MAPping the Future


Criminal Violations of the Tax Code

written by Mr. Raymond "Mon" A. Abrea - March 7, 2022

“Always file and pay the correct taxes and ensure all reported information are accurate” is wisdom that bears repeating because non-compliance may have dire consequences. While some tax violations may be settled with a fine, serious ones may be considered criminal offenses which could lead to imprisonment.


Who are liable?


According to Sec. 253 of the Tax Code, any person who violates the provisions of the Code or causes someone to commit a violation, and those who willfully assisted them, will be held liable. If the offender is a foreign national, he shall be immediately deported. If the offender is a public officer or employee, he will receive the maximum prescribed penalty and be “perpetually disqualified from holding any public office, to vote and to participate in any election.” If the offender is a Certified Public Accountant, his certification will be automatically cancelled.


Persons who attempt to evade or defeat taxes shall be punished with a fine of at least P500,000 but not more than P10,000,000. They shall also be imprisoned for at least 6 years but not more than 10 years.


If the offender is a legal entity (such as a corporation, partnership, or association), the president, partner, general manager, branch manager, treasurer, officer-in-charge, and the employees responsible for the violation will all be held liable. In addition to the penalties imposed upon the liable individuals, the corporation, partnership, or association shall pay a fine of at least P50,000 but not more than P100,000.


Criminal offense


Tax evasion, also known as tax fraud, refers to use of illegal and fraudulent means to avoid the payment of tax or lessen it. It is such a grave offense that the Department of Finance and the BIR initiated the Run Against Tax Evaders (RATE) Program. This aims to investigate and prosecute individuals and entities that engage in tax evasion practices as well as other violations of the National Internal Revenue Code (NIRC).


Some of the offenses considered criminal violations are:

  • Failure to file tax returns
  • Failure to pay taxes
  • Deliberate and substantial underdeclaration of income by more than 30% of that declared per return
  • Hiding or transferring of assets or income
  • Non-remittance of withholding taxes
  • Deliberate and substantial overstatement of amount of deductions by more than 30% of actual deductions
  • Claiming of personal expenses as business expenses
  • Claiming of false deductions
  • Use of fake Certificate Authorizing Registration (CAR), Tax Clearance Certificate (TCC) or other accountable forms
  • Failure to register with the BIR
  • Keeping more than 1 set of books of accounts
  • Making false entries in books and records


The case of Pharmally


The multi-billion peso controversy involving Pharmally Pharmaceutical Corporation made headlines in 2021. A startup company with no track record bagged a P10B contract from the DOH to procure COVID-19 medical supplies such as PPEs and face shields. Tax lawyers and senior certified public accountants working with the Right to Know, Right Now! Coalition audited the corporation and found apparent or prima facie evidence of tax evasion, specifically citing “Overdeclared cost of goods by 50 percent” and “Possible tax deficiency of 30 percent.”


As such, Pharmally and its president, treasurer, managers, and all other employees involved in committing the offenses may be liable to the punishments stated previously. Although the Senate Blue Ribbon Committee hearing is ongoing, it has already recommended the deportation and filing of criminal charges against Chinese businessman Michael Yang, Pharmally’s financier and guarantor to Chinese suppliers.


Ghost of taxes past


Another timely case of tax violation involves presidential aspirant Ferdinand “Bongbong” Marcos Jr. The Court of Appeals convicted him for his failure to file Income Tax Returns from 1982 to 1985, a period when he served as vice governor and then governor of Ilocos Norte. Marcos Jr. is ordered to pay his deficient income taxes due with interest, as well as a fine of P2,000 per count of non-filing of ITRs from 1982 to 1984. For his 1985 ITR, he must pay P30,000 for his failure to file plus surcharges. Marcos Jr.’s conviction complicates his presidential bid as groups cite this alleged criminal offense as a ground for disqualification. As mentioned earlier, public officials who are found guilty of tax evasion shall be “perpetually disqualified from holding any public office, to vote and to participate in any election.”


On December 9, 2021, the Marcos Jr. camp released a BIR certification indicating that he already paid the penalties in 2001 amounting to P67,137. This amount corresponds with the amount stated in the Court of Appeals decision. The petitioners of his disqualification countered with two certifications indicating “no record of any compliance/payment of fine.” These documents came from the Quezon City Regional Trial Court (QC RTC) Branch 105 and the QC RTC Clerk of Court which were dated December 2, 2021 and December 14, 2021, respectively.


As of this writing, the 1st Division of Comelec dismissed the consolidated disqualification cases against Marcos Jr. While petitioners may still appeal the decision before the Comelec en banc and the Supreme Court, taxpayers must not misconstrue Comelec decision stating that failure to file tax returns is not a grave offense.


Again, failure to file (and pay) taxes correctly and on time is a criminal violation of the tax code. And pursuant to Section 248 of the tax code, any substantial under-declaration of taxable income, or a substantial overstatement of deductions shall constitute prima facie evidence of a false or fraudulent return i.e., tax evasion.


While most of us do not engage in billion-peso contracts nor run for the highest position in the land, it is the basic civic duty of every taxpayer to pay taxes correctly and on time. Aside from the peace of mind that the BIR will not be filing tax evasion cases against us, we can take pride in being honest and responsible citizens who contribute to nation-building.


Many of us dream for a better Philippines, but only a few take our civic duty seriously in paying the right taxes and voting good leaders who are hopefully honest taxpayers since they will decide how to spend our hard earned money.


Tax season is around the corner, and before we know it it’s already April 15 which is the deadline for filing our annual income tax returns. Are you ready? Email us at for FREE Annual Tax Health Check to know your level of tax compliance and readiness in filing your income tax return and/or proper settlement of your tax audit.



(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.  The author is Member of the MAP Ease of Doing Business Committee, Founding Chair and Senior Tax Advisor of Asian Consulting Group and Co-Chair of Paying Taxes – EODB Task Force. He is Trustee of Center for Strategic Reforms of the Philippines – the advocacy partner of the BIR, Department of Trade and Industry (DTI), and Anti-Red Tape Authority (ARTA) on ease of doing business and tax reform.