Right to Know, Right Now! (R2RKN) Coalition, a freedom of information advocacy group, on Tuesday said that Pharmally Pharmaceutical Corp. owes P5.12 billion in unpaid taxes in 2020.
Citing the tax audit of a team of certified public accountants and tax lawyers it tapped, the R2RKN Coalition said the amount was reached based on official documents filed with the Bureau of Internal Revenue (BIR), Securities and Exchange Commission (SEC), and the Senate Blue Ribbon committee.
With this, the group called on the BIR to investigate Pharmally for “overdeclared cost of goods by 50%” and “possible tax deficiency of 30%.”
R2RKN Coalition said both counts are “prima facie evidence” of apparent tax evasion by Pharmally.
In particular, the group said that based on the company’s income tax return (ITR) for 2020, Pharmally had claimed a tax credit of P96.09 million and listed an overpayment of P589,163.
However, it said that the company secured 11 supply contracts worth P7.9 billion with the Procurement Service-Department of Budget and Management (PS-DBM) between April and June 2020.
It got two more contracts worth P1.1 million from the Philippine National Railways, and another P37.87 million from the Department of Health-Main, also in 2020.
Pharmally registered with the SEC on September 4, 2019 with a paid-up capital of only P625,000.
The group said that the company closed the year with a net income of only P25,549.18, according to its audited financial statements filed on June 8, 2020.
“By all indications, the coalition’s tax audit reveals Pharmally to have declared by ‘various manipulative accounting methods’ gross sales by the billions of pesos but had unaccounted source/s of funds, even as it also understated and did not declare or pay the right taxes defined in law,” it said.
According to the auditors tapped by the coalition, a “presumption of completeness” could result only from a full investigation by the BIR into Pharmally’s tax liabilities.
“This effort should require the BIR to comb through its database and get more documents from other parties related to, or had transactions with, Pharmally in 2020,” the coalition said.
The group said the tax audit team raises the following “discrepancies”, based on Pharmally’s documents with BIR and SEC:
• Unaccounted income from receivables
• Undeclared income from unaccounted cost of goods sold
• Unaccounted source of cash
• Underdeclaration of expanded withholding tax on income payments
• Underdeclaration of withholding tax on compensation
• Underdeclaration of documentary stamp tax
• Non-payment of donor’s tax
The group’s tax audit team computed Pharmally’s potential tax liabilities for 2020, with surcharge and interest imputed, as follows:
• Income Tax – P3,463,447,293.66
• Value Added Tax – P1,438,329,039.57
• Expanded Withholding Tax – P116,165,355.58
• Documentary Stamp Tax – 87,188,852.86
• Donor’s Tax – P15,899,231.31
The grand total of Pharmally’s tax liabilities amounted to P5,122,414,621.59, according to the R2RKN Coalition.
The group noted that the amount includes “legal increments” defined in the National Internal Revenue Code of 1997, as amended (NITR or Tax Code), which imposes a 50% surcharge under Section 24(B), and a 12% interest, under Section 249.
Pharmally has figured prominently in the Senate’s investigation into the transfer of P42-billion COVID-19 funds from the Department of Health to the PS-DBM.
The transfer includes PS-DBM’s purchase of P8.6 billion worth of face masks, face shields, and personal protective equipment from Pharmally.
Last month, President Rodrigo Duterte challenged senators to file charges against Pharmally executives if they had evidence of alleged overpricing in the emergency purchases. Duterte has repeatedly said the transactions were above board. — VBL, GMA News
FOI advocacy group claims Pharmally s tax liabilities reached P5.12B in 2020
Source: News Panda Philippines
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