BIR raids warehouse, major supermarkets in renewed drive vs tax evasion, illicit trade

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The Bureau of Internal Revenue (BIR) conducted back-to-back raids in a warehouse and major supermarkets as it chases a sweetened beverage manufacturer that has at least P800 million in excise tax deficiencies. 

The BIR disclosed that Vermirich Foods Corp. (Vermirich) incurred P800 million in estimated tax deficiencies that include interests, surcharges, fines, and the 12 percent value added tax (VAT) on sweetened beverages it manufactured from 2018 to date. 

The BIR explained that Vermirich “failed to file excise tax returns and pay the excise taxes due on the sweetened beverages they manufactured” during the reference period. 

In doing so, Vermirich violated Sections 130, 150-B, 254, and 263 of the National Internal Revenue Code (NIRC) of 1997, as amended, which pertains to the filing and payment of Excise Taxes, according to the BIR. 

“Vermirich also failed to secure the appropriate permit to operate as a manufacturer of sweetened beverage products subject to excise taxes, in violation of Section 154 of the same Code,” it said on Friday. 

The BIR raided Vermirich’s warehouse in Cavite Light Industrial Park on June 14 morning. 

Furthermore, the BIR raided three supermarkets—S&R Membership Shopping in Bonifacio Global City, Supervalue Inc. and Super Shopping Market Inc., both in Quezon City—in two days (June 14 and 15) as they were involved in the distribution of untaxed Vermirich-manufactured products. 

The BIR emphasized that the supermarkets could be held liable for selling untaxed sweetened beverages. 

The BIR explained that S&R’s lemon tea and raspberry tea powdered juices, which were manufactured by Vermirich, were “untaxed” leading to the seizure of the products. The S&R supermarket was located at 32nd Street and 5th Avenue, Bonifacio Global City, Taguig.

“BIR records also show that S&R had been duly advised by the Bureau in a letter  dated 6 July 2021 to comply with the regulatory requirements,” the BIR said. 

“As the distributor of Vermirich’s products, S&R failed to exercise due diligence in ascertaining whether the appropriate taxes had been paid by Vermirich on the sweetened beverages in question,” the BIR added. 

The BIR said the S&R “can be held liable for violations of Section 4, Revenue Regulations No. 20-2018, and Sections 130, 150-B, and 263 of the NIRC [National Internal Revenue Code].” 

Supervalue, Super Shopping

Meanwhile, the BIR said the raids on Supervalue and Super Shopping stemmed from the discovery of numerous boxes of SM Bonus Apple Juice Drink and SM Bonus Orange Juice Drink in the warehouse of Vermirich during the June 14 raid. 

“Supervalue and Super Shopping Market, as distributors of SM Bonus Apple Juice  Drink and SM Bonus Orange Juice Drink, both of which are ready-to-drink juice beverages manufactured by Vermirich, were in possession of these untaxed goods, which were seized by the Bureau during the raid,” it said. 

“Since both enterprises possessed the said goods, they failed to exercise due diligence in ascertaining whether the appropriate taxes had been paid by Vermirich on the sweetened beverages in question,” it added. 

Like S&R, the Supervalue and Super Shopping Market could be held liable for violating the country’s tax rules and regulations, according to the BIR. 

“The Bureau will continue to look into other manufacturers of sweetened 

beverages to determine whether they have secured the appropriate permits to produce such goods and paid the correct excise taxes thereon,” it said. 

“Every effort is being made to emphasize the impact of tax evasion and illicit trade on the Bureau’s revenue collections, and on the national economy,” it added. 

The BIR pointed out that it conducted the enforcement operations to “emphasize” the gravity of the “offenses” committed by Vermirich, S&R and Supervalue. 

“The objective is to highlight the impact of tax evasion and illicit trade on the Bureau’s revenue collections, and on the national economy,” the BIR said.

Image credits: BIR