The document discusses tax evasion in the Philippines. It defines tax evasion as a criminal act of deliberately failing to pay tax liability. People who commit tax evasion face criminal charges and penalties such as jail time and fines. The document then discusses various tax revenues in the Philippines including income tax, excise tax, franchise taxes, and import duties. It provides examples of high-profile tax evasion cases in the country such as those against Dunkin Donuts, Rappler, former Supreme Court Chief Justice Renato Corona, and boxer Manny Pacquiao.

3. TAX
EVASION
Republic Act
No.7642
Prepared by:
ARNEL BARTE GUTIERREZ RXT, RRT
Special Problem in Public Administration
Master in Public Administration

5. TAX EVASION
What is Tax Evasion And
How Can You Avoid It?

6. Tax evasion
Tax evasion is a criminal act
where a person or an entity
deliberately fail to pay their tax
liability.

7. Tax evasion
People or entities that commit
tax evasion face criminal
charges and penalties.

8. Tax evasion
Those found guilty of tax
evasion may be punished with
jail sentences, hefty fines or
both.

9. Tax evasion
Tax evasion is illegal and criminal
penalties apply, hence if caught
evading tax the director/s of the
company will be fine and even
imprisoned.

10. What is Revenue?
Income of a government
from taxation, excise
duties, customs, or other
sources, appropriated to
the payment of the public
expenses.
“public revenues are public funds”

11. Government revenues refer to all receipts the
government gets, including taxes, custom
duties, revenue from state-owned enterprises,
capital revenues and foreign aid.
Government Revenues in the Philippines
increased from Php 246,762 million to
Php 259,702 million. Government revenues in
Philippines averaged of Php 41,319.99 million
yearly from 1959 to 2018 or 2.437 trillion.
Source: Trading Economics

12. TAX REVENUES
cover compulsory contributions to
finance government activities. Taxes
are computed at the rate established
by law to a defined base such as
income, estate, imports, etc.
Revenue Sources of the Philippines

13. Revenue Sources of the Philippines
TAX REVENUES
Major Tax Revenues of the Philippines
 Property Tax
 Income Tax
 Amnesty Tax
 Estate, gift and inheritance tax
 Residence Tax
 Immigration Tax
 Excise Tax
 License and Business Tax

14. TAX REVENUES
Major Tax Revenues of the Philippines
Wharfage Tax
Franchise Tax
Import Duties
Documentary Stamps
Charges on Forest Products
Revenue Sources of the Philippines

15. TAX REVENUES
Income Tax
 those imposed on income of individuals , corporations and
partnerships and all fines and penalties charged in relation to
their collection.
Revenue Sources of the Philippines

16. The Philippine Travel Tax is PHP1,620.00 (approximately
$35.00) All passengers departing from the NAIA (Ninoy
Aquino International Airport) are expected to pay the
Airport Terminal Fee of PHP750.00 (approximately
$17.00). No one is exempt from paying the Airport Terminal
Fee
Immigration Tax
includes all taxes and charges imposed upon
immigrants under the immigration law.

17. TAX REVENUES
Excise Tax
are those covering imports and exports such
as specific trade and compensating taxes on
alcohol, sugar, etc..
Revenue Sources of the Philippines

18. Franchise Taxes
imposed for any special right or privilege
granted by a government.

19. Wharfage Fees
wharfage charges relative to imports and exports.
A charge assessed by a shipping terminal or port when goods are
moved through the location. accommodations provided at a wharf for
the loading, unloading, or storage of goods.

20. What Counts as Tax Evasion?
Tax evasion includes both deliberate
underpayment and deliberate
nonpayment of tax. Generally,
taxpayers are considered guilty of tax
evasion if it’s deemed that they
committed the act knowingly.

21. Examples of Tax Evasion
Certain transactions don’t involve
documentation, for instance, cash
payment for goods and services. If a
taxpayer doesn’t report this kind of
taxable income to the (IRS) Internal
Revenue Service while filing taxes,
then it’ll be considered as an attempt
on the taxpayer’s part to conceal
income.

22. Here are some of the
most common tax
evasion examples:
Examples of Tax Evasion

23. •Underreporting taxable income
Examples of Tax Evasion
•Intentionally underpaying taxes
•Falsifying documents related to taxable
income
•Falsely claiming business expenses
•Claiming tax benefits on illegitimate
dependents in tax returns

24. Tax evasion and tax avoidance
may appear to be the same
thing. However, they are entirely
different acts.

25. Tax Avoidance
The arrangement of one's
financial affairs to minimize tax
liability within the law. Under tax
avoidance, taxpayers use legal
means to pay lower taxes.
Ex: Making charitable contributions

27. Tax evasion is a
crime, whereas tax
avoidance is legal.

28. Common Types of Tax Evasion
•Tax Fraud
In this type of tax evasion, tax preparers may act
fraudulently and falsely report financial
information.
For example, a client may be eligible for tax credits of 5,000, but a dishonest
tax preparer may claim they are eligible for 15,000 in tax credits. By claiming
they can give big tax refunds, tax preparers try to negotiate higher fees in
return.

29. Common Types of Tax Evasion
•Abusive tax
Schemes involve the creation of domestic and
foreign trusts to capitalize on financial secrecy
laws of certain overseas jurisdictions. This way,
tax evaders hide their financial activities to avoid
taxes illegally.
Ex.
By taking advantage of secrecy laws and intricate financial arrangements, they
aim to hide assets and identities of investors so tax payments can be illegally
avoided.

30. Common Types of Tax Evasion
•Employment Tax Fraud
Employers must withhold Social Security, Federal,
Medicare, and Unemployment taxes from their
employees’ salaries. Failure to withhold these amounts
can be regarded as tax evasion.
Ex.
•Deliberate concealment of salaries and benefits by the employer
through cash payments is one obvious trick (i.e., “getting paid under the
table”).
•Misclassification: Some businesses classify their employees as
independent contractors. This is a common form of employee tax evasion.
•Pyramiding: The employer will withhold taxes owed by the employee but
will deliberately fail to remit the amount to the Internal Revenue Service
IRS. The employer will then file for bankruptcy so the liability accrued can
be discharged. The employer will then launch a new business and repeat
this procedure.

31. Common Types of Tax Evasion
4.Bankruptcy Fraud
Under bankruptcy laws, financially distressed
organizations can reduce and manage debt to
survive.
The Internal Revenue Service IRS cannot
demand payment of tax liabilities, although it can
demand you file returns and perform tax audits.
Since this is a powerful legal tool, certain
businesses abuse bankruptcy filings to avoid
paying taxes despite being capable of
discharging their tax liability.

32. Common Types of Tax Evasion
.Corporate Fraud
Certain corporate professionals commit
fraudulent acts to avoid tax payments. For
instance, they may underreport income,
claim excessive credits, overstate their
deductions or employ complicated financial
arrangement to obscure their transactions.

33. Smuggling
•is importation or exportation of foreign products by
illegal means.
•is resorted to for total evasion of customs duties,
as well as for the importation of contraband.
• A smuggler does not have to pay any customs
duty since smuggled products are not routed
through customs-tax compliant customs ports, and
are therefore not subjected to declaration and, by
extension, to the payment of duties and taxes

34. High-Profile Tax
Evasion Cases:

35. Golden Donuts Inc (GDI) is partly owned
by a member of the Prieto family, GDI
and its officers should be prosecuted for
evading more than 1 billion pesos ($19.26
million) in income and value added taxes
in 2007, the Bureau of Internal Revenue
said in the complaint it filed with the
Department of Justice.
Dunkin Donuts' Philippine franchisee faces tax
evasion case

37. RAPPLER HOLDING INC FACES TAX EVASION CASE
133.8M

38. RAPPLER HOLDING INC FACES TAX EVASION CASE
133.8M

40. RENATO CORONA TAX EVASION120M

41. RENATO CORONA TAX EVASION120M

42. RENATO CORONA TAX EVASION120M

43. RENATO CORONA TAX EVASION120M

45. Manila had accused
Mighty Corp of
using counterfeit
tax stamps to avoid
paying 37.88 billion
pesos in taxes, and
threatened it with
criminal charges.
BIR files P30 billion tax suit against
Mighty Corporation

47. Cedric Lee, accused of tax evasion
194.47M

48. Cedric Lee, accused of tax evasion
194.47M

49. PINUNO NG MEDICAL ASSOCIATION DR.
LEO OLARTE KINASUHAN NG TAX
EVASION

50. PINUNO NG MEDICAL ASSOCIATION DR.
LEO OLARTE KINASUHAN NG TAX
EVASION

52.  The Bureau of Internal Revenue (BIR) filed tax
evasion charges against Customs fixer Mark
Taguba and businessman Kenneth Dong before
the Department of Justice (DOJ) .
 The bureau sued Dong for not paying
P11,406,940.60 of taxes and Taguba for
P850,574,228.77.
BIR sues Mark Taguba, Kenneth Dong for
tax evasion

54.  THE Bureau of Internal Revenue (BIR) has slapped
P38.57 million tax evasion cases against actor
Richard Gutierrez and his production company, R
Gutz Production Corp. (R Gutz), with the
Department of Justice (DOJ).
BIR sues Richard
Gutierrez for P38.57M
tax evasion

55. BIR sues Richard Gutierrez for P38.57M tax evasion

56. BIR sues Richard Gutierrez for P38.57M tax evasion

57. ABS-CBN agrees to pay P152.44-M
to BIR to settle tax case
Broadcast network ABS-CBN
Corporation has agreed to pay
P152.44 million as part of a
compromise agreement approved by
the Court of Tax Appeals in its tax
deficiency case.

59.  The Bureau of Internal Revenue has filed a tax evasion case
against a Batangas-based small town lottery firm, the first
tax case under President Rodrigo Duterte.
 Batangas Enhanced Technology Systems Inc. was accused
of evading P959.96 million in taxes including interest. Its
past presidents Benedicto Bulatao and Rolando Montecillo
and treasurer Jessie Cantos were included in the charge.
 An investigation showed that the company "substantially
underdeclared its correct taxable income" over nine years
from 2007 to 2015.
Small town lottery firm slapped with P960-M tax
case

60. The biggest and most controversial is
the P2.2-billion tax evasion case filed
against Sen. Manny Pacquiao.
P2.2-billion tax
evasion

61. P2.2-billion tax
evasion

64. If you received a Letter of Authority
(LOA) under the RATE (Run After
Tax Evaders) program, it means the
BIR found some evidence of
fraudulent activities which you may
have intentionally or unintentionally
done.

65. a. Failure to file tax return/s
b. Failure to pay taxes
c. Deliberate underdeclaration of
income or overdeclaration of
expenses
d. Hiding or transferring of assets or
income
e. Keeping more than one set of
books of accounts
Example:

66. THANK YOU!
Prepared by:
ARNEL BARTE GUTIERREZ RXT, RRT
Special Problem in Public Administration
Master in Public Administration