Run After Tax

Evaders
{RATE}
Program
Aika Fore M.
Garcia
LOGO

Background
Important Terminologies
Organization
Objectives
Activities and Persons Covered
Procedures and Methods
Actual Case
Conclusion
Reference

Important Terminologies
Run After Tax Evaders (RATE)
-program initiated by the DOF and BIR to
investigate and prosecute individuals and/or
entities engaged in tax evasion and other
criminal violation of the National Internal
Revenue Code of 1997

Tax Evasion or Tax Fraud

-is the use by the taxpayer of illegal or
fraudulent means to defeat or lessen the
payment of a tax
-tax dodging

Important Terminologies
Income tax
- is a tax on the net income or the entire income
realized in one taxable year
-it is levied upon corporate and individual incomes in
excess of specified amounts and less certain deductions
and/or specified exemptions in cases permitted by law

DOF- Department of Finance

DOJ-Department of Justice

NBI- National Bureau of Investigation

CIDG- Criminal Investigation and Detention Group

Organization of the RATE

BIRs mission: to raise
revenues for the
government through
effective and efficient
collection of taxes, quality
service to taxpayers, and
impartial and uniform
enforcement of our tax laws
DOF and BIRs paradigm shift from
collection of civil liabilities to
prosecution of the criminal aspect of
tax evasion

Organization of the RATE

March 2005, the RATE
Program was
conceptualized and
initiated
RATE TEAM: revenue
officers and lawyers
Ties with NBI and CIDG
Designed to investigate,
prosecute, and convict
tax evaders and
violators if the NIRC of
1997

Objectives
1. Generate the maximum deterrent
on the taxpaying public by
impressing the fact that tax evasion
is a crime and violators will be
caught and punished
2. Enhance voluntary compliance
among taxpayers
3. Promote the confidence of the
public in the tax system

Persons or Entities Covered

Any person,
association,
partnership, and
company found
to have
committed a
violation of the
provision of the
NIRC of 1997
may be charged

Activities Covered

Offenses relating to Income

-failure to file returns
-failure to pay taxes
-deliberate underdeclaration of income
by more than 30% of that declared per
return
-hiding or transferring assets or income
-non-remittance of withholding taxes

Activities Covered

Offenses relating to Deductions

-deliberate overstatement of
amount of deductions by more than
30% of actual deductions
-claiming personal expenses as
business expenses
-claiming false deductions

Activities Covered

Other Violations
-using of fake accountable forms such
as Certificate Authorizing Registration
(CAR), Tax Clearance Certificate (CTCC)
-failure to register with the BIR
-keeping more than one (1) set of books
of accounts
-making false entries in books and
records

Sources of RATE Cases

Audit examination of tax returns

Confidential information filed by
informers (Section 282 of the NIRC)
Information obtained by the BIR from
third parties (Section 5(B) of the
NIRC)
Referrals from other governmental
agencies
Newspaper report

Procedures in Developing Tax Evasion (RATE) Cases

Revenue Investigation report and sworn affidavit

Officers

Commissioner
of Internal
Revenue

DOJ

Refer the case to the Department of Justice (DOJ)

Formal Investigation initiated through the issuance of a

Letter of Authority against subject taxpayer
Existence of Fraud is determined, a criminal case for tax
evasion will be filed

Methods of Proving Tax Cases

Net Worth Method

Expenditure Method
Percentage Method
Unit and Value Method

Informers Reward
Sum equal to ten
percent (10%) of
the surcharges,
revenues or fees
recovered and/or
fine or penalty
imposed and
collected
Or
One Million Pesos
(Php 1,000,000)
per case,
whichever is lower

Cases in Iloilo
2011, Engr. Norberto Fedelicio was
charged with willful attempt to evade
or defeat tax and deliberate failure to
supply
correct
and
accurate
information in his ITR for 2009 and
2010
78th case filed under the RATE
program in the Aquino Admin; 1st
RATE case in Iloilo/ Revenue Region
11

Cases in Iloilo

Income of Php 46.43 Million in 2009

and Php 28.73 Million in 2010
ITR showed that he only declared
Php12.89
Million
in
2009
and
Php10.09 Million in 2010
Total discrepancy of Php26.41 Million
Substantial under declaration of more
than 30% constitutes prima facie
evidence of fraud

Cases in Iloilo
2011, Avelino Aw-Yong was charged with
two counts of willful attempt to evade or
defeat payment of income tax and two
counts of willful failre to supply correct and
accurate information in his ITR in 2009 and
2010
In 2009, he earned Php 20.33 Million but
only declared Php 5.87 Million
In 2010, he earned Php 23.43 Million but
declared only Php 6.39 Million
Substantial underdeclartion of more than
30% constitutes prima facie evidence of
fraud

Cases in Iloilo
2012, Rommel Ynion and
Hok Builders for violating
NIRC of 1997
attempting to evade taxes
and failing to supply the
BIR with
correct and
accurate information in his
ITR in 2006, 2008,2010;
willful failure to file VAT
returns for 2006-2009 and
parts of 2010

Cases in Iloilo

Income of Php 296 Million in 2006 to

2010, but declared only Php 221
Million
Owes the government Php 84.88
Million including surcharges and
interests; Php 57.73 Million deficiency
income tax and Php 27.14 Million

Conclusion

Public Confidence in the Tax

System
Fight against corruption
Strategic Support from different
Agencies of the Government
Public awareness

References

Angelo, F. A. (2011). BIR raps Ynion for Tax Evasion: Businessmanpublisher says case is politically-motivated. Retrieved from The Daily
Guardian: http://thedailyguardian.net/index.php/local-news/15814bir-raps-ynion-for-tax-evasion-businessman-publisher-says-case-ispolitically-motivated
Bureau of Internal Revenue. (n.d.). Momorandum of Agreement with
NBI and CIDG. Retrieved from Bureau of Internal Revenue:
http://www.bir.gov.ph/images/bir_files/old_files/pdf/moa_nbicidg.pdf
Bureau of Internal Revenue. (n.d.). RATE Program- Frequently Asked
Questions. Retrieved from Bureau of Internal Revenue:
http://www.bir.gov.ph/images/bir_files/old_files/pdf/rate_frequently
_asked_questions.pdf
Bureau of Internal Revenue. (n.d.). Run Against Tax Evaders (RATE)
Program. Retrieved from Bureau of Internal Revenue:
http://www.bir.gov.ph/images/bir_files/old_files/pdf/rate_backgroun
d_and_organization.pdf
Department of Finance News Correspondent. (2011, October 27).
Engineer charged with Tax Evasion for Substantial Under declaration of
Income. Retrieved from Department of Finance:
http://www.dof.gov.ph/?p=3275
Sofia, Khariza Joy. (2014, February 22). 2013 Records 15% Growth in
Taxation. Retrieved from Iloilo Metropolitan Times:
http://www.iloilometropolitantimes.com/2013-records-15-growth-intax-collection/

Thank You!