BIR uses Al Capone Method vs Arroyo Son

From the Philippine Daily Inquirer.

MANILA, Philippines—No one is untouchable any longer.

As the Bureau of Internal Revenue (BIR) itself put it, it is using the Al Capone method to nail a son of former President Gloria Macapagal-Arroyo for tax fraud.

In a move unthinkable for the agency during the nine-year Arroyo administration, the BIR Thursday charged Ang Galing Pinoy party-list Rep. Juan Miguel “Mikey” Arroyo and his wife, Angela, with evading taxes.

Under the net worth method, tax investigators add up all assets of a subject and subtract all his or her liabilities to calculate the net worth.

BIR Commissioner Kim Jacinto-Henares said the Arroyo couple were found to have a tax liability of at least P73.85 million, including surcharges and interest.

From 2003 to 2009, Arroyo, who, incredibly, represents the party-list group of security guards and tricycle drivers, and his wife either failed to file their income tax returns or underdeclared their income, Henares said at a press conference at the Department of Justice where the BIR filed a case against the couple.

A BIR comparison of the couple’s net worth and reported taxable income “using the net worth method first employed in the US against gangster Al Capone” showed a substantial underdeclaration of income of more than 30 percent in 2004, 2006 and 2007, a BIR statement said.

Under the Tax Code, an underdeclaration of taxable income of more than 30 percent is considered a prima facie evidence of fraudulent return.

Capone was imprisoned for good not because of criminal activities in the 1920s like bootlegging, bribery of Chicago officials and killings of rivals, but because of tax evasion.

Full story here.