DOJ to wrap up probe on P1.1-B tax rap vs. Dunkin Donuts

THE DEPARTMENT of Justice (DOJ) is expected to end the preliminary investigation on the P1.118-billion tax evasion complaint filed by the Bureau of Internal Revenue (BIR) against Golden Donuts Inc. (GDI), exclusive franchiser and license grantee of US company Dunkin Donuts, by August.

Facing tax evasion raps are officers Walter Spakowski, Miguel Prieto, Pedro Paraiso, and Jocelyn Santos for violation of Sections 254 and 255 of the National Internal Revenue Code (NIRC) for wilful attempt to evade or defeat tax and for deliberate failure to supply correct and accurate information.

Assistant State Prosecutor Charlie Guhit, who is handling the preliminary investigation, disclosed this as ordered the respondents to file their respective rejoinders by July 3. Guhit said the filing of the rejoinder will be the last hearing of the preliminary investigation, after which, the parties will have to file their respective memorandum which would list their evidence in the case.

“The parties will file their respective memorandum within 30 days from July 3 then the case is submitted for resolution,” he said.

The BIR filed the complaint last February 23 before the DOJ alleging the company is liable for nonpayment of P1.118 billion in income tax, value added tax, and expanded withholding tax - including surcharges and interests for the year 2007.

Marissa Cabreros, Deputy Commissioner of the BIR'S Legal and Inspection Group, said under the NIRC, prescription period in filing tax cases involving fraud is 10 years from discovery, adding that the investigation against GDI was prompted by “confidential information” they received only in 2017.

With the record, the BIR said its office has issued a Letter of Authority to examine GDI’S books and other accounting records. BIR said the result of the investigation showed altered sales invoices while other invoices do not contain GDI’S income tax number.

“Through this scheme, GDI was able to claim the altered invoices as deductions from its income and as input VAT credits in the amount of P99,297,036.47 and P11, 915,644.38, respectively,” the BIR said.

“This is an independent evaluation conducted by an officer on the basis of the information provided to us,” Cabreros said, adding, that while tax evasion cases have a prescription period of 10 years under the law, such period in this case starts only from last year when the alleged fraud was discovered.

The complaint lodged against GDI is the 131st filed under Run After Tax Evaders program under the leadership of Commissioner Caesar Dulay. GDI has denied the accusations of tax evasion, saying its tax liabilities for 2007 had been settled with the BIR as of 2012.

In a statement, GDI said while it has yet to receive a copy of the complaint filed, it said it appears that the complaint was filed based on an alleged 39 percent under declaration of sales which arose from the attribution of sales of franchises to GDI which argued that all its franchisees are business entities separate from GDI that are responsible for paying their own taxes.