Drilon seeks blacklisting of DBM-PS contractor Xuzhou of China for tax evasion

Published October 20, 2021, 11:05 AM

by Hannah Torregoza 

Senate Minority Leader Franklin Drilon on Wednesday said the government should ban Xuzhou Construction Machinery Group from doing business in the country over its non-payment of income and other taxes after bagging multi-billion contracts with the Department of Budget and Management’s Procurement Service (DBM-PS).

At the continuation of the Senate Blue Ribbon Committee’s hearing on the government’s alleged anomalous procurement of COVID-19 pandemic supplies, Drilon pointed out that Xuzhou bagged around P2.23-billion worth of contract with DBM-PS but did not pay the mandated income taxes.

Drilon also said the government should immediately ban Xuzhou and withhold any of its pending collectibles in DBM-PS, because they did not pay “a single peso of income taxes in the Philippines.”

Records from the DBM-PS show that as of September 21, 2021, Xuzhou bagged the fourth highest amount of DBM-PS contract in the amount of P2.23-billion.

The amount is part of the P42-billion that the Department of Health (DOH) transferred to the DBM-PS, which senators found as illegal and anomalous.

“You sold goods here and you made profits from commercial transactions. You are liable for income taxes.I now call on the BIR commissioner to take a look at this company, how you can collect taxes on the sales they made in the country,” Drilon underscored.

Xuzhou’s country representative Robin Han told the Senate panel that he has been representing the company since 2012, and admitted they did not pay income taxes in the Philippines, but they paid taxes in China.

Xuzhou also admitted that it is not registered under the country’s Securities and Exchange Commission (SEC) and it is not registered with the Bureau of Customs.

But Drilon said the country’s tax laws mandate that foreign corporations are required to pay income taxes.

“You entered into a transaction in the Philippines where you made income, and therefore under Philippines laws, you are liable for income taxes,” he said.

Mon Abrea, a certified public accountant who was present at the hearing, concurred with Drilon, saying that Xuzhou should have paid 25 percent income tax.

According to Drilon, Xuzhou’s admission “necessitates a deeper inquiry into tax liabilities of several foreign companies engaged by the PS-DBM in the supply of allegedly overpriced face masks and other medical supplies.”

“Did the other companies engaged by PS-DBM pay their dues? We will look into it and make sure they pay,” the Senate minority chief vowed.