Recently, the Bureau of Internal Revenue (BIR) filed criminal cases against buyers (corporate officers, accounting firms, and accountants) of fabricated or ghost receipts that resulted in tax leakage to the government of PHP 17.9 billion.
Those criminally charged were clients of a syndicate that registered ghost companies to sell original receipts to buyers who use these “ghost receipts” to significantly reduce their tax lability. This led the BIR to file criminal cases in March 2023, as well as administrative cases with the Professional Regulation Commission (PRC) for the revocation of the licenses of accountants involved in this illegal activity. The syndicate was discovered by the BIR in December 2022.
The BIR has a list of all the buyers and sellers of these ghost or fake receipts, including the accountants that allowed the buyers and sellers to profit from these transactions by evading taxes.
Pursuant to Section 264 of the Tax Code, using a non-registered official receipt and not having a BIR registered official receipt, is a criminal offense and is punishable, as follows:
- Failure or refusal to issue official receipt and/or issuing incorrect information in the receipt — fine of P1,000 up to P50,000 and imprisonment of 2-4 years.
- Printing of official receipt without authority of BIR, printing of double or multiple set of official receipts, printing of unnumbered and without your information such as Name/TIN/address, and/or printing of fraudulent official receipt — fine of P500,000 up to P10,000,000 and imprisonments of 6-10 years.
Section 34 (B) of the Tax Code also provides that no deduction from gross income shall be allowed unless the taxpayer shall substantiate with sufficient evidence, such as official receipts or other adequate records: (i) the amount of the expense being deducted, and (ii) the direct connection or relation of the expense being deducted to the development, management, operation and/or conduct of the trade, business or profession of the taxpayer.
The Company should secure BIR registered official receipts from legitimate suppliers to avoid these consequences.
The National Task Force – Run After Fake Transactions (RAFT) was recently formed to audit the buyers of these fake receipts and warned those (i.e., sellers, buyers, and accountants) who will continue to be involved in this form of tax evasion.