MANILA, Philippines — After an extensive investigation, the National Bureau of Investigation (NBI) has taken action against the operators of a major tax fraud scheme that has resulted in the non-payment of approximately P50 billion in value-added taxes owed to the government.
Over the weekend, the NBI filed charges against 30 individuals, including Bernard Chong, a notable e-commerce entrepreneur, anime producer, and influential figure in the esports industry.
Chong has been involved in animation production for renowned companies such as Netflix and Dreamworks. He also founded Bren Esports, a prominent esports organization in Southeast Asia. Chong gained further recognition with the establishment of the Lyka e-commerce platform, which experienced popularity in 2021 until it was closed down by the Bangko Sentral ng Pilipinas due to its lack of licensure as an online payment system.
Recently, the Court of Appeals dismissed drug trafficking charges against Chong, determining that he was merely an investor and had actually divested from the cargo company linked to the P1.8-billion shipment of illegal drugs intercepted in 2019.
Chong is also associated with Brenterprise International Inc., the key entity implicated in the value-added tax (VAT) fraud scheme that came to light in December of last year.
According to the NBI Anti-Organized Transnational Crime Division, approximately 1,000 large and small companies utilized Brenterprise to manipulate tax input credits fraudulently, enabling them to evade their VAT responsibilities.
Fabricated transactions
Justice Secretary Jesus Crispin Remulla refrained from disclosing the names of the companies involved but stated that some of them are prominent players in the food and real estate industries.
The NBI’s investigation revealed that Brenterprise orchestrated fictitious purchase orders, sales invoices, and receipts, enabling its clients to claim input credits and reduce their VAT liabilities.
NBI agents, led by agent Rehom Pimentel, discovered that client companies would submit false purchase orders to Brenterprise, which would then utilize one of its dummy corporations to fulfill these fictitious orders.
Phantom corporations
The NBI divulged that Brenterprise established 103 registered corporations, with an additional 44 under investigation, to fulfill the fraudulent demands of their clients.
Interestingly, none of these companies maintained physical offices. The NBI revealed that Brenterprise employees digitally simulated their operations from a condominium building within the Eastwood complex in Quezon City.
Acting on information provided by a former Brenterprise employee, the NBI conducted a raid on the Eastwood offices in December, seizing crucial evidence, including 24 computers that are currently undergoing forensic examination.
Remulla suspects that the culprits had an accomplice within the Bureau of Internal Revenue (BIR). “There’s always a BIR official who’s directing the use of this. They have a contact there,” he stated.
The NBI ascertained that the fraudulent scheme was operational for 14 years, spanning from 2008 to December 2022.
The charges filed by the NBI mark a significant step toward combating tax evasion and holding those responsible accountable for defrauding the government of substantial VAT revenues. The investigation serves as a reminder of the ongoing efforts required to maintain fiscal integrity and ensure that individuals and corporations fulfill their tax obligations, thereby contributing to the development and stability of the Philippine economy.
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