Ferrari owner in Albay faces tax evasion raps

MANILA, Philippines – The Bureau of Internal Revenue (BIR) has filed a tax evasion complaint against an Albay resident who bought  a P15-million sportscar in 2013, then sold it for more than double the price in 2014, but failed to file income tax returns in those years.

The BIR filed a criminal complaint against Rex Pepito Cortex, a resident of Sto Domingo, Albay, for willful attempt to evade or defeat tax, and deliberate failure to file his Annual Income Tax Returns (AITR). He is estimated to owe the government over P16 million in taxes.

A confidential informant had tipped the BIR about Cortez’s Ferrari, which the agency validated through information and documents gathered from the Land Transportation Office (LTO).

The BIR discovered that Cortez bought a brand new Ferrari FF Coupe on December 4, 2013, worth P15.41 million ($342,492.84). He then sold the same car on March 24, 2014, for P33 million ($733,452.23).

Verification with the Revenue District Office (RDO) No. 67 in Legazpi City, revealed that Cortez is not a registered business taxpayer and has no available records of any income and value-added taxes filed for taxable years 2007 to 2014.

“Despite the acquisition of said luxury vehicle in 2013 and revenue received from the sale of the said car, Cortez did not file any income tax return for taxable years 2013 and 2014,” the BIR said.

Using the expenditure method of investigation, BIR computed the estimated the amount of income that Cortez earned and discovered that he had substantial tax deficiencies of P8.38 million ($186,301.97) for taxable year 2013.

To compute his tax deficiency for 2014, the entire selling price of the luxury car less the acquisition cost was taken into account as the net capital gain from the said sale. The BIR thus computed his tax deficiencies for that period at P8.5 million ($188,981.53).

As a result of his acts and omissions, in violation of Sections 254 and 255 of the National Internal Revenue Code of 1997, as amended, Cortez was sued for an aggregate deficiency income tax liability amounting to P16.88 million ($375,278.84), including surcharges and interests.

The case versus Cortez is the 366^th filed under the Run Against Tax Evaders (RATE) program of the BIR. It is likewise a RATE case of the National Investigation Division. – Rappler.com

$1 = P44.98

Ferrari image via Shutterstock