June 23, 2018, 10:40 am
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Rappler charged with tax evasion

THE Bureau of Internal Revenue yesterday filed a criminal complaint accusing news site Rappler and two executives of evading P133.8 million in tax, the latest move against a network whose reporting has irritated the government.

The case comes eight weeks after the Securities and Exchange Commission rescinded Rappler’s operating license for violating foreign ownership rules.

Rappler continues to operate pending an appeal and says it has done nothing wrong and is being punished on multiple levels for scrutinizing the government. It says the complaint is another case of “harassment,” having already received seven complaints from state agencies in recent weeks.

The BIR said Rappler had profited from the sale of Philippine Depositary Receipts (PDR) to foreigners in 2015 and should pay income and value added tax.

An American investor in Rappler who had bought PDRs has agreed to donate its interests to Rappler’s managers, which it said would give the government no legal ground to stifle its operations.

The alleged tax liability comprised of P91.3 million in income tax and P42.5 million in value-added tax. Also subject of the complaint was Rappler chief Maria Ressa and its treasurer, James Bitanga.

The BIR said that on various dates, Rappler Holding Corp. purchased common shares from Rappler Inc. amounting to P19.245 million. RHC subsequently issued and sold PDRs to two foreign juridical entities for a total consideration of P181.659 million. RHC used the same common shares it purchased from Rappler Inc. as the underlying asset/share of the PDRs. 

“The purchase of the shares and the subsequent issuance of the PDRs for profit that transmitted economic rights (e.g. financial returns or cash distributions) derived from the equity of Rappler Inc. to the PDR holders are proof that RHC is engaged in the purchase of securities and resale thereof to customers,” the BIR said.

“As dealer in securities, RHC is subject to income tax and value-added tax (VAT). However, the annual ITR (income tax return) and VAT returns for taxable year 2015 filed by RHC with the BIR showed that no IT and VAT have been paid by RHC for the income it gained in the PDR transactions,” it added.

Certified public accountant Noel Baladiang of R.G. Manabat & Co. was also charged for violating the Tax Code for signing and certifying the financial statements of RHC despite the alleged omission and misstatement of his client’s actual taxable income.

Rappler said BIR agents went to its office this week with a letter from its tax evasion unit that was “scant with details.” Normal procedure provides respondents with 30 days to reply, it said.

“This is clear intimidation and harassment. The government is wasting its energy and resources in an attempt to silence reporting that do not please the administration,” Ressa said.

Urging the BIR to check its own records, she said Rappler had been paying its taxes accurately, promptly and diligently.

The government has repeatedly denied it is going after Rappler or trying to stifle freedom of the press. – Angela Lorraine Celis and Reuters
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