Tax troubles continue to hound Pepsi Cola PH, Korean shareholder

Pepsi Cola Products Philippines Inc. continues to face alleged tax deficiencies of nearly P1.5 billion, three years after it filed for a petition for review with the Court of Tax Appeals in October 2015.

The assessments cover an 18-month period from July 2009 to December 2010 in two separate amounts totaling P1.498 billion. 

The Bureau of Internal Revenue levied the amount on PCPPI for alleged shortfalls in the payment of income tax, expanded withholding tax, value added tax, documentary stamp tax and withholding tax on compensation. 

Pepsi said the case was issued beyond the three-year period prescribed by law and were, therefore, null and void. It also said the tax case had no legal and factual basis.

The case has been under continuing litigation in the tax court for three years now, with both parties still to complete their presentation of evidence.

PCPPI’s Korean stockholder, the Lotte Chilsung Group, has also been beleaguered by tax evasion charges and other serious accusations that included bribery, breach of trust and embezzlement. 

PCPPI’s tax troubles paled in comparison with that of Lotte Chilsung, which acquired a 34.4-percent stake in the local firm in 2010, making it Pepsi’s biggest single stockholder in this country. 

The conglomerate, which is also Pepsi’s bottler in South Korea, has been under intense investigation since 2016 for alleged anomalies. 

Two years ago, Lotte Group chairman Shin Dong-bin and several relatives were indicted for alleged corporate malpractices, including tax evasion amounting to $76 million, or about P3.997 billion.

Prosecutors also subjected Shin Dong-bin’s 93-year old father and Lotte founder Shin Kyuk-ho to questioning in September 2016 on suspicion of evading roughly 600 billion Korean won in taxes through questionable transfer of Lotte stocks and assets to his wife and two daughters. 

Shin Dong-bin was found guilty of embezzlement and breach of trust in December 2017 and got a 20-month jail term. He was again convicted in February 2018 for a separate charge of bribery and was sentenced to 30 months in prison.

The first court suspended his sentence for two years and his second sentence was similarly suspended, for a longer period of four years.  

His father, Shin Kyuk-ho, was convicted with him in December 2017 and was sentenced to four years in jail. His sentence was likewise suspended due to his age and poor health and pending an appeal to a higher court. 

Pepsi’s Philippine operation is run by foreigners, including five Korean officials led by CEO Yongsang You, who also sits in the board.

Topics: Pepsi Cola Products Philippines Inc. , Korean shareholder , Court of Tax Appeals , Bureau of Internal Revenue
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