‘Ghost’ expenses? Tax expert says Pharmally has P3.4B in ‘unsupported’ purchases last year

Sen. Richard Gordon, chairman of the Blue Ribbon Committee (Screen grab/Senate PRIB)

MANILA, Philippines — A tax expert told senators Thursday that Pharmally Pharmaceutical Corp. has P3.4 billion in “unsupported” purchases in 2020 and has paid P21 million in income taxes when it claimed to have settled over P95 million.

During the resumption of the Senate blue ribbon committee investigation into the government’s pandemic purchases last year, tax expert and certified public accountant Mon Abrea said Pharmally declared P7.2 billion worth of purchases in its audited financial statement for 2020.

Abrea based his findings on Pharmally’s financial statement and  the Bureau of Internal Revenue’s (BIR) record. The committee tapped him to examine those documents.

“Lumalabas po na P3.2 billion lamang po ang nakadeklara sa BIR bilang kanilang purchases. Ibig sabihin P3.4 billion ay hindi naka-deklara [sa] BIR pero dineklara nila sakanilang audited FS (financial statement) bilang purchases,” Abrea said.

Senator Richard Gordon, chairman of the blue ribbon panel, then asked Abrea why the firm has P3.4 billion of “unsupported” purchases.

“Maaaring ghost purchases ang lumabas diyan, pwede kaya yon?” Gordon asked.

Abrea answered in the affirmative.

“Hindi po natin alam kung saan po galing or sino po ang nag-suply nung P3.4 billion,” he added.

According to Abrea, the P3.4 billion worth of purchases were deemed “unsupported” since these did not have any declared suppliers or the amount of purchases on the records forwarded by the BIR to the Senate committee.

“Sa experience ko…overstatement po ‘yan, ibig sabihin po madalas po hindi po talaga totoo yung expenses, wala po talagang resibo, ginagawa lang ng iba yun para makapandaya or para mapababa yung buwis na babayaran yung buwis,” he added.

Gordon asked the tax expert: “So hindi na nga sila nagbabayad ng tax, meron pa silang falsification?”

“Posible po,” Abrea said.

As of writing, Pharmally officials have yet to give their side on the matter during the hearing. INQUIRER.net has also reached out to the firm through its media relations arm for comment.

Income tax

Meanwhile, Abrea said that Pharmally’s cash flow statement showed that they paid P95 million in income taxes last year.

“Pero po nung pinag-aralan po namin yung income tax return galing po sa BIR. Ito po ang nakita namin: Ang total income tax due na nireport nila P95 million. Pero, ang talagang nabayaran lang nila base po sa kanilang income tax returns ay P21 million, hindi po P95 million,” he added.

“Hindi po natin ginigisa ang Pharmally pero may malinaw po na material misstatements at dapat po linawin nila,” Abrea further said.

The blue ribbon committee is investigating the government’s purchases of medical goods, including allegedly overpriced face masks, shields and other supplies, at the height of the pandemic last year.

At the center of the inquiry is Pharmally, which was awarded over P8.6 billion worth of supply contracts in 2020.

During the hearings, several senators saw alleged favoritism in the awarding of contracts as they doubted the financial capacity of Pharmally since it was only established in 2019 with a small capital of P625,000 when it secured the medical supply deals.

Pharmally chairman and president Huang Tzu Yen has previously denied that they were favored in any way in the government’s procurement of medical supplies, saying the small company has been “unfairly prejudged.”