COA: San Juan failed to collect P736 million taxes from eight businesses

The City of San Juan has failed to collect taxes worth P736 million from eight large businesses, the Commission on Audit (COA) said Tuesday.

Based on the COA’s annual audit report on San Juan City, the P736 million uncollected taxes should have been collected from the following:

• Puregold Price Club, Inc. (P625 million)
• Ortigas & Company Limited Partnership (P59 million)
• Motor Image Pilipinas, Inc. (P21.8 million)
• Motor Image Manila, Inc. (P20.9 million)
• Techtron Systems Corp. (P7.4 million)
• Colinas Verdes Hospital Managers Corporation (P6 million)
• Unimart Inc. (P403,315) and
• Integrated Computer Systems, Inc. (P4.5 million)

“Books of accounts of eight large business taxpayers were not examined in 2017 and 2018 which is not in consonance with Local Government Code,” state auditors said.

In recomputing the uncollected business taxes, state auditors used the lowest tax rate for those operators with two or more businesses like Techtron Systems Corporation, Integrated Computer Systems, Incorporated, and Unimart Incorporated.

The amount of under collection for the other businesses like Ortigas & Company Limited Partnership, Motor Image Pilipinas, Incorporated, Motor Image Manila, Incorporated, and Colinas Verdes Hospital Managers Corporation—on the other hand—were based on actual amounts reflected in the Statement of Income submitted to the Securities and Exchange Commission (SEC) and the tax rates provided by the business categories declared in the Business Permits and Licenses Tax Administration System of the city.

“The city could have collected more business taxes had it prioritized conducting examination of books of accounts of those large businesses,” COA said.

The San Juan city government under former mayor Guia Gomez, in the same COA report, argued that it was difficult to get the latest records of audited financial statements, especially of those large business taxpayers, in the “I View” Program of the SEC.

“Hence, the examination of books of accounts was undertaken only on the businesses of mid-range business taxpayers,” COA quoted the San Juan city government as saying.

State auditors, however, found out that businesses Motor Image Pilipinas, Incorporated and Motor Image Manila, Incorporated categorized themselves as importer/distributor and retailer/non-essential, respectively—categories that only require businesses of 70 percent of 1% and 75 percent of 1%, respectively.

A business categorized as car dealer, distributor of brand new and/or used cars, van, trucks and other automobiles has to pay a tax rate of 80 percent of 1%.

Per the COA report, Motor Image Pilipinas, Incorporated is the same as Subaru Philippines and as such, should be categorized as a car dealer.

“We recommend that the City Treasurer’s Department seek assistance from the SEC and/or the Bureau of Internal Revenue in gathering financial information to determine/verify the amounts of gross sales/receipts being declared by business owners to facilitate the conduct of examination of the books of accounts of the taxpayers, whether with big or small businesses,” state auditors said.

In response, the City Treasurer said during the exit conference that its examination team has gained access and had been using the SEC "I-View" facility.

The data available, however, is limited to those covering years 2017 and prior years.

Nevertheless, the City Treasurer’s Department agreed to comply with COA recommendation by inquiring and coordinating with the SEC relative to steps in securing financial statements. — BAP, GMA News