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'Favored' Face Shield Supplier Owes Gov't Billions in Taxes, Drilon Says

Senator wants to know if right taxes were paid.
by Erwin Colcol
Oct 28, 2021
Pharmally director Linconn Ong is escorted to the Senate Office of the Sergeant at Arms after being cited in contempt and ordered arrested in connection with the Senate blue ribbon inquiry into the anomalous pandemic deals.
Photo/s: Senate PRIB

Pharmally Pharmaceutical Corp. and other firms potentially owe the government some P7.5 billion in income taxes from the contracts awarded to them to provide COVID-19 supplies that are allegedly overpriced, Senate Minority Franklin Drilon said Thursday.

At the continuation of the Senate blue ribbon hearing, Drilon moved to publicize the income tax returns of Pharmally, its officials, and other personalities and firms involved in the anomalous COVID-19 supply deals to determine if they had paid the proper taxes.

"In my computation, there is a potential tax income of approximately P7.5 billion. Subject to further verification, potentially out of the P42 billion in supply contracts awarded to PS-DBM, the suppliers are supposed to have paid P7.5 billion in income taxes," Drilon said.

Drilon was referring to the P42 billion COVID-19 funds that were transferred to the Department of Budget and Management's procurement service that were flagged by the Commission on Audit.

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Assuming that the funds were all disbursed and paid to suppliers, Drilon said the presumptive net taxable income of these contractors was P25.2 billion. At 30% income tax rate, the potential income tax due was at P7.5 billion.

"Ang tanong, nagbayad ba sila ng tamang buwis? Magkano ang binayad nila?" Drilon asked.

After his motion was adopted, Drilon presented details of the income tax returns of Pharmally executives and other personalities involved in the investigation, which showed that many of them did not file their tax returns for certain taxable years.

Records from the Bureau of Internal Revenue showed that former presidential adviser Michael Yang, who has been linked to Pharmally, did not file his income tax return from 2017 and the years prior, and only paid P7,800 out of his P208,000 taxable income for 2018.

Pharmally chairman Huang Tzu Yen has no record of paying taxes from 2019 up to the present, while Pharmally claimed that it had a tax credit of P96 million in 2020.

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Pharmally executive Twinkle Dargani only paid P29,187 in income taxes in 2018 and P1,000 in 2020, while her brother, Mohit Dargani, paid P97,241 in 2020 but the BIR record marked it "suspended status." In 2019, he paid P22,062 income tax.

It was in 2020 and 2021 when Pharmally officials including Twinkle Dargani bought several luxury cars.

Former Budget Usec. Lloyd Christopher Lao filed his income tax return for 2018 and 2019 through the BIR's electronic forms facility, but "these could not be viewed" by the bureau. He also didn't file his tax return in 2020.

TigerPhil Marketing Corp. which provided COVID-19 supplies to Pharmally, "amended" its taxable income and tax payments for 2020 after being flagged by the Senate committee.

Greentrends Trading International Inc., another supplier, did not file income tax returns from 2015 to 2021, while Xuzhou Constructions has no income tax records available from 2017 up to the present.

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"We are presenting all of these because under the law, and under the regulations, those who paid for the supply of medical supplies should submit a certification of the taxes paid," Drilon said.

"This again would indicate the need for us to closely review how PS-DBM is able to get away with all of these apparent violations," he added.

The Senate is investigating Pharmally after it bagged over P8 billion in contracts to provide medical supplies last year despite having only P625,000 in paid-up capital.


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