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Luxury-loving Napoles girl charged with tax evasion
Publication Date : 12-10-2013
Ironically, luxury became her downfall.
Jeane Catherine Lim Napoles was charged with tax evasion on Thursday for not declaring income for multimillion-peso properties she had purchased and registered in her name, including a unit in the much-ballyhooed glitzy Ritz Carlton in downtown Los Angeles, California.
Since she became a registered taxpayer in 2008, the 23-year-old daughter of businesswoman Janet Lim-Napoles, the alleged mastermind behind the 10-billion-peso (US$232.6 million) pork barrel scam, has not declared any income.
It was the turn of the young Napoles to be charged with tax evasion two weeks after her mother and father were charged with the same offense by the Bureau of Internal Revenue (BIR).
Her two siblings—Jo Christine and James Christopher—are also in trouble with the law.
Levito Baligod, lawyer of whistle-blowers in the pork barrel scam, said last week that he would include the two siblings in the plunder case filed in the Office of the Ombudsman for “direct involvement in the falsification and liquidation of documents” in connection with the P900 million from the Malampaya Fund that was released through the Department of Agrarian Reform in 2009.
Revenue Commissioner Kim Henares said the BIR was suing Jeane Catherine for 32.06 million pesos in tax liability, inclusive of interests and surcharges, broken down into 31.38 million pesos in 2011 and 680,000 pesos in 2012.
This was because she did not declare an income when she was able to acquire and register in her name real estate in taxable years 2011 and 2012.
Among the properties was the Ritz Carlton unit in the United States, acquired in 2011 at 54.73 million pesos and a farm lot in Bayambang, Pangasinan province, where she had a 1/9th share and which was purchased in 2012 for 1.49 million pesos.
The BIR said it used the expenditure method in determining the unpaid tax liabilities.
Under this method, any expenditure that is in excess of reported income and unexplained wealth is considered to be the amount of unreported income. The amount of unreported income and the value of the assets are used as basis for determining unpaid tax liabilities.
Henares said that based on BIR records, the young Napoles did not file an income tax return for 2011 and 2012 and that there were no records of returns proving that gifts, bequests or devises were given her.
“We also checked on any donor’s tax or estate tax and we can’t find anything also. So, the presumption if you can buy something that’s worth P54.73 million, you must have earned an income net of 54.73 million pesos,” the BIR chief said at a news briefing.
Party in Hollywood club
Henares said that this was a “conservative” estimate of Jeane Catherine’s income because the BIR did not consider her living expenditures or even the cost of her partying.
Henares was apparently referring to social media reports of Napoles’ partying in a Hollywood club to celebrate her 21st birthday, which got the ire of netizens amid reports about the pork barrel scam allegedly perpetuated by her mother.
The revenue chief said the BIR was looking into the properties of the Napoleses “so as to find out how much they really owe the government.”
Like her parents, Jeane Catherine is now facing a complaint at the Department of Justice for willful attempt to evade or defeat tax and for deliberate failure to file returns and pay tax for the two taxable years.
This was in violation of Sections 51 (A)(1) (9)(a) and 74 in relation to Section 254 and Section 255 of the National Internal Revenue Code of 1997, as amended.
Request for US help
Amid reports that the Napoleses were selling their multimillion-dollar properties in the United States, Justice Secretary Leila de Lima said the government could not stop the sale of these assets pending its request for US help in freezing these assets.
De Lima told reporters that the government was formalising its request for US assistance through the PH-US Mutual Legal Assistance Treaty.
She said the government was validating the US properties of the Napoleses and their values, and how to proceed against these assets.
De Lima acknowledged that nothing could be done to stop the sale of the properties “but with the wide publicity, this can reach the US and our fellow Filipinos there. They are on notice (about these).”
But the justice secretary said all was not lost because the government could still pursue the properties that the Napoleses had disposed of.
“But we have to make sure what mode or what mechanism can be used to pursue these properties because the premise is these are proceeds of the crime you know, this large-scale corruption. So there are methods of recovery,” she said.
Henares said that even if the properties in the United States had been sold, the BIR could still go after the Napoleses by requiring them to pay taxes for the properties.
BIR sought IRS aid
She said the BIR was expecting its American counterpart—the Internal Revenue Service (IRS)—to help find any assets that the Napoleses may have in the United States.
Confirming reports that the tax bureau had sought assistance of the IRS, Henares expressed confidence that the BIR counterpart would respond favorably given that the Philippines and the United States have a tax treaty.
Under the treaty, each of the two parties may seek the assistance of the other in pursuing people guilty or suspected of tax evasion.
The BIR chief said member-countries of the Organization for Economic Cooperation and Development (OECD) were expected to help out in efforts to catch tax evaders and money launderers.
“Cooperation [between internal revenue agencies of member-countries] is a common practice. Noncooperative countries may be subjected to blacklisting by the OECD,” she said in a phone interview.
“So, yes we [the BIR] have asked assistance of the IRS. In return, we should also help them in case they need information from the Philippines on tax matters,” Henares also said.
The BIR thought of seeking help from the IRS amid reports that the Napoles family have assets in the United States, either legally or illegally acquired, for which taxes have not been paid.
Henares earlier said that under the country’s Tax Code, even ill-gotten wealth and income from illegitimate sources were taxable.
On September 26 the BIR filed tax evasion cases against Janet Lim-Napoles and her husband Jaime Garcia Napoles in the Department of Justice.
The BIR said Janet had 44.68 million pesos while Jaime had 16.43 million pesos in unpaid tax liabilities for 2004 to 2012. The tax liabilities were computed based on assets of the couple that the BIR found through investigation.
But Henares said the amounts of tax liabilities of the Napoles couple would increase should the BIR locate more assets and incomes for which taxes were not paid.
“The assessment of their unpaid tax liabilities will keep on growing as we [the BIR] get more evidence,” she said.
Henares said the BIR had begun investigating assets of nongovernment organisations that Napoles had put up.
“Yes, the BIR is now looking into these Napoles-owned NGOs cited in the report by the COA [Commission on Audit],” Henares said.
The NGOs were said to have been used in the P10-billion pork barrel scam. Whistle-blowers said pork barrel funds given to legislators were used to fund ghost projects of the NGOs. The funds were said to have been diverted to the pockets of the legislators and Napoles.
Henares said the BIR would specifically investigate the contracts and deals entered into by these NGOs with the aim of determining the incomes they derived over the years as well as the corresponding taxes that may not have been paid.
*US$1 = 42.98 pesos