Albay-based Ferrari owner charged with tax evasion

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Albay-based Ferrari owner charged with tax evasion

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against REX PEPITO CORTEZ (CORTEZ) for Willful Attempt to Evade or Defeat Tax, and Deliberate Failure to File his Annual Income Tax Returns (AITR) for taxable years2013 and 2014, in violation of Sections 254 and 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Respondent CORTEZ is registered with the BIR with registered address at Liddong, Sto. Domingo, Albay. The case against him was prompted by an information provided by a confidential informant that CORTEZ owned a Ferrari worth millions of pesos.

Based on the information and documents gathered from the Land Transportation Office (LTO), East Avenue, Quezon City, CORTEZ bought a brand new luxury car on 04 December 2013 worth P15.41 million described as 2013 Model Ferrari/FF/Coupe. He subsequently sold the same car on 24 March 2014 for a purchase price of P33 million.

Verification with Revenue District Office (RDO) No. 67, Legazpi City revealed that CORTEZ is not a registered business taxpayer and has no available records of any income and value added taxes filed for taxable years 2007 to 2014. Despite the acquisition of said luxury vehicle in 2013 and revenue received from the sale of the said car, CORTEZ did not file any income tax return for taxable years 2013 and 2014.

Using the Expenditure Method of Investigation, the BIR computed the estimated amount of income that CORTEZ earned for taxable year 2013 and discovered that CORTEZ had substantial tax deficiencies for taxable year 2013 amounting to P8.38 million.

To compute his tax deficiency for 2014, the entire selling price of the luxury car less the acquisition cost was taken into account as the net capital gain from the said sale. The BIR thus computed his tax deficiencies for taxable year 2014 at P8.50 million.

As a result of his acts and omissions, CORTEZ was sued for an aggregate deficiency income tax liability amounting to P16.88 million, including surcharges and interests.

The case against REX PEPITO CORTEZ is the 366thfiled under the RATE program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of the National Investigation Division.