In a full page advertisement in the Philippine Star newspaper this morning, the Philippine Bureau of Internal Revenue (B.I.R.) continues on its series of ads presumably meant to SHAME corporations into paying more taxes. I, for one, think it is a GOOD thing the government seek to collect far more taxes than it has while sitting on their rear ends for the past five decades to the detriment of the national coffers and ultimately the Philippine population’s welfare in the form of shitty public education, national roadways and highways, healthcare, housing, etc. and should take care in the manner in which they choose to shame companies. Set aside for another day the very weighty argument that even if they had the revenues, they would waste it on the likes of corrupt folks like that woman who is currently sitting in a detention cell in the nearby provinces for her alleged blatant acts of corruption.
Today’s advertisement is targeted at country-wide purveyors of Lechon, and it asks the question “Do the Top Lechon Places Pay their Taxes?”
So here are some facts for those of you who don’t want to read much further down the post that will increasingly turn into a rant as I feel my blood rising to boiling point as I type this:
1. FACT – Zubuchon was established as a corporation in Cebu very late 2009, but only opened its first restaurant in June of 2011, with just 28 seats. At the start of 2012, we had 3 small outlets, with total seating of say 80 seats. In 2012, we invested heavily in our commissary, branches and people and anyone who has followed this blog knows the company was originally set up primarily for employment generation, and to prove a point that you can employ well, pay well and deliver quality locally and ethically sourced and prepared food without going bankrupt.
2. FACT – In 2012, Zubuchon reported sales of PHP24+ million, on which we paid a whopping PHP2.99 million in output taxes, got credit for PHP1.87 million in input VAT taxes due to the heavy purchase of equipment, construction, rentals, etc. and paid a NET VAT of PHP 1.12 million. Correction — as pointed out by readers and a lawyer — Zubuchon COLLECTED VAT and remitted it to government. What about companies who collect it and don’t remit?
3. FACT – We made VERY LITTLE MONEY IN 2012 as any business owner in their FIRST FULL YEAR of business will agree THAT is not UNEXPECTED. In fact, if the BIR had BOTHERED TO LOOK UP our actual BIR filings, they would see we were in a slight LOSS situation for the year as a whole. But instead, some lazy researcher apparently looked up our GIS Filing with attached financial statement to list us as having only PHP32,697 “in 2012 INCOME TAX DUE”
which is actually based on a calculated minimum corporate income tax as a percentage of sales, as our accountant explains to me. Correction, after a comment below, I reverted to our financial statements and they do show a minimal a larger gross income, a minimal net income and taxes of 32% on that net income. So the figure is an existing figure, it just doesn’t paint a COMPLETE AND FAIR PICTURE of the business under review in a proper context placed in comparison with other lechon businesses around the country, several of whom are 10, 20 or 30 years old!
4. FACT – In 2013, the year just past, after we opened our larger outlets and a snack bar at the Mactan airport, we reported close to PHP60 million in sales for the first 11 months through November, more than DOUBLE our 2012 sales, during JUST OUR SECOND YEAR of operations. On these sales, we paid (and yes, I looked up the monthly and quarterly BIR documents on file in our office) a total of PHP7.2 million in VAT output tax, got credit for PHP3.1 million in VAT input tax, and paid a NET VAT of PHP4.1 million, with December still unreported. Correction — as pointed out by readers and a lawyer — Zubuchon COLLECTED VAT and remitted it to government. What about companies who collect it and don’t remit?
5. FACT – Our income tax for the full year of 2013 (we haven’t done a total report or audit yet though the first three quarters have already been fully paid) will be in the same neighborhood perhaps as the LARGEST LECHON PURVEYOR listed in the BIR article for 2012 or over 14x larger than our meager net profits for 2012. And that largest purveyor has been around for 25+ years, and according to government reports, slaughters some 5-7x more pigs than we do on a monthly/annual basis! Can you not see a glaring discrepancy?
So please folks at the BIR, if you are going to take a swipe at folks you think are remiss in their tax payments, at least make sure you have the facts, and not twist a single data point to make your idiotically weak and now less credible slap much more effective. I am with you in that all businesses should pay their fair share of taxes, but when you take these ads out that cast aspersions and insults on companies and entrepreneurs, make sure you take aim at those that deserve it.
1. PLEASE DEFINE “TOP LECHON PLACES” CLEARLY?!!
Please note that the BIR relies on three internet/web sources to list their “top lechon places”. What is this, the era of fingertip to keyboard research of some young BIR auditor? That’s absurd. First of all, “TOP” in the case of some of these sites, is subjective and usually a TASTE opinion… not a factual description of their likely tax liability. Thank you, btw, to choosephilippines.com for placing us on their list. In other words, for the purposes of tax, you want to list the companies that have the biggest sales of lechon throughout the country. And that is INFORMATION THE GOVERNMENT HAS, BUT WAS OBVIOUSLY TOO DAMN LAZY TO LOOK UP. All the researcher has to do is look up corporations registered with lechon as their main business in the SEC database, then look up their GIS filings and financial statements, and rank the top purveyors by sales and taxes, etc. DUH. Just because store XXX is listed as having the best ensaimada, for example, doesn’t mean it should have the highest taxes paid, the link between taste and profit is a very weak one, to say the least. For example, Jollibee and McDonalds have _______ tasting burgers, and they sell billions of them every year, need I say more about the warped logic?
Any BIR or government researcher worth his salt would have other ways to check the definition of “TOP”. Here’s just one way I can think of since they apparently didn’t teach this in Philippine or International tax audit school. Every single month in every single city worth mentioning, there is a Daily Slaughter Report from different private and public slaughterhouses by type of animal. In other words, there is government data that exists that will tell you just exactly how frigging many pigs are slaughtered, and by extension made into lechons so you can tell who the largest purveyors are — ergo the TOP LECHON PLACES. For Cebu, for example, and YES I have the actual report I speak of, here is the data for October and November 2013. Zubuchon and other lechonans typically have their own slaughterhouse licenses, for which we pay taxes, so we have full control of the process. I eliminate slaughterhouses that I cannot connect to a retail lechon purveyor (they slaughter for markets, private lechons, etc.).
October 2013 (Cebu Monthly Slaughter Report)
1. “H” Company 3,205 pigs slaughtered (though not all may have ended up lechon)
2. “C” Company 1,766 pigs
3. “A” Company 1,500 pigs
4. “R” Company 894 pigs
5. “C” Company 713 pigs
6. Zubuchon 410 pigs
7. “A” Company 397 pigs
November 2013 (Cebu Monthly Slaughter Report)
1. “H” Company 3,533 pigs slaughtered (though not all may have ended up lechon)
2. “C” Company 1,560 pigs
3. “A” Company 1,321 pigs
4. “R” Company 518 pigs
5. “C” Company 402 pigs
6. “A” Company 382 pigs
7. Zubuchon 328 pigs
So you see, even just in the city of Cebu, Zubuchon is ranked 6th or 7th in number of pigs slaughtered, and in some months, other companies slaughter up to 11x the number of pigs we do, so shouldn’t THOSE COMPANIES HAVE AT LEAST APPEARED ON THE LIST OF TOP LECHON PLACES??? And it begs the question, why didn’t the researcher think to include those companies in the “TOP LIST” — was his/her sole basis a write-up on line about good tasting lechons? Isn’t it incredible that a company that slaughters 3,533 pigs in one month, what Zubuchon slaughters in almost a YEAR, is NOT EVEN MENTIONED in the published lists of the BIR? And Manila is 7-8x the size and population of Cebu, so you would expect the above such slaughter figures to be MARKEDLY larger than a provincial city. Nationally, I would be surprised if Zubuchon was even in the top 25 companies in terms of pigs cooked, and as of 2013, we are reporting in the top 2 or 3 in terms of taxes paid???
And don’t get me started on the size of pig either. Someone who slaughters 1,000 pigs at 70 kilos each does 7,000 kilos of pork vs. someone who does 1,200 pigs at say 25 kilos each who only does 3,000 kilos of pork — JUST IMAGINE WHAT THAT MEANS FOR SALES in peso terms! And the data up top is just for Cebu, what about Manila? And the ad seems to cover mostly purveyors in Manila and Cebu, do they not darn well enjoy their lechons in Bacolod? Bulacan? Batangas?
If you want to look at another way to define top, then why not check out lechon purveyors based on number of branches, or number of seats, etc. That too would give you an idea of which such places have dozens of outlets now and who do not appear at all in the list of “TOP PLACES” in the BIR advertisement.
So when you boldly state in your full page advertisement “DO THE TOP LECHON PLACES PAY THEIR TAXES” — then at least have a credible, accurate, factual and data driven list of “TOP PLACES” from a sales and tax perspective, not some list of purveyors based on some individual person’s taste buds.
2. PLEASE DEFINE “TAXES” MORE CLEARLY!??
THE B.I.R. advertisement chooses to define “TAXES” solely as “income taxes DUE”, not even income taxes PAID. What, did they FAIL tax class in college or grad school? Are not VAT (Value Added Taxes) one of the LARGEST sources of taxes for the government from corporations? Aren’t business taxes, property taxes, license taxes and employee taxes not also TAXES THAT corporations pay? Isn’t it at best GROSSLY MISLEADING TO DUN a company in public only to discover that they pay a HUGE AMOUNT in taxes in AGGREGATE and relative to their size, their age and the quality of employment provided???
VAT Taxes – Huge, and as you can see above, Zubuchon collects and remits several millions worth.
Business Taxes/Licenses – Property taxes, business taxes, liquor licenses, health certificates, etc.in every town or municipality, etc. to the tune of several hundred thousand pesos per year for ZUBUCHON and other purveyors I am sure, appears NO WHERE in the advertisement.
Income Taxes – Yes, should be included, but are understandably low after the 12% VAT and all the other “taxes” involved.
Personnel Taxes, Philhealth and SSS Contributions – see below AND WE PAY ALL OF THIS, PLUS MORE!
Best I can figure for 2013, between net VAT remitted, business taxes, income taxes and personnel related taxes, ZUBUCHON has added PHP6-7 million in funds to the national coffers. If we did not exist, and did not open two years ago, would the government have collected that sum? DUH.
3. WHAT ABOUT QUALITY EMPLOYMENT/EMPLOYEE BENEFITS? WHAT ABOUT PEOPLE’S WELFARE!??
The advertisement focuses on taxes, but I want to broaden the discussion to people and what the government is doing about PROTECTING CITIZENS and ensuring their WELFARE is TAKEN INTO ACCOUNT. Shouldn’t that be as important a concern as income taxes?
At ZUBUCHON, we established the company with the GOAL of trying to employ better, pay more, meet all government regulations, etc. And this is apparently NOT SOMETHING ALL COMPANIES PRACTICE but Government seems ignorant or lazy to enforce existing laws and regulations. And our profits suffer at the expense of this NON-FINANCIAL GOAL.
For example, most or all of our staff have good salaries and full benefits:
80% are regular or permanent employees, and many are paid above average for their job position
18% are probationary or within their first six months, and are expected to be regularized unless they don’t pass muster.
2% of our workforce is on a contractual basis
In other words, we don’t treat staff as disposable assets. We treat them like they should be treated. And we pay all SSS, Philhealth, Pag-Ibig etc. on time and in full. We are the type of business that government should encourage and support, not cast veiled insults at in full page newspaper advertisements.
In a recent inspection of the Department of Labor, Region VII, ZUBUCHON was found to have complied on all critical labor standards, and the inspector told us it was “a pleasure” to experience an inspection wherein the company was responsive, had all the documentation and data ready for inspection, and whose employees, on random face to face interviews seemed genuinely pleased to be working for the company, etc.
So my question is, how many such companies exist in the Philippines? 20% of all restaurants? 50%? or higher? If our interviews of potential staff are to be any indication, and they are a pretty good proxy for Cebu, at least 50% of establishments they had previously worked at either rarely made any dining/kitchen crew permanent, they were often underpaid or their benefits were never remitted. Sometimes, I hear lechoneros are paid PHP50 per pig roasted, but fined up to PHP200 if they burn said pig?! And they have no benefits, no 13th month, no SSS, no silly Christmas parties with drag queens awarded ridiculous prizes. THOSE ARE THE KINDS OF THINGS GOVERNMENT STAFF SHOULD PAY MORE ATTENTION TO… BECAUSE WHEN COMPANIES MEET THOSE REQUIREMENTS, then the entire working population of the nation benefits. Companies who cannot treat their staff right, should not remain in business and that will ultimately increase the profits of companies that do the right thing. THEN after that, also work on getting the right taxes paid, or do that simultaneously if you can.
And you want to know why we had less income last year, because in just our second full year of operations, we gave HUNDREDS OF THOUSANDS OF PESOS WORTH OF FOOD & MANHOURS TO THE RELIEF EFFORTS IN NORTHERN CEBU (several months worth of profits), WHERE I DIDN’T SEE A SINGLE FRIGGING DSWD TRUCK DISTRIBUTING FOOD IN THE DOZEN TIMES WE WENT UP WITH A DUMPTRUCK FILLED WITH AID. I would much rather give our money directly to the people who need it rather than having the government get their hands on it and SQUANDER IT. What are the other headlines in today’s newspapers? “Expert confirms shelters subpar” — in other words, the government can’t even build decent shelters for storm victims two months after the storm? Tsk, tsk. And what of the alleged “rice smugglers” duping the government out of billions and billions in import taxes? I could go on and on…
“To Zubuchon, Maraming Salamat, Noynoy Aquino”
How bloody ironic, our office crew cooked and donated almost a dozen lechons to Noynoy’s visit to Cebu in January 2010 to raise campaign funds during his presidential election, well before we even had a restaurant, I now wonder if I was supposed to pay a donor’s tax on that or were the folks who organized the event supposed to pay that and DID THEY PAY THAT??? Shouldn’t the BIR check on all the taxes due if any, on those types of fundraising activities??? If you want a daang matuwid (straight path) then make sure your government lieutenants charged with collecting all taxes do their jobs in a fair, factual and comprehensive manner, is all I can ask for. I don’t expect any special treatment, but neither do I expect our company to be publicly shamed, when the truth is, this administration needs at least 5-10,000 similar small entrepreneurial ventures with purpose and passion to provide real solid and reliable growth instead of blindly exporting millions of our countrymen so that other countries gain from having most of our driven, intelligent, risk-taking and hard-working citizens. No wonder so many people just choose to migrate and live elsewhere if they can.
The actual lechons for the Aquino/Roxas fundraiser, don’t they look fabulous?
And huling hirit, a call to the Governor’s office of Cebu. Over the years, the previous and I REITERATE PREVIOUS sitting Governor ordered dozens and dozens of lechons from ZUBUCHON for visiting dignitaries, members of Congress, celebrities, etc., and in most cases, waited months and months to pay us, but now it’s gotten a bit ridiculous, with accounts receivable running some 18 months or more. PLEASE PAY US NOW. We already paid VAT and other related taxes on those sales and you have the nerve to stiff us for the price of a dozen lechons while your government cousins at the BIR seem intent on insulting us in public? And worse, they are probably going to tell us we have to pay tax on all the food aid we gave up North to storm victims!? So if the Governor’s office pays us, we can pay the BIR the donors tax. Ridiculous. Just frigging RIDICULOUS.
And Manolo (Quezon III), yes I did notice you signed up with your Malacañan press office twitter account for Marketmanila’s twitter feed a couple of weeks ago, so hopefully you will have read this, please forward this post to our friends at the BIR so they might learn a thing or two about coming up with appropriate TOP lists and providing a bit more factual and logical context before they take advertisements out pissing off just the type of folks this government needs to start and run entrepreneurial businesses that will provide a real, local and sustainable type of economic growth for the country.
To regular marketmanila.com readers, or folks who just happened to drop by for the first time, please spread the word about this post. Don’t just blindly believe what government puts in their advertisements, it just may do a disservice and discourage people who are simply trying to do the right thing. Thank you.
kudos for this rant, love it. posted in my FB wall.
To WASTE TAXPAYER’S MONEY on a full page national ad that ultimately misleads the public only solidifies why we view many of our government officials as INCOMPETENT. The BIR should issue a PUBLIC APOLOGY for the injustice they have done as they have cast aspersions on, and tainted the image of, lechon companies who are doing honest business in the first place.
Zubuchon pays more than the minimum wages, remits full SSS and Philhealth payments, gives bonuses, regularizes almost all employees, does not practice broken shifts, and even pays for the lab fees and health cards of its employees, WAY BEYOND what other restaurants do for their staff!
SHAME ON YOU BIR!!!
(meanwhile Lucio Tan is prancing around like Peter Pan in Neverland…)
BIR is one hell of a SHALLOW government agency!!
Hit and miss ang principle nila! Grrrr!!!
this is just plain crazy!!!
why not run after those big companies? What are they afraid of?
What the ____!!! They don’t know who the’re dealing with, MM..ma bigyan nga ng Fishpan!
Love it. It’s about time someone hit back at the govt. They seem to protect the big time tax evaders, smugglers, and scam artists while taking pot shuts at all the law abiding ones and/or entrepreneurs.
As a fellow micro-entrepreneur, may I thank you for sharing the exact same sentiments I have by offering my company’s web-based timekeeping and payroll application for free. The country needs more people like you and if they can’t nurture us, then we might as well just support each other.
i feel for you, MM. people in govt are very likely genuinely the worst. (i’ve worked in govt. haha.) thanks for getting up the energy and courage to say what needs to be said. it’s probably going to come to nothing, in practical terms, but i with my ever dwindling faith in this society appreciate your effort no less.
I’m not at all surprised this happened. Not at all. BIR Chief Kim Henares once foisted Kris Aquino as the top taxpayer of 2012 only to be rebuffed by Philippine Daily Inquirer’s editorial the very next day after Andrew Tan of Megaworld disputed the BIR figures publicly.
It does appear that BIR Chief Kim Henares is just like Mar Roxas, puro publicity stunts, puro laway, pero walang gawa. Since BIR Chief Kim Henares came on board, she’s been going after the wrong people. No big fishes just yet. No member of the Fil-Chinese Chamber of Commerce & Industry, Inc who despite figuring in Forbes list do not appear in BIR’s top taxpayers. I’m not just mouthing off, this came from Noynoy himself in one speech he gave to the FCCCII last year.
No wonder BIR Chief Kim Henares has been missing her collections target month after month, quarter after quarter and year after year since she assumed office. Mr. President, perhaps it’s time to fire this incompetent Tax Chief. Kap-shao talaga, is how they say it in fookien according to my chinoy friend.
Yay for this rant! As a newish small business owner, I know for a fact that nothing has changed at the BIR despite Commissioner Henares’ best efforts to put things in order. They do not check their figures, argue with ridiculous facts and are still at their old game of extorting money from companies. Case in point: last December, our RDO charged us with a penalty of around P1.0 MM for various “violations,” some bordering on the absurd. The penalty is even larger than the income tax we paid for the year. When we showed them our books and gave them all the proof that we have properly filed our returns, the penalty was magically lowered to P200K on the condition that we cough up another P200K IN CASH as “lagay.” Can you imagine our consternation?! From our point of view, we shouldn’t even be paying penalties but because it was lowered to a significantly lower sum, parang ang dating nung RDO, may utang na loob pa kami sa kanya.
Long story short, we paid the penalty and the lagay because the RDO was “threatening” that if we postpone to 2014, there’s a 20% surcharge daw on the P1.0 MM, and the offer of P200K + P200K will no longer apply. They’re just plain pigs at the BIR.
I have this nagging suspicion that the major reason Philippine companies try to evade or avoid taxes is they can’t even trust the relevant government agency to behave properly and to impose correct taxes and penalties. I’m now of the hide-everything-from-the-BIR camp because of this experience.
Good response. They didn’t even bother to warn you ahead of time just to clarify things. Sadly, they would just say: “Please disregard this ad if you have already paid your taxes.” :P
No one is gonna get fired for this and I don’t see the BIR backing off from their “shame campaign”. But by the way you “roasted” them, they might think twice before they put up their next ad. :)
I admire you and your resolve. AND especially for giving back to your community/kababayans. If I had your money and resources I would’ve left this country already. These assholes don’t deserve even a centavo of my hard earned income.
They are resorting to shame campaigns because they simply aren’t doing their jobs, in my opinion. They must have thousands of staff at the BIR and they should be figuring out who what where and when to get those taxes, not taking out cute-ish ads designed by Facebook generation folks that miss the point. Look at this graph to show that over the 10 years since 2000, tax collections to GDP in the Philippines have remained in the 13% range, rarely moving up. Taxes to GDP were even higher at close to 16% in the mid 1990’s. In the past two years, according to other googled sources, taxes to GDP were 12.4% and 12.9% for 2012. And during those years, the country grew 6-7% and they instituted recently a huge alcohol and sin tax program designed to improve taxes by PHP35+ billion. And VAT was put in several years ago. In other words, it’s all talk and just a little improvement in tax collection rates. I applaud the government for trying to improve tax collection, but start with the big fish, nail the smugglers with billions worth of goods, as THAT is where you find the easiest gains, then progressively move across logical sectors that will yield the taxes you need.
Having said that, what’s pathetically clear is that despite our tax collection rate, we have little to show for it. Thailand collects some 16-17% tax to GDP, and look at their infrastructure and social nets compared to ours. Malaysia does 15-16% tax to GDP and look at their infrastructure, education spending, health, etc. China collected 10.5% tax to GDP, well below ours and they have built more roads, bridges, buildings, hospitals in the last 10 years than we have probably built publicly in the last 100 years. HK and Singapore, notorious for low taxes and encouragement of businesses, collected 13-14% tax to GDP ratios, and they have some of the most FABULOUS infrastructure in the WORLD. Not to mention some of the best paid and most efficient but SMALL governments as well. Canada, a broad, enormous country with few citizens, collected 11.6% tax to GDP and well, look at their schools, infrastructure, medical coverage, etc. So the question is, with us at 14-15% this year if we are lucky, why do we have one of the worst international airports on the planet? And another huge airport terminal that is still in litigation and not in full operation because of substandard construction? Why have we no major improvements to the roadways? Why do we have such horrific public transportation? One of the worst records of spending on public education? SHOULDN’T CITIZENS DEMAND ANSWERS TO THAT? I am all for paying taxes, but shouldn’t they be spent well for the benefit of the population? And why the need for all these private/public partnerships? Because we are too incompetent to put out proper public services like buses, trains, highways, airports and seaports?
And you want to know why Philippine personal income tax collections are relatively low? One key reason (besides wealthy people having great tax avoidance records) is because we exported 2, 3 or is it 4 million workers, who earn say (a wild guess average of PHP200,000 a year each) or for every million exported laborers that is roughly PHP200BILLION (is my math right?)in income but worse, productive output that’s done for the benefit of other countries… and they don’t pay income tax here. Of course they remit money home that does then eventually end up paying taxes as cars, homes, groceries, phones, etc. are purchased. So looked at another way, if our government was smart enough to create instead 4-6 million good jobs locally, then that would be some PHP800Billion – 1.2 Trillion pesos in taxable income IN THIS COUNTRY not to mention all the productive output they would account for that is also taxable. Those are the kinds of issues the Economic, Finance and Tax Managers should be spending their time worrying about, rather than taking PHP200-300,000 newspaper ads out targeted at lechon purveyors.
If some members of government used their pea-sized coconuts, they would understand that just 10,000 companies such as Zubuchon, with say 200-300 employees each, would yield the nation 3 million good and sustainable local jobs, MORE THAN THE NUMBER OF OFW’S NOW LEGALLY WORKING ABROAD! And companies such as ours buy local goods from local farmers, fishermen and backyard raised pig tenders. We hire local folks who stay close to family. We employ local services for cleaning our equipment, making our stickers and napkins, and buy gas and electricity from local producers/retailers. We pay local business, license, VAT and income taxes. And we attract local and foreign tourists alike.
There is a department store chain (I will say no more about their identity) whose cash registers print out a “Sales Invoice” when you make a purchase and pay. Why not an OFFICIAL RECEIPT? How are THEIR taxes being accounted for? Why not pick on them instead of the small guys?
Daming tumpak na kritisismo pero ang mga sumusunod ang top 3 ko. Anyhow, Zubuchon deserves a public apology from BIR for putting them into public shame by the latter.
1. I don’t expect any special treatment, but neither do I expect our company to be publicly shamed, when the truth is, this administration needs at least 5-10,000 similar small entrepreneurial ventures with purpose and passion to provide real solid and reliable growth instead of blindly exporting millions of our countrymen so that other countries gain from having most of our driven, intelligent, risk-taking and hard-working citizens. No wonder so many people just choose to migrate and live elsewhere if they can.
2. Companies who cannot treat their staff right, should not remain in business and that will ultimately increase the profits of companies that do the right thing. THEN after that, also work on getting the right taxes paid, or do that simultaneously if you can.
3. And you want to know why we had less income last year, because in just our second full year of operations, we gave HUNDREDS OF THOUSANDS OF PESOS WORTH OF FOOD & MANHOURS TO THE RELIEF EFFORTS IN NORTHERN CEBU (several months worth of profits), WHERE I DIDN’T SEE A SINGLE FRIGGING DSWD TRUCK DISTRIBUTING FOOD IN THE DOZEN TIMES WE WENT UP WITH A DUMPTRUCK FILLED WITH AID.
At may pahabol pa:
And huling hirit, a call to the Governor’s office of Cebu. Over the years, the previous sitting Governor ordered dozens and dozens of lechons from ZUBUCHON for visiting dignitaries, members of Congress, celebrities, etc., and in most cases, waited months and months to pay us, but now it’s gotten a bit ridiculous, with accounts receivable running some 18 months or more. PLEASE PAY US NOW. We already paid VAT and other related taxes on those sales and you have the nerve to stiff us for the price of a dozen lechons while your government cousins at the BIR seem intent on insulting us in public? And worse, they are probably going to tell us we have to pay tax on all the food aid we gave up North to storm victims!? So if the Governor’s office pays us, we can pay the BIR the donors tax. Ridiculous. Just frigging RIDICULOUS.
I just love it! :D
OMG, so many folks have visited the site in the past four hours that it nearly crashed twice, and this post has received nearly 500 Facebook likes or one every 30 seconds, a post record I think. And it isn’t even about food! Keep passing the post onto friends, the more people who read this, the better. Thank you.
THE PEOPLE DESERVE TO KNOW HOW MUCH MONEY WAS SPENT FOR THE FULL-PAGE AD. I CHALLENGE THE B.I.R. AND PHIL. STAR TO DISCLOSE THE FIGURE.
Think about it this sobering thought.
On the average, we work for the government 3 months a year. We deserve good government. However…. :(
This is probably the best rant you have ever written sir MM and I’ve read many rants on your site.
Wake-up call to the government that lives and breathes face value deception to the public. From false growths, to pseudo altruistic help in the Visayas down to the fake running and gunning after criminals, nothing seems to be desired from this government.
Hoping Zubuchon weathers this storm as soon as possible.
Ugh. Frustrating! When I saw the list they were posting before, mapapansin mo na it is a ridiculous, smear campaign! If you do the math, their comparisons and their conclusion is baseless and talagang hugot sa hangin lang. Grah.
Kim Henares’s approach merely mirrors what this gov’t and its self-righteous overlord at the top has been doing all along: Persecution without evidence; buck passing; refusing to man up to their failures; etc., all to hide their glaring incompetence. Not really surprised why they hit on the small ones while letting the really big fishes friendly with the “Yellow Army” get away with murder and everything else. :(
Remember that the BIR has, many times, been erroneous even in reporting the top taxpayers in the country. Not surprised they made a mistake in the lechon places ad as well. In its PR on top hair salons a while back, one chain was surprised why it didn’t make it to the list considering the amount of taxes it paid for the reference year. Lazy, lazy, lazy researchers, including officials who are lazy, lazy, lazy in validating their staff reports. Pfft.
Great rant MM.
My problem with Kim Henares is that I feel that I have paid much more taxes than she and her boss combined. Any businessman or professional with employees can make such a claim.
I saw her a few months having an extended dinner at Finestra (in Solaire) with her old chum Vivienne Tan, this after imposing a new tax on Casinos. Its known that her father was a bag man for Lucio Tan. Its also known that she collects high end guns (some worth 600k each).
Filipinos all over the world thrive in high tax jurisdictions. We don’t mind paying taxes as long as its an even playing field and we feel it coming back.
Great rant and really hits at the key issue holding the country back. Btw, aren’t tax records supposed to be confidential? Can BIR publish such numbers without breaking some privacy law?
Just saw this on Twitter today. BEST RANT. EVER. Kudos to you! Sharing this as well.
It baffles me that childish antics, such as public shaming and finger pointing, continues to be the de riguer in the Philippines.
Even in biblical times the tax collector was never a popular character! The government should really do something to make the country more business friendly to generate more jobs and this ” public shaming” especially if it is inaccurate is not helping! :(
BIR should check their people as well. It’s not as if they don’t have corrupt employees as well. Tsk..Tsk.. While they are looking for businesses not paying taxes, they should clean their own office first.
Henares is just a glorified baglady for the moron you call a president whose has an elevated ego. I wonder how she pays for her Macapagal Marina bayside residence
Ate at Zubuchon Escario awhile ago. So this was the reason why MM had a fierce look.
Of all the lechonans that I have tried, only Zubuchon issues an Official Receipt.
fact – countries are run by corporations through puppet governments… its about time to purge the government system. ANARCHY!!! lols
BIR = BUREAU OF INTERNAL ROBBERY
Shut up and give me you money
Check with your lawyers to see if there’s a case for slander. Maybe they should rewrite that ad to say “Are We Collecting Enough Bribes from Successful Lechoneros?” If the math could be calculated, it’d be interesting to note how much of taxes paid are actually correctly accounted for, funneled into, and appropriately spent by the government.
It’s your customers who pay the VAT
MM, there is now another article in Inquirer today about this so called shame campaign. “Metro Manila ‘lechon’ sellers face BIR roasting” link:https://m.inquirer.net/newsinfo/?id=560527.
As a long time reader , I am witness to how much you are a stickler for rules so I fully and truly believe your post above. I fully support you in going against this lazy type of work done by the BIR. Do everything you can in your control to set things straight especially for our much loved Zubuchon.
and the winner —-> ” if some members of government used their pea-sized coconuts…”
I’m from Cebu too and I love Zubuchon. I can see also that your staff like working there. Your post is very well-written and well-reasoned. I’m reposting this on my facebook wall.
Sue for libel
It’s our “lagay” system that’s corrupting this country.
The “silent money” that’s filling up their insatiable pockets.
If we want to save our beloved country, let’s expose these corrupt
and shameless public/government officials.
Let’s expose these extorting, thieving BIR pigs from bottom to top.
Enough is enough, let’s put these people in jail where they belong.
It’s easier said than done but it should start somewhere…
I was planning to open a food business in Manila …. But this is what really put me off :( … In most cases Govt are the one that kills the businesses.
Worse, the PHL Goverment made the lechoneros their scapegoat. E yung pork barrel scam na wala pa ring kinahihinatnan e. Puros pambababoy lang ang nangyayari,
The BIR is just trying to hide their incompetence by doing all this PR stuff. There are so many big businesses out there that don’t pay proper taxes but don’t get prosecuted because they are chummy with the BIR or have friends in the higher ups. How about looking into government official themselves? How are they even able to afford the lifestyles that they have on their meager government salaries?
When I saw the BIR ad re top lechon places, I was puzzled how they got the figures. Indeed since they started publication of top tax payers there were always those that questioned BIR’s data. This is trial by publicity and it is very unfair to those that are paying taxes correctly. Thanks a lot for the explanation. I really hope Kim Henares will read your post.
Taxes in this country are meant to feed corrupt government & officials, the voting system is a hell of a system, poor education, poor infrastructure, lacking job opportunities, even you need to pay for roads (north & south superhihgways) that is supposedly a part of government service from our taxes, poor justice & security, while ALL Senators, Congressmen, Mayor has multiple mansions, luxury cars etc, just go to Batasan parking lot when there’s a session and see where our money goes, even to the barangay level they steal our taxes. Politicians become gods of this country. We people need to change the system.
Naalala ko po tuloy itong news na nabasa ko:
Matuwid ang daan pero binabaluktot ng mga nakapaligid.
Hay tiis na lang Juan, binoto natin sila, mabago sana sa 2016!
what can one expect from an agency with a brainless head? pfffff…
I cringed when I saw one of their ads for another list… it’s so obvious the list is not accurate and it will really hurt the companies who pay due taxes and other fees.
Hope this reaches the folks behind these shame ads – shame on them.
The BIR should go after political dynasties, casino high rollers, luxury car owners. Politicians who steal our taxes deserve special mention
BIR just got served!!! Kim got bitch-slapped!!!
Guys, we can make this BIR shame campaign look ridiculous if not stop it altogether. What we just need to do is to patronize more the businesses that are targets of the BIR shame campaign and to encourage our families and friends to do the same.
I shared your article on twitter and tagged Manolo @mlq3 and Finance Secretary Cesar Purisima @CVP1960. You may want to tweet them . They are active twitter users. Anyway, I also posted in my Facebook wall and a lawyer commented “Slight correction: VAT is not paid by Zubuchon but by Zubuchon’s customers. Look at any restaurant receipt and you’ll see that VAT is part of the price you pay for a meal. So, it’s incorrect for Zubuchon to claim it paid for P6-7M in VAT. More accurately, Zubuchon collected P6-7M in VAT from their customers and remitted the money to the government.”
I don’t believe BIR’s lists like top taxpayers compared with Forbes list. For me, they are comparing apples & oranges. One is based on net worth (Assets – liabilities) the other is income. It’s like retirees having a fully paid house and lot but have no income and given sustento by the children lang. If one does not know how taxes work, they would believe what is on the list and not understanding the footnotes BIR may include in their ads. And they are inciting the masa to believe that big, popular people and establishments are not paying proper taxes. It’s like they want the masa to look at them as heroes and the rich employers as villains in the country.
what would also be helpful is the posting of ads identifying the collection accomplishments of specific inspectors and revenue districts relative to the accounts that these are responsible for. collection efficiency is a result not only of the taxpayers willingness to pay but also of collectors willingness to collect
Shared in my FB and tweeted!
MM, there is now another article in Inquirer today about this so called shame campaign. “Metro Manila ‘lechon’ sellers face BIR roasting” link:https://m.inquirer.net/newsinfo/?id=560527.
That writer is horrible! ‘Taxman is planning a roast’? ‘Send for them to serve as the pig’?? ‘Found it crispy enough’???
The statistics that MM posted comparing the Philippines’ tax collection vs other countries is exasperating, frustrating, and downright embarrassing.
The BIR did the same thing to us last year.
They presented TripAdvisor.com’s 50 top rated restaurants in Makati and compared that to the BIR’s 50 top taxpaying restaurants in Makati.
The ad read “Is your favorite restaurant a top taxpayer in Makati?
The best restaurants don’t just offer a great dining experience. By paying the correct taxes, they also send children to school and provide other social services…”
The subhead of the ad stated “Does your favorite restaurant contribute to good governance?”
Top taxpayer was Yellow Cab and the top rated was WingMan.
The former is a nationwide chain operator while the other is a tiny, hole-in-the-wall standalone.
It was upsetting to see my restaurant’s name on the list (damn that TripAdvisor for exposing us!). Like Wingman, we are a tiny standalone.
It was more upsetting when I saw people commenting on Cesar Pusirima’s Facebook post of the ad saying “thanks for this, Cesar, now we know which tax evaders we should avowing” (or something to that effect). I called him out on it and he defended it by saying it doesn’t take much to be in the top 50 taxpayers.
So, I understand how you feel, and I thank you for the rant, because it’s exactly what I’ve been wanting to do and say.
finally! someone standing up for all legit businessmen who pays their taxes and still get harassed by the bir. cant blame the bir for incompetent staff. our best accountants are either abroad or working at multinationals.
Good grief, 3,100 have “liked this” on their facebooks. I don’t even have a personal facebook, so I can’t begin to know what that means. I have never had a post (usually rants) get more than 500 likes… This will probably get 30,000 page views in a 24-hour period since it was posted. It’s interesting to see how many people are interested in the matter under discussion.
The gravity of the facts provided in this blog, vs the article posted by BIR is staggering. Yet even with this, I know BIR officers will get no reprimand or even apologize for their misstep. To purpose an old quote: “What is taxation without proper representation?”
Consider sueing for slander.
I too have posted this on my FB and to asnwer your wonderment, 3000 likes is fairly high for a local news bit. If you reach 10,000 likes, broadcast worthy na yan. :D
It shows that Zubuchon is now one of the famous companies in the Philippines.
saw the ad in inquirer or star ata… first thing came into my mind was “hmmm… something’s not right… zubuchon dapat ang nasa top payer and with P32k (or was it P82k?) lang na tax…. maling-mali…” BIR talaga… lazy to look up data… Kim Henares, wala ng ginawa kundi mag-apprehend ng mga di naman dapat ina-apprehend! Shame! Shame! Shame!
Eat your heart out BIR fools!!!
Lazy and disgusting morons with all the complete comforts of what life has to offer while the nation works hard to provide for your damn pleasures!
To the owners and stakeholders of Zubuchon: more power!!!
Good grief. Sometimes I think the government is run by keystone cops talaga.
Anyway, Manolo is a friend of mine. I’ll ping him.
Bravo on this post MM!!! I never thought about the OFW phenomenon in terms of tax tradeoff that we are losing.
Off topic, I loved the silvanas you are selling in the airport! Not cloyingly sweet at all.
While i agree to most of what you have posted about our Govt and the BIR. You have started a fight with them and aside from doing a Manny Pacquaio, May i suggest you carry a sharp sword on your side.
The sharpest sword I know when it comes to taxes and the BIR is SGV & Co. Im sure there are other good accounting firms out there but I have used the services of SGV a few years ago and am familiar with their services. It might be good for you to take on their services on retainer and probably do the tax filing and replies to public humiliation statements from Kims boys.
Having SGV on your side in a BIR misunderstanding is like having Atty Fortun or ACCRA fight for you on a legal battle.
Good luck with your endeavor Marketman.
This goes to show that the most targeted by the BIR are those who are ACTUALLY PAYING RIGHT TAXES, and they WILL abuse their powers to persecute them.
Take for example a businessman whom they accused of not paying over P10M worth of taxes in a year… when he was operating a FOOD STALL!
You read that right: A F*CKING FOOD STALL!
He asked BIR for their basis for such a monstrous number, and they gave none… only DEMANDS that they pay them that amount or they will force him in jail.
I never knew what happened to him, but I doubt it could have ended well. He can’t even pay a decent lawyer!
What’s worse? He has competitors in the form of SQUATTERS across the street from the place he was operating in. They have their own food stalls that they can afford to sell cheaper food in, because they DON’T PAY RENT and they DON’T PAY TAXES! And yet BIR NEVER GOES AFTER THEM! While the legit businessman struggles with paying rent, paying taxes, AND THIS BIR ABUSE, squatter food stall operators enjoy more customers, bigger sales, and NO hassle from the government, ESPECIALLY BIR, SSS, PAG-IBIG!
Where is the justice in this? And I say, the BIR DOESN’T CARE!
B, I have NOT started a fight. I merely vociferously point out that if they are going to go after folks, they should do it in a logical, rational manner… instead of this trial by publicity. I AGREE BUSINESSES SHOULD PAY THEIR TAXES. But how credible is the BIR effort if on my limited resources and googling capability, can come up with several other companies in the same industry with lots of activity that never even made it to the top list of “lechon” purveyors? Is it fair and equitable to “accuse” or “cast negative thoughts” on some companies and leave other ones scot-free? I think not. In other words, it’s a bit sloppy to say the least. But I DO BELIEVE the government has the right to collect the taxes, and in turn, to USE THOSE TAXES WELL FOR THE BENEFIT OF ALL FILIPINOS. Ms. Henares has a very tough job, and I commiserate with her and the BIR and the herculean task ahead of them. But there are ways to do this better, and it is that sincere hope I continue to cling to… after all, the tighter the process, the more logical and rational the approach, the MORE CREDIBLE EVERYONE APPEARS and that is a positive cycle all around. Just as they have the right to collect taxes, the people have the right to EXPECT and DEMAND that the government spends the tax money wisely, ethically, and prudently.
that’s why a lot of companies, small businesses especially, don’t want to pay taxes because it’s not being used properly. why pay tax that will end up in someone else’s pocket?
i would gladly pay any Philippine tax if i can clearly see it being used wisely…..but sadly that’s not happening, not now not in the past and i don’t see it being done in the near future.
Best rant ever! I love it! I believe you, MM!
I knew something was seriously wrong with the ad– if BIR Henares is serious with this effort, she should first fire her staff who prepared this ad! This was so irresponsible for BIR. Mas magaling pang mag-research ang college students, e. Super embarassing for BIR. Cringe worthy.
Researchers who don’t do their job thoroughly often do much more harm than just trying to be informative. It’s their job to be thorough and fair and to ask questions when they are not sure of their points.
Sock it to them!
You should sue BIR for embarrassing you on a national paper! Somebody should really take action when Government tries to squeeze small establishments!
It is time.
well now you know how professionals feel when the BIR came after us based on wrong information
BIR should apologize
Can you not sue for libel? i wonder if this cannot be some form of harassment and/or invasion of privacy.
it is good when you come right out and throw the truth back into the ugly fat faces – wherein most are in the shape and attitude of your very product and need to be roasted!!!
i somehow feel they do not deserve this rant – let them stew in their own ugly fat…i think people know the truth anyway…
they can only do this to the common folks since it would be hard to fight back – but the real culprits – those pigs in power – i have not seen any of them “lechonated”!!!
there is no need to increase taxes, but there is a need to spend it right. if the BIR chief is so good as finding money, maybe she should be in the COA? it may be a demotion, but if she is doing it for the country – it shouldn’t matter…
in the end, who will be the butt of the joke???
I don’t have access to Facebook where I’m at but I am posting the URL of this post to my Instagram account. My way of supporting you and all of our kababayans who are providing work for folks back home and religiously paying what’s due to our (corrupt) government. Congratulations on this post, MM!
Very well said! This was a good, cathartic read. I love how you stick it to the lazy ass man. Worry not about your company’s reputation, people will believe and side with Zubuchon forever. We know a god thing when we see (and eat) it. As for the Phil gov’t, their so-called service and ill behavior aren’t worth a pitcher of spit. The nameless, faceless drones in government offices will wither and die from the sheer banality and stupidity of their work, fk ’em! We don’t care. Mabuhay ang Zubuchon!
It is such a sorry state when a government is so focused on covering their own asses, that they tend to forget that MOST OF THE MONEY THAT THEY ARE MOSTLY POCKETING COMES FROM THE AVERAGE JOE AND THE MICRO TO MEDIUM ENTERPRISE BUSINESSES… Just because they lack the political will, by choice or otherwise, to go after the huge conglomerates, they then focus on the small institutions, who by the way MOSTLY PAY THEIR TAXES AND DUES ON TIME AND CORRECTLY, with no thought to the fact that these businesses are stand alone and the ONLY SOURCE OF INCOME FOR THE FAMILIES OF AVERAGE FILIPINOS… Personal experience, here in Cagayan de Oro, after our family’s business (Hotel and Catering) was ruined by 25 feet of flood water during TS Sendong, it took us a freaking year and a half to collect a mere 120K+ account from the city government, and to think that these accounts were already earmarked and allocated months before they had the activity in our hotel… A month afterwards the BIR comes after my mother-in-law for almost a million pesos in supposed interest for a capital gains tax that was applied for an amnesty back in the late 90s, denied only recently and so we were expected to pay for the interest since the 90’s, and all of these was unknown to my mother-in-law. What was worst is that they were threatening to confiscate a completely separate property, makes us think of a very different agenda there. KIM HENARES, I APPRECIATE ALL THAT YOU ARE DOING FOR THE NATIONAL GOVERNMENT, I HONESTLY DO BELIEVE THAT YOU ARE WORKING FOR THE COUNTRY’S BENEFIT, BUT I ALSO BELIEVE THAT THERE IS A BETTER WAY TO DO THINGS WITHOUT STEPPING ON THE LITTLE PEOPLE. THERE IS ALWAYS A MORE EFFECTIVE WAY TO DO THINGS, WITHOUT AFFECTING BUSINESSES AND THEIR INCOMES, THEIR EMPLOYEES AND FAMILIES THEREAFTER. A BETTER SYSTEM HAS TO BE FOUND AND APPLIED. JUST TAKING RANDOM SWIPES WITHOUT THE BENEFIT OF PROPER AND COMPLETE INFORMATION, IN MY OPINION, IS A COMPLETE WASTE OF TIME AND MONEY. TRY LOOKING AT IT FROM A BUSINESS PERSPECTIVE, IS WHAT YOUR AGENCY DOING COST-EFFECTIVE? SIMPLE LANG DIBA?
Una sa lahat, ka-cheapan yang ginawa nyong ad. Why not go after those companies if you have the proof? Answer: you have no proof. Sa Facebook na lang sana kayo mag-publish ng mga ganyan para libre. Sayang lang yung tax money ng mga Pilipino. You should really resign and let sane people run that agency.
uh.oh! shame..shame…ayan get your facts straight before printing your swipes…this is the problem..the small fishes they fry…the big fishes they let go,scot free!
Seconding the comments for MM to sue for slander.
Better yet, have the lawyer do a class action if they could get the other companies to get on the lawsuit.
Slander suits have been filed for having said/stated much less. I vaguely remember Corazon Aquino filing a slander suit against a newspaper reporter (or was it a radio person) who had remarked that she hid/cowered under a table during some earthquake.
I’m suggesting the class action route so that the BIR would have a harder time singling out Zubuchon in the future (e.g. making tax filing more cumbersome in retaliation).
on comment #10 – PB why pay the bribe when you’re in the right? don’t you think you’ve just condemned the rest of us small business owners to remain under the mercy of these corrupt BIR men? when we pay the bribe ourselves – corrupt din tayo.
This is my word of advise to BIR, in the last quarter of 2013, it was all over the newspapers, and tabloids about Billions of Pesos not being properly paid for by a cigarette company, and based on the data that was most likely provided by Philip Morris, there is easily P1.2B/mo or P14.4B/yr of unpaid taxes due to “undervaluation”, misdeclaration and/or non-declaration. In fact I could not believe if it was a joke when BIR commissioner said “she cannot control a company wants to sell at a loss”, when the issue was brought out for comment from her. When i read that response from the commissioner for a moment I thought she was the legal counsel for the accused. Oh by the way, no tax charges had yet been filed against the company, so it means the BIR had not found any wrong doing after they issued an audit letter last Oct 15, 2013. I am not saying that BIR should not collect from others, but what i am saying is focus your efforts where it really counts. Remember that the cigarette taxes have increased again this Jan 2014, hence that P1.2B/mo is now most likely P2B/mo or P24B/yr, and next year 2015, that would be like P4B/mo or P48B/yr, that is given that the volumes will remain the same and we all know it is not because it is growing. We all have to remember that the effect of the Higher Tax in cigarettes will not reduce the number of smokers or the consumption of cigarettes within 5-10 yrs, because smokers just shift to lower priced cigarettes, but the effect would be felt after 10 yrs when the new generations will not be able to easily afford them, to even start on clicking a lighter.
By the way in case they do not know how to audit a cigarette factory, it should be easy if it is operating 24hrs, just check on the plant capacity and multiply it by the number of days on a month. Sometimes i wonder how those top people in BIR that seemed to have graduated from top caliber universities or even abroad, could not be better than a 5th grader on mathematics.
I also got on the list — “Are these top 50 restaurants in Makati paying the correct taxes?” — a full paged ad in Inquirer.
Corner Tree Cafe is a miniscule restaurant with seating for 26 people. Yet, we were included in this “list of shame”. Then they listed the highest tax payers in one column and we weren’t on it…for Obvious reasons!!! And funny that restaurants like McDonalds and Jollibee weren’t on the list! really not well thought out strategy of the BIR etc. Amazed to see they are still doing it.
I hope you actually have the guts to approve this comment.
This is karma biting in you in the ass. For someone as intelligent as you, I wonder why you voted and supported someone like Noynoy Abnoy Aquino. He’s not just stupid but even xxxxxxxxxxxxxx (xxxxxxxx?). He’s lazy, vindictive and just plain ugly. He has no leadership qualities at all. You had four other choices, and you chose the worst one. I really, really hope you learned your lesson. It’s really sad that no matter how intelligent or well-educated Filipinos are, they still don’t know how to choose their leaders.
You deserve every bit of shaming you got from that ad because you actually helped in putting Henares in her position.
abcd1234, I normally don’t publish comments without verifiable email addresses and with content that is similar to yours, but I do so I can respond to it.
I voted for Noynoy because I thought he was the best possible candidate who could win and do a good job. Given the other candidates with winning capability. I believe Noynoy is very honest, his family has high integrity, and I hope he is able to bring positive incremental change to this country. While we all wish there was a broader choice of folks who ran, there weren’t many with all the qualities voters SHOULD seek — intelligence, honesty, integrity, vision, implementation capability and WINNABILITY. Intelligence alone is not a sufficient quality for President, I can name several “intelligent” Presidents who went awry.
Your logic that this is “karma” just makes your comment seem bizarre and bitter. And I am advising you now that any further comments from you or others in this vein WILL be moderated. Thanks.
P.S. To all the folk(s) out there trying to put in ridiculous off tangent comments, you are all doing it with the same IP address, ergo it is suspect, thus they have been spammed automatically.
spot.ph has picked up this story
ami, yes, and they publish that Marketmanila “brought Zubuchon to Manila” suggesting we have a branch in Manila, which we do not. It’s amazing how many errors or inaccuracies are published on the net…
This is lunacy. anyways MM i think you should upgrade your webhosting that support high traffic spikes like these in your post/s. Cheers
Utterly shocked at that karma comment. A lot of people voted for Noynoy because he’s the logical choice amongst all candidates, period. It’s not always about who is the most intelligent, charismatic, blah blah blah. And while I admit I didn’t vote for him, I respect the opinion of those who did.
Who does the research for these government agencies? Always full of inaccuracies! And their shame campaign? Tsk tsk. They are not only incurring the ire of decent businessmen and professionals, they are also exposing how incompetent they are in performing even the most basic tasks! Research, research, research!
All of us regular readers and those who know better than to believe that BIR ad are behind you, MM! And I came here to inform you that spot.ph mentioned you, but ami beat me to it.
We should move towards a flat tax system to eliminate the discretionary powers of the BIR.
LOl whats new.
BIR is merely using the ignorance of the public to fuel their own futile propaganda.
“But instead, some lazy researcher apparently looked up our GIS Filing with attached financial statement to list us as having only PHP32,697 “in 2012 INCOME TAX DUE” which is actually based on a calculated minimum corporate income tax as a percentage of sales, as our accountant explains to me.”
-Yeah not many people are even aware of what minimum corporate income tax (MCIT) is. How convenient that BIR left out the fact that you were operating at a loss (as you claimed), which by extension only requires the company to pay 2% of gross income as tax.
“n 2012, Zubuchon reported sales of PHP24+ million, on which we paid a whopping PHP2.99 million in output taxes, got credit for PHP1.87 million in input VAT taxes due to the heavy purchase of equipment, construction, rentals, etc. and paid a NET VAT of PHP 1.12 million”
-In the eyes of BIR, you are still not paying taxes. Why? because in their own rationale, output VAT is merely shifting the burden of paying tax to the buyer.
“PLEASE DEFINE “TAXES” MORE CLEARLY!??”
-Yeah this has been the case for so long now. They somehow conveniently leave out the fact that all year round corporations have been paying different kinds of taxes. They use the word taxes loosely as Income tax due only.
Look at how they always publish income tax paid by celebrities and compare it (indirectly) with prominent businessmen/women. Again, by relying on the ignorance of the masses, they shame people into believing celebrities pays a lot more taxes in comparison to others doing business. And for the nth time, CONVENIENTLY leaving out the fact that its the corporation that is paying taxes (corporation and individual requires separate income tax returns).
I really can’t believe that BIR would stoop this low. Oh..wait what.? We are in the Philippines? lol never mind then. The Government will never change
Already post in my status..kainis talaga ang gobyerno, we’re seriously looking @ migrating to other country!
Have anyone tried to ask to be business partner with you before the incident who you have put down?
Just wondering because there are many cases of these type; some big time was CAP and Banco Filipino. This is one of the political schemes now a days specially with LGU’s to control the market for their own.
Larry, no not at all. I don’t think there is anything sinister at all. I just think this was less than responsible research, blatantly published. It just makes folks look bad, and honestly, what do they care if they cause any damage… I don’t think there is any conspiracy whatsoever, we are so small, so insignificant, they wouldn’t have bothered…
marketman, i would register and vote for you if you ever thought of running for president. no joke.
Masyado naman obvious si abcd1234. xxxxxxxxx na xxxxxxxxx ang hirit Hindi pa din maka-get over sa pagkatalo ni manny b…..as in bilyar
“Nakaligo ka na ba sa dagat ng basura…..si manny bilyar ang magtatapos ng ating kahirapan.”
Jazz, :), sorry, I had to delete names, just in case hindi naman siya. I don’t read that blog, so I wouldn’t know… But thanks for the head’s up.
hello MM sunstar picked up your rant
Very well said and kudos Marketman for standing up against this creeping persecution of the p-noy administration!
You hit it on target – about that NAME SHAME tactics that this administration has been employing since day 1 which is typical of a populist but shallow, amateurish and self-righteous campaign reminiscent of Peron of Argentina and Hugo Chavez of Venezuela who were authoritarians of different kind. The pro-masa stance (kaya po tayo may CCT) is a big lie to cover up this administration’s elaborate effort to perpetuate the status quo of the scheming oligarchs, elites and the burgeoning new circle of power and wealth-hungry parasites (Akbayan, etc..) all at the expense of the hard-working and decent middle and working class.
Remember how this administartion shamed the Roman Catholic church with the Pajero Bishops “scandal” (and marketman, be comforted by the fact that hindi ka nag-iisa because ABshop Valles, a close spiritual adviser of the sisters, was included in this one). It turned out that no one among the 9 bishops implicated had a pajero and just like that, the yellow media (ABS-CBN, Phil Star, PDI mainly) suddenly stopped covering the issue. Likewise with the AFP “pabaon” and “pasalubong” issue. The whistleblower, ex-Col Rabusa, was really the MAIN architect of the scheme and the reason why this now BIR comm Heidi Mendoza cannot directly pin down the culprit/s was because all transactions would all go back to Rabusa. But yet again, the yellow media had to portray Rabusa and Mendoza as the victims here and the innocent officers implicated had to endure the shame of the ordeal (of course, ex-Gen Garcia, Ligot, Abadia et. al., have to suffer the consequences of their wrongdoings).
i don’t really know the head of IRS here, nor have we seen them on tv or the news. Now on the other hand, BIR head is almost always on the news, daig pa ang arstista lol.
I love the country because I have roots there although I wasn’t born there or have never lived there. It’s beautiful and it has a lot to offer. My husband wants to retire there but all the corruption is less than tolerable. I don’t speak the language and have the fear of getting ripped of every time I think of taking a taxi or going to the palenki. I’m not trying to buy things close to nothing because everyone needs to make a living but be fair and I won’t have to walk away. I still love the Philippines despite all this but it saddens me to think what I will have to put up with if I decide to live there. MM, I hope the BIR will do you and others right by publishing an apology.
Lava bien: Actually the IRS was very much in the news for most of 2013 and Steven Miller, the acting Commissioner for Revenue was forced to resign last May. It is believed that the IRS targeted Republican (Tea Party) opponents of the Obama administration with very nasty audits.
Interesting read! Posted on FB.
@Jody. Most of 2013? Dang, I didn’t know we have an IRS channel on Comcast. What have I been watching huh, the 7-11 channel? My bad
sargo, your first comment did not immediately post because you are a new poster, and the system automatically holds the comment for moderation until I get a chance to review it, which could be hours or up to a day later. And since your first comment contained patently false and slanderous material, I subsequently held it back. I let your second comment through until I found your email address to have been banned on other forums. Obviously, you have problems comprehending the contents of the lengthy post above, not to mention being unable to comprehend a simple message after you posted your comment that probably said “comment for moderation”… And might I remind you against posting slanderous material which can probably be traced back to your computer lest you wish a whole host of other problems on yourself. Duh.
Your comment has been permanently deleted and spammed, particularly as your “handle” has been banned on other discussion boards and websites.
BIR Kim Henares roasts lechon sellers but not DUNKIN’ DONUTS’ local seller…a TAX EVADER?
The news article which appeared in THE MANILA TIMES on December 11, 2013 “WHO IS AFRAID OF DUNKIN’ DONUTS?”, by Columnist Emeterio Sd. Perez, mentioned that GOLDEN DONUTS, INC. (GDI) has unpaid tax deficit of P1.5 Billion for year 2007, but Henares refuses to collect it or sue the company for tax evasion for under-declaring its revenues in the income tax return. GDI is the Philipppine Franchisee of DUNKIN’ DONUTS OF AMERICA, INC. now DUNKIN’ BRANDS, INC.
Henares’s refusal to collect or charge the company for fraud confirms former ABS-CBN correspondent now Inquirer Radio newscaster IRA PANGANIBAN’s open letter to the Commissioner on her arbitrary choice in the personalities she chooses to prosecute.
While Henares, “the national bully”, sows fears among taxpayers, she fears DUNKIN’ DONUTS’ local seller…a TAX EVADER?
I think you should hire a good accountant like one of the advice given to Manny Pacquiao when he had tax problems. He/She might be advising you wrong, or preparing your tax filings and financial statements wrong.
Firstly, the minimum corporate income tax is 2% of gross income. If I work back your tax due, your gross income, or what you earned without taking into consideration rent, salaries, light and water, in 2012, it amounted to Php1.6 million (Php32k / 2%). Based on what you said, your sales is Php24.0 million, then your cost of sales would be Php22.4 million. Your mark up is too low for a food establishment. This shows your overall markup for all meals is at an unbelievably low level of 7%, when in fact, it is widespread practice for food establishments to have a markup of 50-100% or more? Besides, your Php1.6 million gross income is way too low to cover your rent, salaries, light and water and other expenses. If you pay minimum wage for at least 20 workers, then that would already result to an expense of Php2.16 million, how about your rent? Your utilities? You already mentioned that you made very little money (or none at all, depending on the paragraph you are reading, but you didnt LOSE money).
Second, VAT is a passed on tax and therefore, you did not lose Php1.12 million, your customers lost Php1.12 million of claimable input VAT.
Lastly, you shouldn’t compare the larger lechon purveyors since they are also listed in the article. What the BIR just said is a list of the income tax payments of the famous lechon purveyors based on an arbitrary list (to avoid bias) just to raise awareness in the minds of the public. There is nothing wrong with putting a list of taxpayers since the records of the BIR is in itself, already public record, since the BIR is an agency of the government.
Remember the old adage that he who comes to court must do so with clean hands.
I hope you post this so that your readers may be enlightened and don’t see the BIR as the enemy. This should foster cooperation rather than conflict. Also, please PLEASE take my advice, change your accountant, either go to the top firms like SGV, P&A, KPMG, PWC etc. Change starts with the taxpayers, everything will follow.
PS. Oh and if you’re thinking I’m part of BIR or any other conspiracy, I’m afraid that is untrue, I am just an accountant who dreams for a brighter future for this country.
James, thanks for that, and I agree BIR should not be considered an enemy, and neither should businesses be seen as such…
On your clarification of MCIT, I have reverted to actual financial statements, and corrected the post above. While it seems the MCIT percentage was given as an explanation to me, the actual financial statements show a much larger gross income than you suggest (closer to 35%), a lot of legitimate operating expenses and deductions, a very minimal net income and 32% tax on that income.
You are right in that margins were tight in the first year, but not as tight as you suggest. Meat/pork has some of the smallest margins of any major restaurant protein (beef perhaps being worse), that’s why you see so many chicken places. Our retail price for lechon was on average, PHP450-490 when we opened and during our first year, and gross margins were just 20-25% of that. Whole lechons have even more modest margins, as I am sure any BIR rep can calculate. Of course we sold other food items that improved the overall margins. If you were in Manila, and sold lechon at say PHP750-800 a kilo, you would be closer to your example of 50% you suggest. It was expenses, including staffing, rent, etc. that brought net incomes down in our first year of operation. In our second year, things change noticeably and I am hope they will improve in our third year… If the BIR has to take ads out, wouldn’t it be helpful to list Purveyor, Total Sales, VAT paid, Other taxes paid and Income taxes paid? Wouldn’t that present a better/clearer picture, and a natural comparison amongst companies in a similar industry — rather than a shotgun approach?
I regularly do business research along the lines of your article. I don’t think you should count VAT as taxes paid by your company. They are taxes paid by consumers that you merely pass on to the government (offset by the VAT you paid, as obviosuly corporations don’t pay VAT). But in any case, well done for at least passing on the VAT you collect – I think that’s pretty outrageous that companies would not do so!
Also, please keep up these rant posts against shoddy research, journalism etc in the Philippines, they are by far my favourite posts!
“Kim Henares’s approach merely mirrors what this gov’t and its self-righteous overlord at the top has been doing all along: Persecution without evidence; buck passing; refusing to man up to their failures; etc., all to hide their glaring incompetence. Not really surprised why they hit on the small ones while letting the really big fishes friendly with the “Yellow Army” get away with murder and everything else. :(”
Exactly! It’s so sad that the yellow army still fails to see how incompetent Noynoy is despite this. And, the irony of this post is the author still believes in Noynoy. It’s like saying someone is beautiful but has an ugly face. The worst part is, everyone suffers. Even those who at the very start saw how big of a disaster a Noynoy presidency would be.
Dr. Nick, technically I would have to agree with you and others that VAT is a pass on tax and meant to be. However, the reality is when VAT was introduced, prices overall did NOT rise by 12% nor did inflation jump dramatically, which seems to suggest a lot of tax was partially absorbed by companies. However, ultimately, consumers pay for ALL taxes, as it is their business that generates production or service and it is that production or service that results in taxes and revenues for government.
Mark, I think folks still view the whole thing in relative terms. Compared to some of the other candidates for President at the time, I am still confident Noy has done a reasonable job. I don’t think it is ideal, but I am very much a pragmatist now, and would rather have him than some of the others who were in the running. Perhaps Gibo would have been another good choice, but who knows what a Teodoro presidency would have turned out like… I still believe Mar would have been a better choice than Binay, but ultimately, I am but one voter, and I made my choices and have to live with it. Lots of folks echoed similar sentiments as yours with respect to Gloria and we had her for 10 years…
This + the knowledge that we have to pay VAT on our association dues and Forbes Park/Dasma residents don’t… Ahhhh BIR, how I hate you….
hello mm did bir pick this rant up? i hope i was settled peacefulky
If the gov’t is sincere in daang matuwid, the first thing they should do is to conduct lifestyle checks on all gov’t officials, employees and those elected into office. Any mismatch in the assets they (and their family) own and income they’ve declared over the years should result in confiscation of the asset/s. Then it becomes pointless for gov’t officials and employees to accumulate assets way beyond their income. To achieve this, we need a strong judicial system. Sadly, we don’t have it ;-(
Also agree with comment 85, that we should have a flat tax system, where the basis for taxes would be sales. So the BIR just checks and keeps track of a company’s sales. Simple and less prone to “negotiations.”
Thanks for sharing MM.
Sarah, on business transactions, I tend to agree with you, a flat tax would be easier and fairer to apply across the board. For personal income tax, however, I do believe that the wealthy should pay more than the minimum wage earners, hence a graduated tax system for personal income would be more appropriate.
I remember some politician running for office (don’t remember if it was a Philippine or US politico) proposing doing away with all taxes (income tax included) and instituting a flat tax on all sales.
The idea being is if you spend/consume more, you pay more tax. If you save, you defer taxes until the time you do buy something. Anything from a pandesal bun to a house up to a whole condominium building would be subject to the same tax rate.
Rich people, with more disposable money, you spend on pricier items if they weren’t frugal.
I thought it was a very simple and brilliant scheme. Way better than graduated tax brackets depending on income. And besides, the super rich with lots of money to throw around don’t get a majority of their money from high incomes; they get it from stock sales/dividends so a graduated income tax bracket is only really felt by a small minority of the upper middle class (some high management, individuals in the entertainment industry, etc.)
The poor getting taxed at the same rate would probably still come out better for it since you don’t usually accurately declare the sale of all your pandesals. Nor does the typical sari-sari store operate with a business permit and declare figures for taxes at present.
The problem with adding complexity to the tax code means you introduce more holes which those with more money can exploit to their advantage.
Now if all bank records were transparent, you could see where the money is coming and going and transparency/clarity is the enemy of those who want to circumvent the system. Obfuscation and secrecy are the tools of the corrupt that’s why they can get away with things. But then, everyone has skeletons in their closet so total transparency is a paradigm shift that would be a very hard sell to anyone.
Since I have some free time to kill while waiting on some work events, I have a few other ideas to throw out there.
Some politicians here in the US bandy about the idea that “corporations are people” which, imho, is a load of crap. But then that is a legally true statement that enables corporations to donate loads of money to campaigns of politicians.
Anyway, from a tax perspective, the difference between a business and an individual is that the business can deduct “business expenses” from its gross earnings so that the net earnings are what is taxed.
That is the major advantage a business has over an individual. An individual also needs to spend on necessities to go on living but can’t deduct “living expenses” from his gross earnings so that his taxable net earnings are lower.
So that’s why taxing income is kinda “bass-ackwards” and taxing sales/consumption is another way to think about it.
Sales/consumption is the lubricant of the economy and a sales tax kinda encourages saving, so less velocity of money. But then again, even the current system (VAT taxes essentially are taxes on the sales of most items) hasn’t really curbed spending. And without an income tax, people would have more money to spend.
Seems to be “spenders gonna spend, savers gonna save.” regardless of how the tax system is structured.
Comments are closed.