[New Tax Law] Philippines fined up to 10 million pesos for tax evasion and imprisonment for 20 years

The House of Commons unanimously passed measures on third and final readings to define the new offence of extortion of tax and impose heavy penalties on offenders.

House Bill No. 8144 (HB), which seeks to amend article 257 of the revised 1997 National Internal Revenue Code, was passed in plenary session on the afternoon of Monday, May 29.

Franco "Duke" Frasco, deputy speaker and Rep. Vincent of Cebu's 5th District, said Monday that the bill received 276 "yes" votes on the nominal vote. There were no negative or abstentions.

Martin Romualdez, the speaker of the House of Representatives, said that the purpose of seeking amendments to the tax code is to "stop the plan to cheat the government of billions of pesos in tax revenues that are the lifeblood of the country and that could otherwise be used to benefit our people".

"These schemes are cleverly exploited by syndicates and bogus businesses. They may not fall within the definition of tax evasion that the tax code punishes... We must close loopholes in the law to stop tax revenue that should have gone into government coffers, not into the pockets of ordinary people with very few criminal tendencies," said Leyte Romualdez, a lawmaker from the 1st constituency.

According to the Act, extortion is "an offence committed by any person who participates in any coordinated plan or action to evade or frustrate any tax collected under this Code through the fraudulent use of receipts, returns and other records, with a minimum amount of 10 million pesos for tax evasion."

In addition to the other penalties provided by law, the offender shall be sentenced to 17 to 20 years' imprisonment. Neither conviction nor innocence is an obstacle to bringing a civil suit for taxation.

If the offender is a company, a non-governmental organization, an association, a cooperative or a sole proprietorship, its officials or employees, as well as individuals who could not have committed the violation without their participation, shall be punished.

In addition to other penalties provided by law, accomplices or collaborators in the commission of the crime shall be punished by 10 to 17 years' imprisonment.

A person who is aware of tax fraud, who participates in it after its implementation, including profiting from it, shall be punished by imprisonment for 6 to 10 years.

Any public official who aids and abets tax evasion faces permanent disqualification from public office.

The bill also adds to the law against any "wilfully distributing, obtaining, using or assisting in the use of unauthorized, forged or falsified official receipts of income, sales invoices, commercial invoices, powers of attorney, tax debit memos and other accounting forms in any attempt in any way whatsoever to evade or defeat any tax levied under this Code".

Such persons face a fine of 5 million to 10 million pesos (from 50,000 to 100,000 pesos under the current law) and a prison sentence of 6 to 10 years (ranging from two to six years).

If the offender is a certified public accountant, his practice license shall be revoked upon conviction. If he is a foreigner, he will be deported immediately after serving his sentence.

HB No.8144 is a merger of two related measures by Albay Rep. Joey Salceda and Rizal Rep. Emigdio Tanjuatco lll.

The Salceda said: up to 100 billion pesos of tax revenue is lost every year for tax evasion and extortion activities involving the use of false receipts and similar documents.