Monday, January 7, 2013

Silka Papaya Soap COO Evades Taxes to Support Lavish LIfestyle

In his Facebook account, Jannsen Co brags about buying a
Ducati 991 and billing it as "company expense".
The cost? Php 3 Million.

Former employees at Cosmetique Asia Silka Papaya say that their Chief Operating Officer Jannsen Co's lavish lifestyle is the reason behind their low wages and the company's Php 1.5 Billion tax evasion.

Since 2008, Silka Papaya has been under reporting its sales by as much as 50%!

According to its Financial Statements from 2007 to 2011, Cosmetique Asia Silka Papaya’s Net Sales amounted to P2,661,288,237.  But according to market research data from a reputable Market Research Firm, Silka Papaya's actual net sales amounted to P 4,490,682,515.


The total estimated under payment of basic tax is around P350 Million and the total estimated potential deficiency in taxes including penalties may range from P600 Million to P700 Million.

But that's just basing the tax deficiency on market research data from large supermarket chains and if we were to include sales made through small stores, the total tax deficiency of Silka Papaya may go over some Php 1.5 Billion!

The BIR seems to have completely overlooked Silka Papaya despite the dubious Financial Statements it has been submitting since 2008.

Silka Papaya Reported Fake Net Sales Figures from 2008 to 2011

Since 2008, Silka Papaya has been reporting unusual Net Sales Growth which is uncharacteristic for its market.

In 2008, Silka Papaya achieved Net Sales of P365,034,832.
In 2009, its Net Sales jumped by 14.4% to P426,881,955.
In 2010, Silka's Net Sales increased to P628,327,183, jumping by 32%.
In 2011, Silka managed to surpass its Net Sales again, reaching a 36.8% increase with its Net Sales at P994,928,845.

Silka's Net Sales Growth goes far beyond the norm, something easily seen when it is compared with the Net Sales of other companies.

Net Sales of Cosmetique Asia's Silka Papaya Soap grew from P365,034,832 in 2008 to P994,928,845 in 2011 -- achieving a Net Sales Growth of 272% in a span of just 3 years!  It's incredible that Silka Papaya Soap's Net Sales grew by an average of 90 percent per year!

In 2008, Johnson and Johnson reached Net Sales of  P 2,374,479,381 and in the following year, 2009, its Net Sales contracted to P 2,032,118,636 -- a decrease of 14.4%.

In 2010, Unilever achieved net sales of  P35,735,971,982 and in 2011, its Net Sales went up to  P38,859,784,456, representing an increase of 8.74%.

In the matrix above, you will note that Cosmetique Asia's Net Sales growth increased 14.4% from 2008 to 2009, 32% from 2009 to 2010, and 36% from 2010 to 2011.  Silka Papaya's Net Sales Growth which had three consecutive years of growing by leaps and bounds -- an incredible feat, indeed.

On the other hand, Colgate Palmolive's Net Sales went down 28 percent in 2009, increased by 20 percent in 2010, and decreased again by 5.2 percent in 2011.

Silka Papaya Reported Fake Cost of Sales

It is unbelievable that a company would spend Php 800 Million in 2010 just to make Php 100 Million!  Silka Papapaya has been reporting ridiculous figures since 2008 and it is a wonder why the BIR didn't detect the ruse.

In 2008, Cosmetique Asia Silka Papaya declared its Cost of Sales at P273,335,746.  With its Net Sales at P365,034,832, its Gross Profit amounted to P91,899,086 -- a gross profit rate of 25%.

In 2009, it declared its Cost of Sales at P324,508,893 and Net Sales at P426,881,955, coming out with a Gross Profit of P102,373,062 -- a Gross Profit of just 24%.

In 2010, Cost of Sales was at 469,298,415 and Net Sales was at P628,327,383, its Gross Profit was at P159,028,768 or again, just 25%.

In 2011, Cosmetique Asia Silka Papaya's Cost of Sales nearly doubled to P833,597,551! It's Net Sales was at P994,928,845 and its Gross Profit was at P161,331,294, making its Gross Profit Rate EVEN SMALLER at 16%!

The norm for cost of sales is at 40% or 50% Gross Profit, compared to Cosmetic Asia Silka Papaya which has a Gross Profit rate of 25% to 16% at its lowest.

Looking at its unusually rapid and consistent Net Sales Growth at 90 percent per year, its unusually high Cost of Sales, and its peculiarly low Gross Profits, Cosmetique Asia Silka Papaya has all the signs of doctoring its financial figures to evade taxes by fooling the BIR into thinking its income is really small.

1 comment:

  1. The United Kingdom budget is also very criticized especially because many had expected some measures limiting transactions seen as the cause of tax avoidance, such as the use of intellectual property holding companies outside the UK where there is no commercial substance to support the transaction

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