How much do you make as a corporate tax officer? In my conversations with tax officers or finance officers performing tax-related work, it is becoming a common view that handling tax matters is difficult, to the point where some are beginning to believe their compensation is inadequate, considering the pressures of the job.
Serving as a company’s tax officer is no joke. A single “yes” or “no” call on the tax treatment of certain transactions can mean millions, or even billions.
Are there things which a tax officer or a finance officer doing tax work should know? Or are there things which they already know, except that they need some reassurance that others are also experiencing the same? Here’s a bird’s eye view:
1. Expect notices of audit for open tax years.
The collection target of the Bureau of Internal Revenue (BIR) for taxable year 2015 is about P1.67 trillion. By way of comparison, the BIR’s actual collection last year was around P1.33 trillion (lower than the target of P1.46 trillion). On this information alone, we know that the BIR will be hard pressed to achieve its target for this year. And what does this mean? As a tax officer, you might want to already expect notices of audit for open years (i.e., years which the BIR’s right to assess has not yet prescribed).
No one wants to receive such notices, since attending to the requirements of a BIR audit is disruptive to the other core functions of a tax officer. Perhaps it bears mentioning that receiving audit notices is normal and expected, if that is any consolation. In order to allay the stress and anxiety that comes with receiving one, let us just say that many others are currently receiving such notices. As long as you are confident in your tax records, then, there is no need to worry.
2. BIR examiners are just like us, and want to get their work done with minimal fuss. Most of them, at least.
In BIR audits, we are not merely dealing with the BIR as an institution. We are talking to actual people -- BIR examiners. The danger of thinking of the BIR as an impersonal institution during an audit is that, sometimes, the process becomes too hostile, adding an unnecessary layer of conflict to even routine events like the initial phase of document submission.
Don’t get me wrong. If the process becomes harassment rather than the usual reasonable BIR audit, then that’s a different matter. Fight it out. It’s self-defense. Whatever might be considered a reasonable BIR audit is a matter for individual officers to judge. All I’m saying is that you may not want to start the war.
3. The BIR’s approach on tax assessment has evolved.
Many observe that the BIR is now placing more reliance on third party information (TPI). The information is sourced from your suppliers and customers, and for imports, data from the Bureau of Customs. Taxpayers have been clamoring for the BIR to reconsider this approach, because the matching procedures are flawed. In the TPI approach, the BIR is acting on the mere presumption that the counterparty’s records are 100% correct, and that the taxpayer being audited has the burden of explaining the variances that emerge.
If you receive a list of “insidious” findings based on TPI matching, don’t panic, but don’t seek the help of a spirit warrior either. All you need to know is that some legal thinking supports the idea that TPI findings cannot prevail. Several court decisions have declared that TPI findings are unlawful and void. In Collector of Internal Revenue vs. Benipayo, no less than the Supreme Court explained that, in order to stand judicial scrutiny, the BIR assessment must be based on facts. The presumption of the correctness of an assessment, being a mere presumption, cannot be made to rest on another presumption. In addition, you have your records and documents with you to back you up.
4. We have a lot of tax rules in the Philippines, plus the various shifts in the way they are interpreted
This should not be news to you. The Philippine tax system is not just about the Tax Code. We have special laws, revenue regulations, revenue memorandum circulars, revenue memorandum orders, and court decisions, among others.
As a tax officer, you might want to free up time on your schedule for reading. What you thought you knew might not be applicable today. Keep abreast of developments in the tax rules.
These four points are just a few of the things that a tax officer should know.
Without question, a tax officer is in a critical position -- a position to prevent the unnecessary loss of company funds due to tax exposures. For such an officer, what is the takeaway? Stay informed; be prudent with tax records; pay attention to the BIR assessment approach; and keep in touch with the company’s outside tax consultant, if any. And -- do I even have to mention it -- ask for a salary increase?
Olivier D. Aznar is a Partner with the Tax Advisory and Compliance division of Punongbayan & Araullo. P&A is a leading audit, tax, advisory and outsourcing services firm and is the Philippine member of Grant Thornton International Ltd.
SOURCE: Businessworld
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