THE 2015 collection target of the Bureau of Internal Revenue (BIR) is P1.72085 trillion. As part of its effort to achieve the goal, earlier this year the BIR issued Revenue Memorandum Circular No. 3-2015 (RMC No. 3-2015) outlining 27 Priority Programs for 2015.
RMC No. 3-2015 cites the importance of BIR revenue performance in the context of the Philippines emerging as one of the fastest-growing economies in Southeast Asia. Among the more noteworthy of the programs are.
• Run against Tax Evaders (RATE) program -- This program has been expanded to Revenue Regions and aims to identify and prosecute high-profile tax evaders.
• Oplan Kandado program -- This pertains to strengthening the BIR’s array of administrative sanctions, including suspending businesses and closing their premises for non-compliance with the requirements of value-added tax (VAT) rules.
• Compliance Improvement Strategy -- This refers to a system that will develop a comprehensive end-to-end compliance improvement strategy for taxpayers for the effective management of risks and to improve overall levels of compliance in areas of registration, filing and payment, under-reporting and arrears management.
• Exchange of Information (EOI) Program and the Implementation of the Foreign Account Tax Compliance Act Intergovernmental Agreement Model 1 (FATCA-IGA 1) -- This program seeks to make the BIR more aware of the benefits of EOI in collecting taxes, particularly in cross-border transactions, wherein the BIR can obtain information from another tax authority regarding the foreign-sourced incomes of taxable residents.
• Transfer Pricing program This program seeks to complement the transfer pricing guidelines of the BIR issued in 2013, which prescribed how to determine the appropriate revenue and taxable income of the parties in controlled transactions. The proposed program will include a commercial database subscription for transfer pricing studies and the crafting/finalization of related issuances on transfer pricing.
The programs indicate that the BIR is gearing up to upgrade to a more automated or computer-based system. Examples of these automated programs are the Online System for Transfer Tax Transactions, Online System for Accreditation of Importers and Customs Brokers, and Online Application and Processing of Tax Clearance for Bidding Purposes.
With such an aggressive collection target, many taxpayers are skeptical whether the BIR can pull off its 27-point strategy without imposing measures that will disadvantage taxpayers. Taxpayers are anxious about more stringent regulation by the BIR and the potential for the issue of confusing tax directives.
On the automation processes, the BIR intends to revolutionize the mechanism of implementing its power of taxation. If implemented well, the automation of the processes could be a win-win situation both for the government and the taxpayer. This is because of potential efficiencies and reduced human intervention, thus resulting in fewer errors.
With a view towards avoiding any detrimental effects from the 27-point program, it is the desire of taxpayers that regulations be tangible and the requirements definitive to avoid conflicting interpretations by different BIR offices. In addition, the BIR’s public information campaign should be strengthened to keep the taxpayers abreast of developments in tax rules.
Moreover, in regard to automation, taxpayers hope that the intent of such initiatives, which is the speedy disposition of tax-related cases, not be foiled by delays in the review stages.
To reduce worry, taxpayers must be well-informed about how to comply with the tax rules. Procedural requirements set by the BIR should be taken seriously to avoid disputes with the BIR case officers. Past tax returns must periodically be reviewed to check for any need for amendments, in order to prevent being charged interest on possible deficiency taxes. Transactions must be studied for tax implications prior to the preparation of returns. Controls must be strengthened on maintaining of books of accounts and on observing documentary procedures, such as VAT invoicing requirements. Policies and strategies which expose the company to potential violations must be evaluated and corrected to align with the prevailing rules and issuances of the BIR.
As the game plan of the BIR keeps evolving, taxpayers must be sufficiently equipped to remain well within the bounds of law to curb any pain that new reforms might inflict. P1.72085 trillion is a huge target. Taxpayers should always aim to be faithful subjects of the State. On the other hand the BIR should also take care to ensure that taxation does not end up killing the hen that lays the golden eggs.
Eliezer P. Ambatali is a tax associate with the Tax Advisory and Compliance division of Punongbayan & Araullo.
source: Businessworld
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