Senator Franklin Drilon on Sunday vowed to look into the tax records and liabilities of Pharmally Pharmaceutical Corp. which bagged multi-billion deals from the Department of Budget and Management’s procurement service (DBM-PS) during the stint of former undersecretary Christopher Lao.
Citing red flags in its financial statements, Drilon said it is not clear whether Pharmally has paid the government the correct taxes, and Bayanihan 1 and 2 does not exempt from value added tax (VAT) local purchases.
“Therefore, the amount paid to Pharmally should have been subject to a 2 percent withholding tax on government payments, and a 5 percent VAT withholding,” Drilon said in a statement.
“Furthermore, the sale of the PPE to government is subject to an output VAT of 12 percent because the product they imported are exempt, therefore, they would not have any input VAT to deduct except for the 5 percent VAT withheld if this was properly withheld from the payment to Pharmally by PS-DBM,” Drilon said.
Pharmally bagged the P8.6-billion contract with the DBM -PS for the procurement of face masks, face shields and other personal protective equipment (PPEs), including test kits, as the country struggles amid the COVID0-19 pandemic last year, despite having only a P625,000 paid up capital.
“Apart from the issue of overpricing, there could be violations of our tax laws by Pharmally. We should examine the potential tax liabilities of this dubious trading firm. Did Pharmally pay any percentage tax? Did it pay any excise tax and documentary stamp tax payments?” Drilon stressed.
Drilon said records show that Pharmally is classified as a domestic corporation subject to the provisions of Section 27 of the Tax Code. For a company or entity to participate in government bidding, they need to get a tax clearance from the Bureau of Internal Revenue (BIR).
Yet there are no records of Pharmally obtaining any tax clearances, Drilon observed.
“The BIR should review possible violations of the tax laws committed by this dubious and shadowy company that bagged billions of pesos in government contracts. They should zero in on potential tax crimes and tax fraud by Pharmally,” he stressed.
Drilon also said it is mysterious and highly questionable how Pharmally acquired over P7-billion to fund its inventory supplies.
Based on its financial statement, he said Pharmally has P7,485,401,046 sales and P7,092274,180 cost of sales. It reported a cost of inventory of P7-billion while its liabilities only stand at P1,748,879.
“Where did it get the P7-billion to buy their inventory of supplies with only P625,000 paid up capital? How did they acquire the inventory? There is none on record that will show a payable or equity close to P7-billion. It remains a mystery,” he said.
“There is no indication where the P7-billion came from. Without any explanation, it appears that it just fell into its lap. Pharmally executives should come out and explain this among other things,” Drilon said.
The minority leader reiterated his call for Pharmally executives to appear before the Senate and testify about the over P10-billion supply deals it got from the DBM-PS.
“Kung wala kang itinatago, bakit ka magtatago (If you’ve got nothing to hide, why would you hide)? Where are the officials of Pharmally?” Drilon asked.