Written by Catherine T. Manahan, 1 February 2007
The premier professional tax organisation, Tax Management Association of the Philippines (TMAP), just held its Annual Induction of the Incoming Officers and Board of Directors for 2007 last 29 January 2007. Heading the new team is incoming TMAP President Mary Assumption S. Bautista-Villareal of Isla Lipana & Co. / PricewaterhouseCoopers, who has aptly and timely invited the BIR Commissioner as keynote speaker and inducting officer for the occasion. His presence provided the group of tax professionals and practitioners the golden opportunity of getting a first-hand knowledge of what tax reform programs the BIR intends to implement this year.
Unfazed by the P765 Billion total revenue target for 2007, the Commissioner outlined the following flagship programmes, among others: adoption of an Automated Tax Ruling System (ATRS) that will allow taxpayers who are requesting for BIR rulings to file them electronically; full manpower complementation of its rationalisation programme to address the human resource shortage; expansion of the large taxpayers base by additionally including all corporations with at least P10 million paid-up capital under the electronic filing and payment system (EFPS); continuation of the industry benchmarking and taxpayers profiling through more intensified tax compliance verification drives and relentless pursuit of the tax evasion program under the RATE (Run After Tax Evaders).
An interesting feature of the proposed ATRS is the opportunity accorded to the party requesting for the BIR ruling to also attach already together with its request a draught of the desired ruling. Of course, it goes without saying that such draught will still pass through the scrutiny of the revenue officers assigned, as to whether there is basis for such ruling under the law, rules, jurisprudence and established precedents.
What this programme is possibly trying to address is the current prolonged process of securing a BIR ruling which may have a deleterious effect on the influx of foreign investments and the efficient and smooth decision making process of business entities since taxation always constitutes a material transaction cost.
On the manpower shortage, it has been reported that although the BIR has 11,800 employees spread out across the country, serving about 10 million registered taxpayers, only 5,000 of these total employees are examiners or roughly about 42% only. This pales in comparison with Vietnam and Japan which have a total workforce of 20,000 and 50,000, respectively.
Thus, a key to its strategic action plan is to hire CPAs and lawyers to fill up the vacancies so that the assessment and collection functions of tax administration can be effectively and efficiently discharged.
As to the expansion of the large taxpayers base which will compulsorily subject these additional targeted corporations to the EFPS, this may be explained by the reported statistics that the Large Taxpayers Service (LTS) has contributed to at least 53% of the overall BIR revenue target of P675 Billion last year or about P357.7 Billion.
A going concern, however, expressed by the e-filers relative to this programme is an assurance from the BIR that its present computerised system will be really ready, able and properly equipped to receive more tax returns and payments electronically and prevent any glitches in the system. Thus, the availability of the international funding from agencies like World Bank, CIDA, IMF, will really come in handy.
As far as the industry benchmarking is concerned, one can surmise that it is still a work-in-progress since the adoption of the criteria per industry is certainly open to debate among the affected sectors.
The intensified tax-mapping drive is really effective in bringing to the tax net those taxpayers who have not registered their business or do not issue official receipts (OR). Related to this programme, the BIR has started last year two measures intended to curb the taxpayers’ common practice of not issuing ORs. These are the PSR or the “Premyo sa Resibo”, an electronic raffle drive, and the “NO-OR-COMPLAINT” e-facility which enables a taxpayer to email his complaint about establishments that do not issue OR to no-or-complaint@bir-gov.ph.
Finally, the RATE is here to stay and although the gains to be derived from this programme are long time coming because of the lengthy litigious process, the lesson it is impressing upon the errant and dishonest taxpayers is that criminal tax fraud does pay.
The BIR has indeed an awesome task ahead of it which it cannot singularly accomplish without the indispensable assistance and cooperation of the private sector. The theme that the current leadership of TMAP has adopted, i.e. Team-Up for Tax Awareness, synchronises its goal with the role of the BIR to become a partner of government for the nation’s progress, by creating tax awareness and encouraging the Filipino citizens to become responsible taxpayers. As the newly-inducted TMAP President has remarked in her concluding Inaugural Address: “We can succeed if all together we can put to heart George Bernard Shaw’s provocative challenge: You see things and you say, Why? But I dream things that never were and I say, Why not?” Thus, hopefully, this also becomes the rallying cry of the BIR as it charts its 2007 course in achieving its formidable tax goal.
