Republic of the Philippines

Department of Finance
BUREAU OF INTERNAL REVENUE
Revenue District No. 049
North Makati

MEMORANDUM FOR:
The Regional Director
Revenue Region No. 8A
Makati City

Subject: CREATECH WELLNESS CORP.

2176 Primo Rivera St., La Paz, Makati City
TIN: 008-382-325-000

This refers to the investigation of All Internal Revenue Taxes of the above subject taxpayer
covering Taxable Year 2017 under eLA201600037276/LOA-049-2019-00000440 dated on June
19, 2019.

BACKGROUND

CREATECH WELLNESS CORP. is incorporated in the Philippines registered with Securities

and Exchange Commission (SEC) WITH REGISTRATION Number CS201217829 dated September 28,
2012.

The primary business purpose of the company is the establishing and maintaining a therapeutic
massage shop; and to do and perform such other acts and things necessary or incidental to the
accomplishment of the foregoing corporate business and obkects insofar as may be allowed by applicable
laws, rules and regulations

The registered address of the company is located at 2176 Primo Rivera St., La Paz, Makati City.

The Company’s financial statements as of and for the year ended December 31, 2018 were approved and
authorized for issue by the Board of Directors on April 11, 2019.

The above taxpayer’s books of accounts were registered and prepared in the manner consistent
with that of the Generally Accepted Accounting Principles and existing Rules and Regulations set forth
by the National Internal Revenue Code (NIRC), as amended.

AUDIT FINDINGS

The investigation was conducted in accordance with audit guidelines and procedures set forth in
Revenue Audit Memorandum Order No. 1-2000 with the end view of determining the taxpayer’s correct
tax liability and to check the substantial compliance with internal revenue rules and regulations. Analysis
was conducted on all presented records and documents of which resulted to discrepancy on its All
Internal Revenue Taxes. Details of which are as follows, to wit;

RESULTS OF INVESTIGATION

INCOME TAX:

The taxpayer declared in its Annual Income Tax Return (ITR) the Gross Revenue as
accounted in the Audited Financial Statements (AFS) in the amount of P142,791,327.00. The
Deductions claimed from the gross revenue in the amounts of 86,495,421.00 respectively, were
duly supported and found to be ordinary and necessary in carrying on the business operations
during the year under audit in accordance with Section 34 of the NIRC. Net Income per AFS was
appropriately reconciled with the Taxable Income per ITR.
 Audit Disclosed the following:

o Unsupported Taxes and Licenses – P443,326.00

o Unsupported Creditable Withholding Tax – P39,857.50

Foregoing considered, there has been found due to the taxpayer deficiency Income Tax
amounting to P182,402.35, inclusive of increments.

The undersigned’s findings were presented and discussed properly with the taxpayer’s authorized
representative, who agreed and paid the same.

VALUE-ADDED TAX

Verification disclosed that the taxpayer is a VAT registered entity with Taxpayer Identification
Number (TIN) 008-382-325-000. The taxpayer reported Vatable sales amounting to P142,791,327.00.

During the course of audit, the taxpayer provides documents to support its sales and purchases, hence, no
discrepancy has been noted.

WITHHOLDING TAXES

On the examination and verification of the withholding tax liabilities, the undersigned
have undertaken appropriate standard auditing procedures in order to check and countercheck the
proper imposition of the said regulations and to determine the correctness of the taxes withheld
and remitted.

However, it was disclosed during investigation that the taxpayer failed to withhold/remit the
corresponding withholding tax on the Salaries and Wages, hence assessed, pursuant to Sec. 79 (A) of the
Tax Code and implemented under Sec 2.78 of the Revenue Regulation 2-98 in the amount of
P304,271.75, inclusive of statutory increments.

The undersigned’s findings were presented and discussed properly with the taxpayer’s authorized
representative, who agreed and paid the same.

DOCUMENTARY STAMP TAX:

Also, as the result of the investigation, Verification disclosed that you failed to pay the
Documentary Stamp Tax of one peso (P1.00) on each Two Hundred Pesos (200.00), or fractional part
thereof, on your advances to related parties in aggregate amount of P20,000,000.00 which purported to be
loans pursuant to Section 179 of the National Internal Revenue Code as established in the case of CIR vs
Filinvest Dev’t Corp..

As a result, the said discrepancy resulted into basic deficiency tax amounting to P163,216.44,
inclusive of statutory increments.

The undersigned’s findings were presented and discussed properly with the taxpayer’s authorized
representative, who agreed and paid the same.

RECOMMENDATION

Inasmuch as the above deficiency have been paid as evidenced by duly validated BIR Payment Form
0605, it is hereby recommended that the above mentioned Letter of Authority be considered closed and
terminated and be filed for future reference.
Respectfully Submitted by: Reviewed by:

JOHN LOUIE ESGUERRA ANNABETH B.

GUTIERREZ
Revenue Officer Group Supervisor

Recommending Approval: Reviewed by:

FREDERICO Q. PILARCA MARIZA UY

Revenue District Officer Chief, Assessment Division

Approved by:

MARIDUR V. ROSARIO
Regional Director