Drilon: Michael Yang paid only thousands in taxes in 2018, did not file ITR from 2014 to 2017

Chinese businessman Michael Yang only paid P7,600 in income tax in 2018 and failed to pay his duties from 2014 to 2017, Senate Minority Leader Franklin Drilon disclosed Thursday.

During the continuation of the Senate probe into the government procurement of COVID-19 supplies, Drilon flagged the alleged non-filing and incomplete ITR records of former Budget Undersecretary Christopher Lloyd Lao and Pharmally officials, as well as its suppliers of medical supplies based on the documents provided by the Bureau of Internal Revenue (BIR).

According to Drilon, there is an estimated P7.56 billion income tax from the P42 billion worth of contracts awarded by the Department of Budget and Management-Procurement Service (PS-DBM).

“In my computation, Mr. Chairman, there is a potential tax income of approximately P7.5 billion. I repeat, Mr. chairman, subject to further verification, potentially out of the P42 billion in supply contract awarded by PS-DBM the suppliers are supposed to have paid P7.5B in income taxes,” Drilon said.

Yang

In his presentation, Drilon presented BIR’s certification that Yang, a Davao City-based Chinese businessman who is close to President Rodrigo Duterte, did not file ITRs for fiscal year 2014 to 2017.

In 2018, he had a taxable income of P208,000 but only paid the government with P7,600.

Yang’s ITR records for years 2019 and 2020, as provided by the BIR, were not readable.

At the latter part of the hearing, Yang confirmed the P7,600 tax payment that he made in 2018, but he said he still needs to verify this and the other tax records with his accountant.

“If that is what is reported [with the BIR], I think it is correct because that is prepared by our accountant,” Yang, through a translator, said.

He refused to disclose the sources of income that he currently have in the Philippines when asked by Drilon.

The Chinese businessman committed to provide the BIR a more readable tax record for year 2019 and 2020, including the explanation for his non-filing of ITR from 2014 to 2017.

During the course of the hearing, Senator Francis Pangilinan raised doubts on Yang’s declared taxable income of P208,000 in 2018.

“‘Yung P208,000 income is not even 20,000 pesos a month so medyo mahirap maniwala. Very difficult to believe that sa halagang P20,000 a month mas mababa pa e hindi mo alam saan galing, which tends to show that Mr. Michael Yang is not being forthright with his answers,” Pangilinan said.

(The P208,000 that you declared is not even P20,000 a month so it’s hard and very difficult to believe that you do not know where the P20,000 came from, which tends to show that Mr. Michael Yang is not being forthright with his answers.)

“It also shows that with all these investments, and he is into trading, bakit P18,000 a month lang ang kinikita niya (why does he earn only P18,000 a month)? Again, a red flag in terms of tax evasion perhaps which the committee should take note of,” he added.

Darganis

For Pharmally corporate secretary and treasurer Mohit Dargani, the BIR has no information on his ITR for the year 2018.

Mohit’s taxable income for the year 2019 and 2020 are both unreadable but he had paid P22,062 and P97,241, respectively.

Pharmally president Twinkle Dargani paid her ITR in 2018 in the amount of P29,187, and in 2020 amounting to P1,000 only.

BIR records on Twinkle’s taxable income for 2018 and 2020 are both unreadable while the bureau has no information on her ITR for the year 2019.

Huang Tzu Yen, an incorporator of Pharmally, has no ITR records available with the BIR.

In 2020, Pharmally, in its financial statement, claimed a tax credit of P96,089,293. There is a tax due of P589.163.

Drilon likewise flagged the taxes paid by TigerPhil Marketing, saying the taxable income of the firm may be “under-declared.”

The following are the TigerPhil’s taxable income and tax payments:

Drilon said TigerPhil amended its taxable income and tax payments and declared P3,264,671 taxable income and paid P1,138,680 after the blue ribbon committee flagged it.

“Noong sinita nitong kumite na ito ang kanilang income when they were subjected to question from the committee, suddenly they amended their ITR,” Drilon said.

The amendment to the tax payments was admitted by TigerPhil official Albert Sy  in a previous Senate hearing.

TigerPhil Marketing was one of the face mask suppliers of Pharmally, the start-up that cornered billions of pesos worth of government procurement contracts at the start of the COVID-19 pandemic in 2020.

Greentrends Trading International Inc., another face mask supplier, did not file ITRs from 2015 to 2021, Drilon said, while Xuzhou Constructions Machinery Group has no records available from 2017 up to present.

Apart from the suppliers, Lao, the officer-in-charge of DBM-PS when the transactions were made, did not file an ITR in 2020, Drilon said.

Lao allegedly declared zero taxable income in 2017 and had filed ITR through electronic BIR forms Online facility for years 2018 and 2019, but Drilon said these could not be viewed by the BIR.

Prior to the disclosure of the tax records, the Senate blue ribbon panel has approved a motion allowing the disclosure of the ITR files provided by BIR be tackled during the public hearing.

“President Duterte is always telling the public that hirap na hirap ang pamahalaan wala pong pambayad kaya ang ayuda hindi nabibigay, yung pambili ng bakuna P45 billion ay nasa unprogrammed funds ibig sabihin walang pondo sa P45 billion para sa pambili ng bakuna,” Drilon said.

(President Duterte is always telling the public that the administration is having a hard time looking for funds to provide for the financial aid and the procurement of vaccines. The P45 billion funding is lodged under unprogrammed funds which means there are no available cash to fund it.)

“Di po ba tama lamang na tingnan natin sa magandang na mga kontrata na nakuha ng mga suppliers? P42 billion, magkano bang binayad nilang income tax?” he asked.

(Isn't it just right to look into these contracts that were bagged by the suppliers? That is P42 billion. How much income taxes did they pay the government?)

The panel also approved Drilon’s motion urging the BIR to create a task force for a special audit on the returns made by the suppliers of medical supplies.

The Senate blue ribbon committee is looking into the transfer of P42 billion COVID-19 funds from the Department of Health to the PS-DBM.

This includes PS-DBM’s purchase of P8.6 billion worth of face masks, face shields, and PPEs from Pharmally Pharmaceutical Corporation, a firm that is being linked to Yang.

The company only had a P625,000 paid-up capital when it entered transactions with the government. —KBK/RSJ, GMA News