THE Bureau of Internal Revenue (BIR) filed on Friday a P1-billion tax evasion complaint against Prieto-owned Golden Donuts, Inc. (GDI), which holds the local franchise for Dunkin’ Donuts chain.

In a statement, the BIR said the criminal complaint was filed with the Department of Justice against Golden Donuts and four of its officials for willful attempt to evade tax, and failure to supply correct and accurate information on the company’s income tax return (ITR) and quarterly value added tax (VAT) return in 2007.

Named in the complaint were Golden Donuts President Walter C. Spakowski, Treasurer Miguel H. Prieto, Chief Financial Officer Pedro E. Paraiso and Vice-President for Finance and Administration Jocelyn V. Santos.

The BIR said GDI and its corporate executives are also being held civilly liable for income tax, VAT and expanded withholding tax (EWT) deficiencies for taxable year 2007, reaching P1.12 billion, including surcharge and interest. Broken down, GDI’s income tax deficiency stood at P840.82 million; VAT — P270.42 million; and EWT — P7 million.

Golden Donuts is the exclusive franchisor of Dunkin’ Donuts of America, Inc. (DDAI), which gave it the license to develop and operate doughnut shops in the Philippines.

“The case arose when a confidential information was received by the BIR that GDI made substantial under-declaration on its sales. To check the veracity of said information, a Letter of Authority was issued by the Commissioner of Internal Revenue for the examination of its books of accounts and other accounting records pursuant to the Run After Tax Evaders (RATE) Program of the BIR,” the tax agency said.

In its investigation, the BIR said sales invoices issued by some suppliers were “intentionally altered” and did not include GDI’s taxpayer identification number.

“Through this scheme, GDI was able to claim the altered invoices as deductions from its income and as input VAT credits in the amount of PhP99,297,036.47 and PhP11,915,644.38, respectively. Consequently, no deduction or input tax credits shall be allowed if supported by non-compliant receipts/invoices as they are not valid proof of substantiation,” the BIR said.

The tax authority also noted Golden Donuts was found to have “substantially” under-declared its sales by 39%, and its royalty income by P38.96 million.

“The under-declaration of sales was noted by comparing the donut sales declared by GDI vis-à-vis sales derived from the grossed-up value of franchise fee paid to Dunkin Donuts of America, Inc. (US),” the BIR said.

In response, Golden Donuts said it “categorically denies” the BIR’s accusations.

“As a matter of fact, the tax liabilities of GDI for the said year had been settled with the BIR as of 2012. Further, it has always been compliant with all tax laws and regulations, as evidenced by tax clearances issued by the BIR over the years,” the company said in a statement.

“It appears from the news reports that the complaint was filed based on an alleged 39% underdeclaration of sales which arose from the attribution of sales of franchises to GDI. All GDI franchisees are business entities separate from GDI that are responsible for paying their own taxes… GDI is prepared to answer the tax evasion case in the proper forum,” it added.

In April 2017, President Rodrigo R. Duterte accused the Prieto family, which then owned The Philippine Daily Inquirer, of not paying correct taxes on its Dunkin’ Donuts business.

“Inquirer ang may-ari ng Dunkin’ Donuts. Alam mo ba ‘yan? At may utang ‘yan sila na taxes. Inayos ni Kim Henares. Walang ibinayad o nabayad nang kaunti lang (Inquirer is the owner of Dunkin’ Donuts. Did you know that? And they owe us taxes. It was fixed by Kim Henares. They did not pay or just paid a little amount),” Mr. Duterte said then, referring to the former BIR commissioner.

Last year, the Prietos sold its 85% stake in the Inquirer Group of Companies to business tycoon Ramon S. Ang, calling the move “a strategic business decision.”

Mr. Duterte also criticized the Prieto and Rufino families, owners of the Mile Long property in Makati City, for evading taxes and rentals.

The Mile Long property located along Amorsolo Street in Makati has been the subject of a legal dispute between the government and Sunvar Realty Development Corp.

In August 2017, the property firm owned by the Rufino and Prieto families agreed to vacate Mile Long following an order issued by the Makati Regional Trial Court’s branch 141. — Karl Angelo N. Vidal