Hontiveros accuses China's Xuzhou Construction of tax evasion

Job Manahan, ABS-CBN News

Posted at Oct 28 2021 10:00 PM | Updated as of Oct 28 2021 11:59 PM

Screen grab from the Senate hearing
Screen grab from the Senate hearing

Xuzhou Construction says only responsible for export delivery

MANILA (UPDATED)- Sen. Risa Hontiveros on Thursday accused Xuzhou Construction Machinery Group (XCMG) of tax evasion after the company allegedly failed to pay income taxes despite being the Duterte administration's second-biggest supplier during the pandemic.

Xuzhou Construction, a China-based company, bagged P1.9 billion in contracts, according to research by the Right to Know, Right Now! Coalition. The group is composed of freedom of information law advocates. 

Hontiveros said the firm, led by a certain Wang Min, got P1.67 billion worth of contracts from the Philippine government. 

Despite this, XCMG had "no income tax records available for the taxable periods 2017 up to present," records from the Bureau of Internal Revenue (BIR) revealed. 

Wang-Duterte link

Hontiveros, in her presentation, showed a photo of Wang and President Rodrigo Duterte in Malacañang, which her camp sourced from a Chinese website.

"Ayon sa website na iyon, from Feb. 23 to 27, Wang Min led a XCMG delegation to the Philippines... President Duterte expressed his appreciation for the support provided by XCMG for the economic construction of the Philippines," Hontiveros said. 

Yang supposedly led the Chinese delegation when they paid a courtesy call to President Rodrigo Duterte in February 2017.

“Yung mainit na tinanggap noong 2017 sa Malacañang, tax evader pala ngayon. Bakit ba ang mga kumpanyang nagresponde sa pandemya sa Pilipinas, puro nanlalabag ng batas? Hindi tuloy malayong maisip na kaya ang daming kaso ng COVID-19 sa atin dahil sa mga kaduda-dudang medical suppliers,” Hontiveros said. 

(The firm warmly accepted in Malacañang in 2017 is a tax evader. Why is it that the company that helped the country for its pandemic response is a law violator? Maybe we have a high number of COVID-19 cases because of the anomalous medical suppliers.)

The Chinese firm denied Hontiveros' allegation that it avoided paying taxes to the Philippines.

"Xuzhou Construction Machinery Group Imp. & Exp. Co. Ltd. categorically denies these claims and declares that the reports are false. Our transaction of PPE sets with the Philippines is considered a form of international trade that rightfully complies with established international trade practices and Philippine national laws," XCMG said in a statement Thursday night shared by the Chinese embassy in Manila.

"Our company is only responsible for export delivery, not the import, sales, use, and links in the Philippines. Hence, the transaction is deemed completed once the goods are loaded at the Chinese port. In accordance with Philippine laws (National Internal Revenue Code Section 42(e), Section52 (A)) and relevant international regulations, exporters of international trade aren't required to register at their destination and shall pay no income tax to the destination country," it added.

The company said its PPE deals with the Duterte administration "were conducted on the CIF [cost, insurance, and freight] terms."

The Coalition of Philippine Manufacturers of PPE (CPMP), meanwhile, lamented that they did not have the same treatment that Duterte gave to either foreign importers or Wang's delegation.

Wang was not present during the hearing. Xuzhou Construction was represented by Rey Gulleban, its liaison offocer. 

Gulleban said he no longer works at the firm, and he only oversaw the completion of the transactions with the Department of Budget and Management's Procurement Service (PS-DBM). He said he was paid P50,000 for the duration of 3 months. 

He also said that while the firm delved on construction businesses, they have diversified to medical supplies. 

When asked how they sourced supplies, Gulleban said only his boss in Xuzhou, a certain Robin Han, could answer the question. 

According to him, he was ordered by Han to go to PS-DBM to give the letter to intent on Mar. 26, 2020. 

This, even if he was assigned as the resident agent only on April 1, 2020. 

Xuzhou, meanwhile, delivered P500 million worth personal protective equipment to the PS-DBM on April 10, 2020 despite the fact that they were able to give a letter of intent only in late March. 

Senators earlier revealed that XCMG does not have accreditation nor is it registered in government agencies, which include the Securities and Exchange Commission, Bureau of Customs (BOC), and Department of Trade and Industry. 

Han earlier said that the company's clearance from the BOC was only secured with the help of the PS-DBM.

“That’s the first time I heard PS-DBM is handling clearances for a private company,” said Sen. Richard Gordon, chairman of the Senate Blue Ribbon Committee. 

-- With reports from Johnson Manabat, ABS-CBN News


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