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Corrugated packaging company “boxed” for tax evasion

Date Filed:

05/16/2013

Respondent:

MEGAPACK Container Corporation / LARA, Salvador C.

Case Summary:

Charged for the following:

Willful Attempt to Evade or Defeat Taxes for taxable year 2009 and 2010,
Deliberate Failure to Supply Correct and Accurate Information in its Quarterly Income Tax Returns (ITR) for taxable year 2009,
Willful Failure to Supply Correct and Accurate Information in its Quarterly Value Added Tax (VAT) Returns for taxable year 2010, and
Deliberate Failure to Supply Correct and Accurate Information in its Monthly VAT Returns for taxable year 2010

MEGAPACK is a domestic corporation registered with the Securities and Exchange Commission (SEC) with office address at No. 18 General Tirona Street, Bagong Barrio, Caloocan City. Its primary purpose is to engage in the manufacture, purchase and sale at wholesale and retail of corrugated boxes and other goods of similar nature, including materials and supplies used or employed in or related to the manufacture of such finished products. SALVADOR C. LARA is the President of MEGAPACK for the years 2009 and 2010 with address at Lawang Bato, Valenzuela City and/or at Valle Verde 2, Pasig City.
MEGAPACK was issued Letter of Authority Nos. 00026961 and 211-2013-00000098 for the examination of its books of accounts and other accounting records on all internal revenue taxes covering taxable years 2009 and 2010, respectively.
For failure of MEGAPACK to present its books of accounts and other accounting records despite numerous notices, investigators gathered information on the internal revenue tax compliance of the company from the BIR’s Integrated Tax System, particularly the Electronic filing and Payment System (eFPS). The BIR’s eFPS showed that MEGAPACK declared sales of P457.38 million for taxable year 2009 and zero sales for the year 2010.
Data were also culled from various suppliers and clients of the company that included Crocodile Tape and Co., Inc., Nestle Philippines, Inc., Handyware Philippines, Inc., Consolidated Adhesives, Inc., Toprite Plastic Industries, Inc., and Datrima Packaging & Ind’l Corporation. Audit conducted by the BIR using said third party information disclosed sales amounting to P737.07 million for taxable year 2009 and P206.21 million for 2010.
A comparison of the information gathered from the BIR’s ITS/eFPS against data provided, certified to, and confirmed by clients showed that MEGAPACK underdeclared its taxable sales by P279.68 million or 61% for taxable year 2009 and by P206.21 million or 100.00% for the year 2010.
Consequently, MEGAPACK was assessed a total deficiency tax liability amounting to P398.97 million covering taxable years 2009 and 2010, inclusive of surcharges and interests, broken down into P221.68 million (IT-P176.79 million and VAT- P44.89 million) for 2009 and P177.29 million (IT-P118.05 million and VAT- P59.24 million) for 2010.
The case against MEGAPACK CONTAINER CORPORATION and its President SALVADOR C. LARA is the 166^th filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of Revenue Region No. 5, Caloocan City.