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Manila Bulletin devider Philippines devider National devider BIR's wrong audit procedure costs gov't P141M in tax case

BIR's wrong audit procedure costs gov't P141M in tax case

Published Mar 8, 2022 11:48 am

The local and exclusive distributor of Italian luxury sports car, Meserati, was cleared by the Court of Tax Appeals (CTA) of more than P141 million tax liabilities as the Bureau of Internal Revenue (BIR) used wrong audit procedure.

The court's Third Division stated that the Formula Sports, Inc. of Bonifacio Global City, Taguig City was not liable to pay deficiency excise and value-added taxes for the years 2010 to 2012 as the assessment was based on a mission order and not on a letter of authority (LA) to investigate as required by Section 13 of the Tax Code.

The BIR said an LA was not necessary in this case as the audit was conducted by the office of the commissioner which function "is organic to his office."

The court explained that an LA is given to a revenue officer empowering him to examine the books of accounts of a taxpayer.

Whereas, it said the mission order covers only surveillance, or observation operations and not outright authority to examine the taxpayer's financial statements.

It added that the mission order should have been changed with an LA after the surveillance operations have been completed.

Examiners from the BIR large taxpayers service uncovered the alleged deficiency taxes when it reconciled the company's importation records and the information furnished by the car supplier to the bureau.

Meserati's prices start at P4.3 million.

The 15-page decision was written by Associate Justice Maria Rowena Modesto-San Pedro.

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