Drilon: Chinese PPE supplier liable for tax evasion


SENATE Minority Leader Frank Drilon pressed the Duterte administration on Wednesday to file tax evasion charges against a Chinese firm that the government paid almost P2 billion to as one of the awarded suppliers of personal protective  equipment (PPE) during the Covid-19 pandemic.

Drilon zeroed in on the XUZHOU Construction Machinery Group from which the Procurement Service of the Department of Budget and Management (PS-DBM) bought the PPE supplies.

The Minority Leader maintained that even if the supplier is based in China, it must still pay taxes on earnings from commercial transactions here in the Philippines.

During the 12th Blue Ribbon panel hearing on Tuesday, senators were told that XUZHOU had “no business permit, is not registered at the Securities and Exchange Commission and is not listed as an accredited importer” at the Bureau of Customs.

Its Country Representative, Robin Han, admitted to Senate probers that XUZHOU has “no office in the Philippines and was not a direct importer,” adding that it was the DBM that “handled their clearances.”

Still, he added that the DBM imposed a deduction to cover the standard value-added tax, as probers pressed for proof of tax payments.  Senators, including Blue Ribbon chairman   Richard J. Gordon, Drilon, and Sen. Panfilo Lacson were baffled by such a peculiar setup.

Drilon described  this as an additional indication of lack of due diligence by Duterte administration officials involved in awarding contracts for pandemic supplies.

Much of the past several hearings have zeroed in on the low-capital startup Pharmally Pharmaceutical Corp., which bagged over P8.7 billion in contracts from PS-DBM to supply face masks, shields and Covid-19 test kits that some senators suspected to be overpriced or substandard.

Three Pharmally executives are under fire for evasive testimonies before Senate probers, especially about how much exactly did the company—incorporated with only P625,000 capital—get exactly as financial assistance from President Duterte’s businessman friend and former economic adviser, Michael Yang, so Pharmally could shoulder the cost of delivering multimillion-peso supplies for each contract. The three—Linconn Ong, and siblings Mohit and Twinkle Dargani—have been cited in contempt but only Ong is in Senate custody.

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