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San Juan failed to collect P736-M taxes

COA report says former local officials did not examine books of 8 biggest businesses in city in 2017, 2018
San Juan failed to collect P736-M taxes

WASTED OPPORTUNITY San Juan officials missed out on the chance to collect hundreds of millions of pesos in taxes the last two years, according to the Commission on Audit. —NIÑO JESUS ORBETA

The San Juan government has failed to collect P736.105 million in taxes from eight of the biggest businesses in the city over the last two years.

In its annual audit report, the Commission on Audit (COA) said that in 2017 and 2018, the city government headed by then Mayor Guia Gomez did not examine the books of accounts of Puregold Price Club Inc.; Ortigas & Company Limited Partnership; Motor Image Pilipinas Inc.; Motor Image Manila Inc.; Techtron Systems Corp.; Colinas Verdes Hospital Managers Corp. (Cardinal Santos Medical Center); Unimart Inc. and Integrated Computer Systems Inc.

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Recomputation

“Our recomputation of business taxes of the top eight business establishments registered in the city, based on the highest gross receipts reported to the Securities and Exchange Commission (SEC) for 2016 and 2017 which were the bases of tax dues for 2017 and 2018, [showed an] under collection of business taxes totaling P736,104,965,” COA said.

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Of the eight businesses, Puregold Price Club Inc. registered the highest under collected taxes of over P625 million.

The under collection of taxes is in violation of Section 171 of Republic Act 7160 or the Local Government Code. According to COA, the city treasurer is required to examine the books of accounts and pertinent records of businesses “in order to ascertain, assess and collect the correct amount of taxes.”

However, instead of properly going over the books of big businesses in San Juan, the city treasury department (CTD) only concentrated on mid-range business taxpayers, COA said.

It noted that the city treasurer had reasoned out that it was “difficult” to get the latest records of audited financial statements from big companies.

“The city could have collected more business taxes had the CTD prioritized [the] examination of books of accounts of those large businesses,” COA said.

Wrong business categories

It also revealed that the listed business categories declared by Motor Image Pilipinas Inc. and Motor Image Manila Inc. — the business names of Subaru Philippines — were incorrect.

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The two businesses were categorized as “importer/distributor” and “retailer-non-essential,” respectively. However, they should be reclassified as “car dealer, distributor of brand new and/or used cars, vans, trucks and other automobiles,” COA said.

The car dealer classification is in a higher tax bracket, with a tax rate of 80 percent of 1 percent, compared to only 70 percent of 1 percent for importers and distributors, and 75 percent of 1 percent for nonessential retailers, it added.

In its recommendations, COA said the CTD should seek assistance from SEC or the Bureau of Internal Revenue in gathering financial information to determine and verify the amount of gross sales and receipts declared by business owners, in order to facilitate the conduct of examination of the books of accounts of taxpayers, “whether big or small businesses.”

For its part, the city treasurer assured COA that it already had gotten access to SEC’s I-view facility and would coordinate with SEC in order to secure the financial statements of businesses based in the city.

The Inquirer tried to reach Puregold for comment but at press time, a spokesperson said there was “no word yet from management.”

The release of the COA report came a day after Mayor Francis Zamora revealed he had inherited a nearly P1 billion debt from Gomez.

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TAGS: business taxes, COA, Commission Audit, Guia Gomez, San Juan tax collection
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