Dentist from Binondo charged with tax evasion for grossly underdeclaring service income received thru credit card payments

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The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against DR. STEVE MARK G. GAN (DR. GAN) forWillful Attempt to Evade or Defeat Tax, Deliberate Failure to Supply Correct and Accurate Information in his Income Tax Return (ITR), and Willful Failure to file his Quarterly Value Added Tax (VAT) Returns, for taxable years 2009, 2010 and 2011, in violation of Sections 254 and 255 of the National InternalRevenue Code of 1997, as amended (Tax Code).

DR. GAN was likewise charged with Failure to Register as VAT Taxpayer for taxable year 2009 in violation of Section 275, in relation to Section 236(G)(1) of the Tax Code and Revenue Regulations No. 3-2012.

DR. GAN is engaged in dental services with registered addresses at 822 Regina Regente St., Binondo, Manila and 1708/1709 Medical Plaza, Amorsolo St., Legazpi Village, Makati City.

The case against DR. GAN stemmed from a confidential information denouncing the dentist for tax evasion. Investigation showed that DR. GAN declared in his ITRs for taxable years 2009, 2010 and 2011 service income amounting to P14.29 million, broken down into: P3.12 million in 2009; P3.04 million in 2010; and P8.13 million in 2011. Further, DR. GAN did not file his Quarterly VAT Returns for the said three-year period as he opted to register under Percentage Tax and file Percentage Tax Returns with its lower tax rate of 3% of his gross receipts.

Access letter addressed to Rizal Commercial Banking Corporation (RCBC) was also sent by the investigators requesting for certifications as to income payments made to DR. GAN. RCBC is a credit card company whose services were utilized by the clients of DR. GAN to pay him. Certification from RCBC revealed that the bank paid DR. GAN a total amount of P47.49 million, broken down into: P11.96 million in 2009; P23.21 million in 2010; and P12.32 million in 2011.

A comparison and evaluation of DR. GAN’s declared service income as against the income he actually received from the said banks showed that he substantially underdeclared his correct taxable income/receipts by 283.13% or P8.84 million in 2009, 664.46% or P20.18 million in 2010, and 51.43% orP4.18 million in 2011.

Under Sec. 248 (B) of the Tax Code, under-declaration of taxable income by more than 30% constitutes a prima facie case of fraud.

As a consequence of his acts and omissions, DR. GAN was assessed a total deficiency tax liability amounting to P36.49 million, inclusive of surcharges and interests, broken down into: 2009 – P10.27 million (Income Tax – P6.68 million and VAT – P3.59 million); 2010 – P20.47 million (Income Tax – P14.06 million and VAT – P6.41 million); and 2011 – P5.75 million (Income Tax – P2.59 million and VAT – P3.16 million).

The case against DR. STEVE MARK G. GAN is the 301st filed 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.