Tax Evasion Case vs Billionaire Businessman Macario Lim Gaw

The Department of Justice (DOJ) has ordered the filing before the Court of Tax Appeals (CTA) of tax evasion charges against a billionaire businessman.

In an eight-page resolution approved by Prosecutor General Claro Arellano, the DOJ gave the “green light” for the prosecution of Macario Lim Gaw for violation of Section 255 of the National Internal Revenue Code (NIRC) of 1997 which provides penalty for a taxpayer’s failure to file return, supply correct and accurate information, pay tax withheld and remit tax and refund excess taxes withheld on compensation.

Gaw is the president of Mega Packaging Corp. and Makro LPG.

Based on his shareholdings, Gaw also has shares in Uniwide Sales, Inc.

The resolution is dated March 17, 2011 but was released to the media only on Thursday during a press conference by DOJ Secretary Leila De Lima.

In December, 2007 and from April to June, 2008, Gaw bought a total of 10 properties consisting of an aggregate area of 19.5592 hectares which he sold in July, 2008.

In its resolution, the DOJ said that Gaw failed to pay the corresponding tax for the income he earned for the sale of the said properties.

Gaw claimed that he already paid the corresponding capital gains tax as he insisted that the sold properties were capital assets and not ordinary assets as claimed by the Bureau of Internal Revenue (BIR).

Gaw paid the six percent capital gains tax amounting to P9,111,801.69 for 2007 and P418,746,021.11 for 2008 to evade the payment of the 32 percent income tax and the 12 percent value-added tax (VAT) due to the sale of lands classified as ordinary assets.

But the DOJ pointed out that evidence showed that the transactions of Gaw, as well as his continuing transactions showed that he is engaged in real estate business under the BIR revenue regulation 7-2003.

“While respondent would insist that the revenue regulation merely pertains to selling and not buying, the revenue regulation does not distinguish since the revenue regulation itself states that the property purchased for future use in the business, even though this purpose is later thwarted by circumstances beyond the taxpayer’s control, does not lose its character as an ordinary asset,” the DOJ said.

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