This year, the BIR is tasked to collect P1.829 trillion which is equivalent to 79% of the National Government’s total projected tax revenue of P2.313 trillion. Although the target amount is lower than the last year’s collection goal which was P2.025 trillion, P1.829 trillion is still undeniably an uphill challenge.
To meet the new target, the BIR has 27 Priority Programs this 2017. These programs are anchored on three principal objectives, namely: (1) attain collection targets; (2) improve taxpayer services; and,(3) protect revenue and recapture public trust.
Actually, most of the programs are congruent with the continuing priorities of the BIR in its High Level Strategic Plan for 2016-2020. These include strengthening the Run After Tax Evaders (RATE) and Oplan Kandado programs; increasing awareness of the benefits brought by Exchange of Information (EOI) Program in collecting taxes on cross-border transactions; and enhancing the electronic registrations.
Of the BIR’s 27 Priority Programs, I picked out the particular items below which could be interesting.
1. Broadening of the tax base without increasing tax rates.
The strategy is to cover unregistered taxpayers/businesses as a result of tax compliance verification drives (TCVD) and third-party information (e.g. from other government agencies).
No increase in tax rates is definitely a welcome news for taxpayers. Further, in the eyes of compliant taxpayers, the strategy of running after unregistered taxpayers is certainly better than a strategy of doing annual tax assessments on a registered taxpayer. It has always been the sentiment of many registered taxpayers that the apparent unceasing BIR audits against them are unfounded and have been a significant disruption of their business operations.
On the other hand, I would also like to caution registered taxpayers to be prudent by avoiding transactions with fly-by night businesses. This involves having strict policies on supplier accreditation, including asking your suppliers for BIR-registered documents when transacting with them.
2. Simplification of tax forms
This pertains to simplifying the tax forms, including filing frequency, according to taxpayer’s business size (large/medium/small/micro).
I believe that this has been long a battlecry of taxpayers. Our tax laws should not treat every business alike, particularly with respect to tax reporting requirements, as there are requirements that are applicable only to large or medium businesses, but not to small and micro businesses.
Needless to say, tax forms and the frequency of filing come with basic tax compliance. If these are simplified, it would encourage better compliance by making it easier and less costly for taxpayers.
3. Review of revenue issuances and tax rulings.
Part of the BIR’s program is to review and recall, if warranted, revenue issuances which impose unnecessary burdens on taxpayers, and to review and revoke tax rulings which hinder business transactions.
This strategy deserves applause from taxpayer because a number of revenue issuances require re-evaluation. One concrete example is Revenue Regulations No. 12-2013 which provides that, even if a taxpayer pays for the deficiency withholding taxes at the time of the BIR investigation, the expenses, to which such withholding taxes relate, will still be disallowed by the BIR for income tax purposes. A lot of criticism has emerged on this issuance, with a consensus forming that the rule is unreasonable. Taxpayers are hoping that the BIR can expedite the review of this issuance.
4. Integrity Management Program.
The intent is to install a standard but flexible approach at the Agency and Program levels in ensuring that standard norms of conduct for public officials are consistently applied, through:
To meet the new target, the BIR has 27 Priority Programs this 2017. These programs are anchored on three principal objectives, namely: (1) attain collection targets; (2) improve taxpayer services; and,(3) protect revenue and recapture public trust.
Actually, most of the programs are congruent with the continuing priorities of the BIR in its High Level Strategic Plan for 2016-2020. These include strengthening the Run After Tax Evaders (RATE) and Oplan Kandado programs; increasing awareness of the benefits brought by Exchange of Information (EOI) Program in collecting taxes on cross-border transactions; and enhancing the electronic registrations.
Of the BIR’s 27 Priority Programs, I picked out the particular items below which could be interesting.
1. Broadening of the tax base without increasing tax rates.
The strategy is to cover unregistered taxpayers/businesses as a result of tax compliance verification drives (TCVD) and third-party information (e.g. from other government agencies).
No increase in tax rates is definitely a welcome news for taxpayers. Further, in the eyes of compliant taxpayers, the strategy of running after unregistered taxpayers is certainly better than a strategy of doing annual tax assessments on a registered taxpayer. It has always been the sentiment of many registered taxpayers that the apparent unceasing BIR audits against them are unfounded and have been a significant disruption of their business operations.
On the other hand, I would also like to caution registered taxpayers to be prudent by avoiding transactions with fly-by night businesses. This involves having strict policies on supplier accreditation, including asking your suppliers for BIR-registered documents when transacting with them.
2. Simplification of tax forms
This pertains to simplifying the tax forms, including filing frequency, according to taxpayer’s business size (large/medium/small/micro).
I believe that this has been long a battlecry of taxpayers. Our tax laws should not treat every business alike, particularly with respect to tax reporting requirements, as there are requirements that are applicable only to large or medium businesses, but not to small and micro businesses.
Needless to say, tax forms and the frequency of filing come with basic tax compliance. If these are simplified, it would encourage better compliance by making it easier and less costly for taxpayers.
3. Review of revenue issuances and tax rulings.
Part of the BIR’s program is to review and recall, if warranted, revenue issuances which impose unnecessary burdens on taxpayers, and to review and revoke tax rulings which hinder business transactions.
This strategy deserves applause from taxpayer because a number of revenue issuances require re-evaluation. One concrete example is Revenue Regulations No. 12-2013 which provides that, even if a taxpayer pays for the deficiency withholding taxes at the time of the BIR investigation, the expenses, to which such withholding taxes relate, will still be disallowed by the BIR for income tax purposes. A lot of criticism has emerged on this issuance, with a consensus forming that the rule is unreasonable. Taxpayers are hoping that the BIR can expedite the review of this issuance.
4. Integrity Management Program.
The intent is to install a standard but flexible approach at the Agency and Program levels in ensuring that standard norms of conduct for public officials are consistently applied, through:
• Removal of corrupt and erring revenue personnel (Revenue Integrity Protection Service/Ombudsman/BIR Internal Affairs Service) and to relieve/transfer personnel with unsatisfactory records of collection performance; and
• Strengthening the Internal Affairs Service to swift action of administrative cases filed against BIR personnel.
The issue of corruption and erring revenue personnel has been a perennial concern of the taxpayers. This issue has also discouraged a lot of investors and potential investors from operating in the Philippines.
I believe that the above program is very basic, but it goes to the very heart of our tax assessment process. Without corruption and malfeasance, taxpayers will no longer have the perception of being at the mercy of BIR examiners who come up with haphazard and unfounded tax findings during the investigation process.
Other priority programs can be seen in Revenue Memorandum Circular No. 05-2017.
The BIR has always counted on its priority programs to help the agency attain its collection targets. I think that these priority programs can succeed if the BIR wins the full cooperation and trust of taxpayers.
Richard R. Ibarra is a manager 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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