IBP seeks TRO vs new BIR regulation

MANILA, Philippines – Saying the Bureau of Internal Revenue was encroaching on the Supreme Court’s jurisdiction, the Integrated Bar of the Philippines has asked the high court to void a new tax regulation requiring self-employed professionals like them to disclose their service fees and client information.

In a petition asking for a temporary restraining order filed April 8, the Integrated Bar of the Philippines, an association of all lawyers in the country, assailed Revenue Regulation 4-2014 titled “Guidelines and Policies for the Monitoring of Services Fees of Professionals” as unconstitutional.
RR 4-2014, dated March 3, requires all self-employed professionals to submit an “affidavit indicating the rates, manner of billings, and the factors they consider in determining their service fees upon registration and every year thereafter on or before Jan. 31.”

They were also required to submit their books of accounts and official appointment books, containing the names of their clients and the dates and time of the meetings.

Even in pro bono cases when no fee is charged, RR 4-2014 also requires lawyers to issue a BIR-registered receipt showing that a 100 per cent discount was given.

The IBP said the regulation issued by the BIR and the Department of Finance “encroaches upon the court’s exclusive authority and jurisdiction to regulate and prescribe rules” for the legal profession.
“The power to promulgate rules on the protection and enforcement of constitutional rights, pleadings and practice and the law profession is lodged exclusively in the Supreme Court, not in any other agency of government, least of all the Department of Finance and the Bureau of Internal Revenue,” the IBP said.

The IBP also said that both the Code of Professional Responsibility and the Rules of Court state that the lawyer-client relationship should be “strictly personal, fiduciary and highly confidential.”

“One rule adopted to serve this purpose is the rule on attorney-client privilege. Under the operation of this privilege, an attorney is mandated to keep inviolate his client’s secrets or confidences,” the IBP said.

source:  Philippine Daily Inquirer


Rules on self-employed tightened
The Bureau of Internal Revenue will now require self-employed professionals to submit an affidavit stating their service fees as directed by a new revenue order.

In a one-page advertisement in one broadsheet, the BIR said the affidavit must contain the manner of payments and the factors considered in charging the rates.

“Self-employed professionals are obligated to register the book of accounts and official appointment books of their practice and profession,” the BIR said.

The advertisement said the official accountant book should contain names of the clients and date and time of meeting.

“They are likewise obliged to register their sales invoice and official receipts,” the agency said.
In cases no professional fees were charged, the taxpayer must issue a receipt showing 100 percent discount as proof of the rendered pro-bono service.

Earlier, the BIR required professionals to hang signs of professional fees in their offices for transparency purposes.

Meanwhile, the Tax Managers Association of the Philippines, a group of professionals that manages the obligations of corporations, said the public must be properly informed of the new set of rules.
“Sometimes, the taxpayers are not informed. So they do not know their obligations or responsibilities,” TMAP president Rina Manuel said.

TMAP also criticized a new revenue regulation asking taxpayers to confirm or protest the assessment of the BIR on individual or corporate obligations. The new directive shortened the period to reply to or contest the BIR assessment from the original 30 days to 15 days.

Manuel said the amended evenue regulation violated the right of taxpayers to due process.
She said some taxpayers might need more than 15 days to settle the issue on tax  assessment.
“It depends on the complexity of the circumstance of the taxpayer. In the case of the big taxpayer, the documents may be voluminous,” she said.

The BIR is intensifying its tax collection from 1.8 million self-employed individuals, saying professionals were paying an average of only P33,000 in taxes annually, lower than the industry salary grade they were receiving.

Finance Secretary Cesar Purisima said the average tax collection from professionals should be increased to P200,000. “This will increase our revenues significantly by P300 billion more,” he said.
The agency is also monitoring the tax payments of government suppliers as a part of  efforts to collect more revenues.

BIR Commissioner Kim Henares said the agency would soon run after government suppliers that did not pay their duties correctly.

Henares said the monitoring on government suppliers would involve “verification, cross verification of data on value-added tax and withholding tax.”

source:  Manila Standard Today, March 22 2014