China firm in PPE deal claims it didn't need to register, pay tax in Philippines

China’s Xuzhou Construction Machinery Group (XCMG)on Tuesday denied  allegations of tax evasion, saying all its dealings with the government were above-board.

In a statement, XCMG lawyer Atty. Kimberly Baltazar said that as an international exporter from China, XCMG was not required to register in the destination country and was not obligated to pay income tax.

“In accordance with Philippine laws (National Internal Revenue Code Section 42(e), Section52 (A)) and relevant international regulations, exporters of international trade aren't required to register at their destination and shall pay no income tax to the destination country," Baltazar added.

Baltazar said the XCMG in April and May 2020 delivered 1.25 million PPE sets to the Philippine government upon the latter’s request through PS-DBM.

“The above two batches of PPE sets were conducted on the [cost, insurance, and freight] terms. Our company is only responsible for export delivery, not the import, sales, use, and links in the Philippines," Baltazar said.

"Hence, the transaction is deemed completed once the goods are loaded at the Chinese port,” she added.

No tax record, no Customs registration

Senators pointed out that XCMG had no tax record with the Bureau of Internal Revenue (BIR).

The lawmakers also learned that XCMG had not been accredited by the Bureau of Customs (BOC) as importer and had not been registered with the Securities and Exchange Commission (SEC).

The Senate panel is already seeking BIR’s help to conduct a special audit on the income tax returns of the suppliers of medical supplies.

Baltazar said the company would not allow its name "to be tarnished by any accusations of illegal tax evasion."

“The reports have caused damaging effects to our brand reputation and to the Filipino public opinion towards our company. Xuzhou Construction Machinery Group Imp. & Exp. Co. Ltd. categorically denies these claims and declares that the reports are false,” Baltazar said.

“Our transaction of PPE sets with the Philippines is considered a form of international trade that rightfully complies with established international trade practices and Philippine national laws," she added.

'Highly qualified'

While the lawmakers questioned the construction firm supplying medical goods to the PS-DBM, Baltazar said XCMG was “highly-qualified” to export all kinds of medical equipment that “conformed "to the strictest international standards of quality."

The Chinese firm’s lawyer cited XCMG’s experiences which includes deliveries to the United States, United Kingdom, Canada, Australia, Spain, Brazil, Malaysia, UAE, Nigeria and Bangladesh since the COVID-19 broke out.

The XCMG lawyer is hoping that the firm’s rights, interest and reputation be duly recognized and safeguarded.

“In view of the doubtful claims and false reports, we will reserve the right to pursue legal liability and other appropriate legal actions,” she said.

Meeting with Duterte

Baltazar hit “malicious insinuations” on the photos showing the 2017 meeting between XCMG officials and President Rodrigo Duterte.

At the committee's October 28 hearing, Senator Risa Hontiveros said Duterte met Wang Min, allegedly the chairman of XCMG, in 2017.

Malacañang said conclusions should not be drawn from mere photos showing Duterte with the XCMG officials, adding that these would not prove a relationship.

She said the occasion was part of an official visit were in officials of reputable companies from various countries paid courtesy call to the new administration.

Baltazar said XCMG is a “reputable company both in Beijing and internationally” which owns more than 60 enterprises, covering eight business sectors with more that 26,000 employees. -NB, GMA News