The House Committee on Ways and Means will look into DITO Telecommunity Corporation’s tax liabilities in connection with alleged international simple resale (ISR) calls and alleged “services smuggling,” Albay Representative Joey Salceda said on Friday.
The telco firm said it is ready to face the investigation to air its side, stressing that the ISR is an “industry problem” requiring “industry solution.”
Salceda said the panel’s inquiry will center on the probable tax liabilities of DITO over allegations that it is bypassing its interconnect agreements with other telecommunications companies.
This scheme resulted in forgone interconnection payments of around P2.5 million daily, or around 1000 international voice calls allegedly masked as local calls.
“The government could be losing at least P7.5 million monthly due to this bypassing, if the figures alleged by the other telecom companies are true,” Salceda said.
The lawmaker cited that under Section 120 of the National Internal Revenue Code, there is a 10% tax on “every overseas dispatch, message or conversation transmitted from the Philippines by telephone, telegraph, telewriter exchange, wireless and other communication equipment service.”
“By masking the calls as local, they effectively do services smuggling. I am all for cheap international calls, because OFWs need to connect to their loved ones here. But, we cannot condone nefarious means of doing business, especially if it deprives the country of precious tax revenues, the lifeblood of the government,” he said.
“So, I want to know if there is a basis to say that DITO is violating such a tax provision, and what our tax authorities can do about it. I also want to hear DITO’s side,” he also said, adding that the inquiry is not meant to embarrass, harass and intimidate.
He said the House probe should also shed light on the imposition of digital tax, given that Filipino companies pay to advertise to digital service providers like Facebook, Google and other advertising venues which are based overseas.
“The internet is obviously a communication equipment service. So, I want to know if we can interpret advertising as a message or dispatch,” he said.
Salceda says he will call the Bureau of Internal Revenue, National Telecommunications Commissions, DITO and telecommunications companies it has interconnection agreements with, and other key stakeholders to the hearing.
Industry problem
In response, DITO chief administrative officer Adel Tamano says DITO welcomes the congressional probe.
“We at DITO welcome Congressman Salceda’s call for an inquiry. Given Congressman Salceda’s reputation for integrity and fairness, we know that we will have a chance to air our side,” Tamano said in a statement.
“As we have stated at the onset, ISR is an industry problem that requires an industry solution, which can only be achieved if all the stakeholders —the telcos, who must collaborate, the legislature to provide laws and budget to the government agencies, the NTC to provide the regulatory framework, and the DOJ and NBI to provide the investigation and prosecution —genuinely work together,” he added.
Tamano, however, maintained that DITO has not committed tax evasion.
“On the issue of tax evasion, most respectfully, it is the position of DITO that it is not liable for that since there is no attempt to willfully evade a tax liability and no gain on the part of DITO and, more importantly, ISR is not committed by DITO but rather by criminal syndicates illegally using our SIMS and network,” Tamano said.
“How can DITO be liable for tax evasion when it is equally a victim of these ISR criminals? Also, given that DITO has set up systems and measures to address ISR, then why would it still be liable?” Tamano added.
Tamano said holding DITO liable for tax evasion would create a dangerous precedent “where taxpayers, good corporate citizens, are taxed for acts wholly outside their control and where they’ve had no gain and in fact are deemed victims of syndicated crimes.”
The theory is that the mere use of a telco’s SIMS and network for ISR makes DITO liable for tax evasion, Tamano said, would also make SMART and Globe liable for tax evasion.
“In fact, given that DITO has only been in commercial operation for a year, whereas SMART and Globe have been operating and facing ISR issues for decades, their liability for tax evasion would be astronomically larger than DITO’s,” Tamano added.—LDF, GMA News
Salceda panel to look into alleged ‘services smuggling’; DITO welcomes probe
Source: News Panda Philippines
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