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BIR hits Rappler with P134M tax raps

Malacañang has only one advice to embattled online news outfit Rappler amid the tax evasion raps the Bureau of Internal Revenue (BIR) slapped on it: “Pay up.”

Presidential spokesman Harry Roque said there would be no other way to address the BIR and the Department of Justice’s (DoJ) filing of criminal raps against Rappler Holdings Corp. for the “willful attempt to evade or defeat tax and for deliberate failure to supply correct and accurate information in its annual Income Tax Return (ITR) and Value Added Tax Returns (VAT) for 2015.”
As a consequence of its acts and omissions, the aggregate tax liability of Rappler amounted to P133.8 million.
Roque said Rappler can now put into good use its foreign financier Omidyar Network’s (ON) $1.5 million donation.
“The law should be implemented. If you did not really pay your taxes, you will really have to pay,” Roque said.
“If I received $1.5 million, I will have to pay,” he added. 

Last January, the Securities and Exchange Commission (SEC) revoked Rappler’s license to operate as local media entity on the basis of foreign ownership.
The online firm has challenged the SEC decision before the Court of Appeals (CA).
The SEC said the news outfit was liable for violating SEC rules by engaging in a fraudulent transaction and circumventing constitutional restrictions on foreign ownership.
According to the business regulating body, Rappler “intentionally created an elaborate scheme” to justify the receipt of ON’s $1 million infusion.
Rappler founder charged
Named as respondents in the tax evasion complaint were RHC president Maria A. Ressa and treasurer James C. Bitanga for violation of Sections 254 and 255 of the National Internal Revenue Code (NIRC) for willful attempt to evade or defeat tax and for deliberate failure to supply correct and accurate information in its annual income tax return (ITR) and value-added tax (VAT) returns for 2015.
The BIR alleged that the company is liable for non-payment of P133,841,305, broken down into P91,320,481 in income tax and P42,520,824 in VAT arrears for 2015.
Based on the complaint, RHC purchased common shares from Rappler Inc. worth P19,245,975. Then, it issued and sold Philippine Depositary Receipts (PDRs) to two foreign firms worth P181,658,758.
BIR said RHC used the same common shares it purchased from Rappler as the underlying share of the PDRs for profit and transmitted economic rights to the PDR holders.
BIR said RHC is subject to income tax and VAT, being a dealer in securities.
However, the annual income tax and VAT returns for 2015, according to the BIR, does not reflect any tax payments from the PDR transaction.
Last January, the Securities and Exchange Commission (SEC) revoked the certificate of incorporation of Rappler, Inc. and RHC allegedly for violating the Constitution and foreign equity restrictions in mass media.
The SEC stated that Rappler violated the Foreign Equity Restrictions in Mass Media enshrined in the 1987 Constitution and enforceable through the Mass Media Law, Anti-Dummy Law, and the Foreign Investment Act.
Article XVI, Section 11 (1) of the Constitution states, “The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.”
Rappler filed a petition before the Court of Appeals (CA) seeking to stop the implementation of the decision made by SEC.
In its petition, the appellate court was asked to reverse and set aside the SEC en banc decision dated Jan. 11, claiming that the SEC issued the assailed order hastily that it violated their constitutional right to due process.
Rappler argued that the ruling was done in the absence of a formal charge, which was supposed to be required in the commission’s rules.
“There was also no formal administrative action filed against Rappler and RHC before the SEC. Without an administrative action, surely, no administrative action, including the suspension or revocation of the corporation’s franchise, could have been imposed by the SEC,” read the petition.

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