Bureau of Internal Revenue Commissioner Romeo Lumagui Jr. declared a war against all those who profit from propagating a culture of tax evasion using ghost receipts.
The agency launched the Run After Fake Transactions program of the BIR, the brainchild of Lumagui, and the first in the history of the agency that follows the issuance of Revenue Memorandum Circular No. 38-2023.
Ghost receipts are fictitious receipts/invoices where transactions did not take place. Its main purpose is to reduce the income tax and VAT liabilities of the purchaser by claiming false deductions/expenses and claiming input VAT on the basis of fictitious transaction, ultimately resulting in defrauding the government of taxes, according to the BIR.
Lumagui said the war against ghost receipts would be on on three fronts–buyers, sellers and certified public accountants.
“Buyers of ghost receipts will likewise be audited by the BIR. CPAs will have their licenses revoked for abetting and advising their clients to avail of a tax evasion scheme. Buyers, sellers and CPAs will be imprisoned for 6 to 10 years due to tax evasion. This is an all-out war. All available BIR forces will be deployed, this is the top priority program for our enforcement activities,” he said.
Lumagui led the raid of a condominium unit in Quezon City in December 2022, resulting in the confiscation of thousands of ghost receipts. He filed criminal cases before the Department of Justic against the sellers of the ghost receipts on March 16, 2023.
He also filed a case for revocation of the license of the CPA involved in the syndicate before the PRC on March 21, 2023.
“In the coming April 17 deadline, this is my last warning to all buyers of ghost or fictitious receipts. Do not use the same in your tax filings. Do not listen to your CPAs or financial advisors telling you to evade your taxes through ghost receipts. We have a list of buyers and sellers of ghost receipts. Your business will be tagged and audited. You will spend more due to this audit, in comparison to just paying the proper taxes,” he said.
“You, your company officers, and financial advisors will be imprisoned for tax evasion. Not only will you lose millions of pesos, you will also lose your freedom,” Lumagui said in his ultimatum to the taxpaying public.
Under Lumagui’s leadership, the BIR also enforced tax laws against illegal cigarette and vape traders.
He led a nationwide raid against illegal cigarettes in January 2023. He said there would be a nationwide filing of criminal cases against the traders involved in the coming months.
He also led a raid against big warehouses where illegal vape traders were storing their untaxed and unregistered merchandise in November 2022. Cases worth P1.2 billion and criminal cases were filed against these traders in December 2022.
Regular enforcement against illegal cigarettes and vape will also continue, he said.