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: TOP GROUPON FOODS CORP.

Unit C, D & E Puregold, JP Rizal St., Singkamas, Makati City
TIN: 008-907-149-000

This refers to the investigation of All Internal Revenue Taxes of the above subject taxpayer
covering Taxable Year 2017 under eLA201600037344/LOA-049-2019-00000339 dated on July
02, 2019.

BACKGROUND

TOP GROUPON FOODS CORP. is incorporated in the Philippines registered with Securities
and Exchange Commission (SEC) WITH REGISTRATION Number CS201422401 dated November 17,
2014.

The primary business purpose of the company is to establish, operate and maintain restaurants,
coffee shops and refreshment parlors, cocktail lounges and cater foods. It currently operates a “Jollibee”
fast food outlet under franchise and royalty agreement with Jollibee Foods Corporation.

The registered address of the company is located at Unit C, D & E Puregold, JP Rizal St.,
Singkamas, Makati City.

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 P219,848,293.00. The
Deductions claimed from the gross revenue in the amounts of P190,049,745.00 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.

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

Verification disclosed that the taxpayer is a VAT registered entity with Taxpayer Identification Number (TIN)
008-907-149-000. The taxpayer reported sales amounting to P219,848,293.00 which consists of Vatable Sales (see
attached working paper). During the course of audit, the taxpayer provides documents to support its sales and
purchases, hence, no discrepancy has been noted except for the Receipts not subjected to VAT amounting to
P2,678,133.81, hence assessed and subjected to 12% VAT pursuant to Section 105 and 108 of the tax code.

Consequently, the said discrepancy resulted into basic deficiency tax amounting to
P381,389.73. which was discussed properly with the taxpayer’s authorized representative, who
agreed and paid the same.

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
P319,232.27, 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