 2007 to 2010  and his director's fees at Union Bank of the Philippines.

The SSS invested its members' trust fund in these two companies.

"When he was SSS administrator, he was sitting in the various boards. Nag-file siya pero underdeclared. What we did is we looked at what he declared and what everyone else said he earned. Take note that an under-declaration of 30% is already a presumption of fraud," Henares said.

Neri has denied these allegations. Cunanan, who is presently in China for cancer treatment, has also denied he failed to properly declare his taxable income.

In turn, Malacañang denied that they are harassing Neri through the tax-related charges. Neri has figured prominently in the ZTE-NBN broadband scandal.

Fraudulent return

Under the Tax Code of 1997, an under-declaration of income or revenues of more than 30% is considered substantial and constitutes prima facie evidence of a false or fraudulent return tantamount to tax evasion.
 
Henares, however, stressed this case against Neri does not mean there is a witch-hunt against officials of the previous administration.

"There is no witch-hunt. It's not that you are in the previous administration that we are investigating you. If you recall, there was an investigation (by the Senate), there were facts presented. We don't want to go on a fishing trip, at least, dapat may basis," Henares clarified.

Henares said any additional information that may be threshed out in the course of the BIR's continuing investigation into Neri's Income Tax Return records will further strengthen this case.

"These are minimum amounts because as we go on, these are expected to increase because as the case is progressing, we usually discover other incomes they earn," Henares said.

Former SSS chair and retired armed forces General Thelmo Cunanan was also slapped with tax evasion charges for non-declaration of his perks.

Cunanan's total tax liabilities amount to P42,483,294, inclusive of surcharges and interests.

The cases against Neri and Cunanan are the 13th and 14th filed by the BIR under its Run After Tax Evaders (RATE) program under the new Aquino administration.

The RATE program of the tax bureau and the Run After the Smugglers (RATS) program of the customs bureau are the Aquino government's name-and-shame campaign to improve revenue collections amid a widening budget gap.