Royale charged with tax evasion in PH: What will happen to members?

Popular multi-level marketing firm Royale Business Club International, Inc. (Royale) has been formally charged by the BIR with tax evasion.

Here's the press release from the Department of Finance:

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against ROYALE BUSINESS CLUB INTERNATIONAL, INC. (ROYALE) for Willful Attempt to Evade or Defeat Tax, and Deliberate Failure to Supply Correct and Accurate Information in its Annual Income Tax Returns (ITR) and Quarterly Value Added Tax (VAT) Returns for taxable years 2011, 2012 and 2013, as defined under Sections 254 and 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Likewise charged for the same violations were its responsible corporate officers – President JULIUS ALLAN G. NOLASCO, and Vice President for Finance/Treasurer ISA ANGELA C. BAUTISTA – and its responsible employees – Assistant Treasurer JEANETTE R. MAGHIRANG, Assistant Treasurer IMELDA P. PEDRON, and Assistant Accounting Manager MARJORIE G. MOLINA.

Respondent ROYALE is a domestic corporation with the primary purpose of marketing consumer products and distributorship of food supplements, cosmetics, pharmaceutical products and beverages. Its registered address is at 1363 A. Quezon Avenue, West Triangle, Quezon City.

In the course of investigation, access letters were sent to various banks, including the Bank of the Philippine Islands (BPI), Metrobank, and Banco de Oro. In reply, BPI, Metrobank, and Banco de Oro certified that they paid ROYALE P141.60 million, P468.55 million, and P171.07 million, respectively.

In sum, ROYALE received income payments from the said banks amounting to P190.79 million in 2011, P236.38 million in 2012, and P354.06 million in 2013. Investigators, however, discovered that ROYALE declared in its ITR gross sales amounting to only P39.14 million in 2011, P106.69 million in 2012, and P196.68 in 2013, thus substantially underdeclaring its correct taxable sales by 387% or P151.64 million in 2011, by 122% or P129.69 million in 2012, and by 80% or P157.38 million in 2013.

As a consequence of its acts and omissions, ROYALE was likewise sued for an aggregate deficiency tax liability amounting to P359.75 million, inclusive of surcharges and interests, broken down into: 2011 – P135.87 million (Income Tax –P95.53 million and Value Added Tax – P40.34 million); 2012 – P115.39 million (Income Tax – P74.56 million and Value Added Tax -P40.83 million); and 2013 – P108.49 million (Income Tax – P82.24 million and Value Added Tax – P26.25 million).

The case against ROYALE BUSINESS CLUB INTERNATIONAL, INC., together with its responsible corporate officers and employees, is the 340th filed under the RATE program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of the National Investigation Division.

On the day of the announcement from the BIR, the administrator of Royale-Quezon City Facebook page changed the cover photo. It now reads:

All posts, shoutouts, comments and products promoted herewith are sole discretion of the administrator of this page.

Screenshot from Facebook

So what will happen to Royale members in the Philippines now? The MLM firm has not issued an official statement on the matter.