Commissioner Romeo D. Lamagui Jr of the BIR (Bureau of Internal Revenue) is currently waging a war against users of ghost receipts as this method is a form of tax evasion. His program is called RAFT or Run After Fake Transactions, with operations based in the commissioner’s office. This is a first in the history of the BIR, with the project running after the issuance of Revenue Memorandum Circular 38-2023. The latter contains the various priority programs of the BIR for the new year.
What are Ghost Receipts?
These ghost receipts are fictitious or fake receipts and invoices, with transactions not taking place. The primary purpose of using this is to evade the income tax and vat liabilities of the purchaser. With these fake documents, tax evaders make false deductions and expenses, along with input VAT. These fictitious transactions equate to defrauding the government of proper tax dues. Consequently, the Filipino people are deprived of public programs and benefits, which could have been implemented with the said taxes.
How is the War Waged?
The RAFT is waged on three fronts, namely the buyers, sellers, and CPAs. Buyers and sellers who rely on fake receipts and invoices face severe penalties. Similarly, CPAs could have their licenses revoked if they ignore or sign off on their clients who use this tax evasion scheme. All three proponents could face 6 to 10 years imprisonment for tax evasion. Commissioner Lamugui Jr. said that their all-out war equates to the deployment of all BIR forces as the enforcement of RAFT is a top priority.
Initial Skirmishes in the War
As of today, the Commissioner has led several successful skirmishes. He and his team raided a condo unit in Quezon City last Dec 2022 where they confiscated thousands of ghost receipts. He has already filed criminal cases against the sellers of ghost receipts with the DOJ last March 16, 2023. Furthermore, he filed a case with the PRC to revoke the license of the CPA involved with the syndicate last March 21, 2023.
The forthcoming April 17 deadline for the filing of income taxes is the Commissioner’s last warning to all buyers and sellers of ghost receipts. He enjoins the public not to patronize and use fraudulent documents for their tax filings. He also tells everyone not to listen to their CPAs or financial advisors who encourage tax avoidance with fake receipts. It is no longer tax avoidance, which is legal, but tax evasion.
Hence, businesses and individuals who use this for their returns will be tagged, investigated, and audited for appropriate penalties. The Commissioner also points out that taxpayers will spend more for this audit and face potential imprisonment, which is a bigger hassle than filing the correct tax returns and tax dues. Apart from potentially losing millions of pesos, tax evaders can lose their freedom.
Aggressive and Fearless Enforcement of All Tax Laws
As of press time, the BIR is aggressive and fearless with their enforcement of the laws. Under the Commissioner’s leadership, the BIR also enforced tax laws on illegal traders of cigarettes and vape. Last January 2023, there was a successful nationwide campaign against illegal cigarette traders. In the coming months, cases will be filed against all cigarette traders who undergo illegal activities.
Similarly, the Commissioner spearheaded a raid against big warehouses storing untaxed and unregistered vape goods last November 2022. Around 1.2B pesos worth of cases and criminal charges were filed against illegal cigarette vape traders the following month in December.
Apart from enforcement against the illegal trade of tobacco and vape products, the BIR will consistently go after patrons of ghost receipts. The public is warned to abide by the laws because the current Commissioner is firm in upholding all tax rules and regulations. No exceptions!
