Ex-BIR chief: Low taxes paid by persons linked to Pharmally ‘unbelievable’

Former BIR chief Kim Henares INQUIRER PHOTO/LYN RILLON

MANILA, Philippines — Given their “lifestyle” and company’s worth, the low taxes paid by individuals linked to the Pharmally Pharmaceutical Corp. controversy are “unbelievable,” former Bureau of Internal Revenue (BIR) commissioner Kim Henares said Friday.

Henares issued the statement after Senate Minority Franklin Drilon pointed out that several individuals linked to the alleged anomalous government deals with Pharmally filed incomplete or unreadable income tax returns (ITRs). In some years, no records of their ITRs can be found, the senator added.

The former BIR commissioner found it odd that individuals—such as Chinese businessman Michael Yang who provided financial assistance to Pharmally in supplying the government with pandemic supplies—is only required to pay P7,600 in income tax in 2018.

“I would think that for him to be able to lend money to Pharmally and to be able to rent a house in Forbes Park, he should have reported a lot of income through the years and paid a lot of taxes,” Henares said in an interview with ABS-CBN News Channel.

Asked if she thinks that the P7,600 income tax paid by Yang in 2018 was “believable”, Henares said: “No it’s not [believable] because of the surrounding talks that came out in the investigations.”

“I think the surrounding situation where he was interviewed, his lifestyle is not a lifestyle that can be supported by an income tax payment of P7,600,” Henares said.

The same is the case for the ITRs of Pharmally officials and siblings Mohit and Twinkle Dargani.

In the case of Mohit, it was shown in the Senate hearing that he paid taxes amounting to P22,062 in the year 2019—a figure that Henares finds to be “unbelievable” as this means he only had a net income after taxes of around P295,000 for the entire year.

“I’m just saying it’s unbelievable because when you hear them saying that they own a Ferrari, a Lamborghini, so how can somebody who has a net income after taxes of around P295,000 afford to buy those kinds of cars?” Henares said.

Henares said that there is a possibility that the siblings are receiving dividends. However, she pointed out that if a person gets dividends, it is still subject to a withholding tax of 10 percent.

“It will not really come out in your income tax return. But then you will now have to look at the corporation if they declare a dividend or not, and from my understanding, if you look at the Pharmally ITR and financial statement, they never declared any dividend,” Henares said.

“That now becomes unbelievable given their lifestyle, and given that you have a company that’s doing a turnover of P12 billion,” she added.