Lower House to dangle P10-M maximum reward to tax fraud, smuggling informants

Published June 10, 2021, 12:53 PM

by Ben Rosario

Good news for whistleblowers and informants targeting tax cheats, tax evaders and smugglers.

The House of Representatives has scheduled for plenary approval a bill that would increase to P10 milliion the P1 milliion cap for rewards to be granted informants of tax frauds, violations of revenue and customs laws and smuggling.

Immediate passage of House Bill 9306 has been sought by the House Committees on Appropriations chaired by ACT-CIS Partylist Rep. Eric Go-Yap and Ways and Means, the main committee, chaired by Albay Rep. Joey Sarte-Salceda.

Authored by Magdalo Partylist Rep. Manuel D.G. Cabochan, HB 9306 provides a comprehensive and rationalized grant of rewards to informers for the discovery of violations of internal revenue and customs laws.

Originally filed as HB 883, approval of the proposed measure was sought by Cabochan who blamed the amendment of 1959 vintage Republic Act 2338 as among the factors that discouraged tax informers and whistleblowers from cooperating with the Bureau of Internal Revenue and Bureau of Customs.

RA 2883 has been amended by Republic Act 8424 or the National Internal Revenue Code and RA 108634 or the Customs Modernization and Tariff Act by reducing to ten percent the 25 percent share of informants from the amount reward they could are entitled to receive.

To make matters worse for informers, recent laws also put a cap of P1 million on the reward to be made paid by government in exchange for the valuable information it received.

“The new law effectively discourages tax informers to report fraud involving P10 million or more because no matter how big the tax frauds and liabilities are involved in a case, an informer would only get a maximum of P1 million,” noted Cabochan.

Under HB 9306, informers will be entiled to ten percent of revenues, surcharges or fees recovered and fine or penalty collected or P10 million in reward, whichever is lower.

Whistleblowers of information that are instrumental in the discovery and seizure of smuggled goods are entitled to 20 percent of the actual proceeds from the sale of the smuggled and confiscated goods or P10 million, which ever is lower.

The proposed measure also grants the person falsely accused of violating tax laws the right to file criminal or civil action against the informant of the wrong information.

It will be recalled that government’s reward system against tax cheats and smugglers has been put to test by tax informer Danilo LIhaylihay who, demanded P12 trillion reward for his alleged role in the recovery of ill-gotten wealth of the Marcos family and their close associates.

Lihaylihay computed his reward based on the provisions of RA 2338 that contained no reward cap.

In a 2018 ruling, the Supreme Court dismissed LIhaylihay’s claim for lack of merit.