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Large taxpayers unit boosted

Vol. XXII, No. 116 [ BusinessWorld Online ]

Wednesday, January 14, 2009 | MANILA, PHILIPPINES


Tax chief reverses predecessor’s order


IN A CONTINUING QUEST for bigger collections, the head of the Bureau of Internal Revenue (BIR) returned a number of firms to the jurisdiction of the Large Taxpayer Service (LTS) from Revenue District Offices (RDOs), overturning the order issued by his predecessor seven months earlier.


In Revenue Memorandum Order 1-2009 issued on December 10 last year, BIR Commissioner Sixto S. Esquivias IV said collection of tax payments from "re-enlisted" large taxpayers would be credited to the LTS starting last January 1.


This, in effect, reversed RMO 25-2008 issued by his predecessor, former Commissioner Lilian B. Hefti on May 26, 2008, which distributed big firms among the LTS and RDOs, in order "to bring equity in the sharein collection targets" among these BIR units.


In his order, Mr. Esquivias explained that, "relative to the programs of the BIR on goal rationalization, benchmarking and industry profiling, there is a need to expand the large taxpayer base under the LTS. For the first phase of the expansion, it is deemed necessary to prioritize the re-enlisting of large taxpayers [delisted under Ms. Hefti’s order] under the jurisdiction of the LTS."


BIR offices concerned have until the end of next month to implement the order "to give enough time for LTS office acquiring jurisdiction over the re-enlisted taxpayers to fully integrate the same in the formulation of their respective operational strategies."


Hence, taxes paid by large taxpayers starting last January 1 will be credited by the BIR revenue accounting division to the LTS from the RDOs.


Mr. Esquivias said in a phone interview yesterday that putting more big firms under tighter scrutiny by the LTS, which has been accounting for half of the bureau’s total collections, should result in the desired increase in collections.


"I think they should be placed back under the jurisdiction of the large taxpayers service. The idea is closer monitoring. I hope there will be higher collections," he said.


Targets


The government is targeting P1.36 trillion in revenues this year, consisting of P1.24 trillion in tax revenues and P128 billion in non-tax revenues.


The BIR is tasked to collect 73% of total tax revenues at P910.9 billion, while the Customs bureau has been entrusted with a P317-billion target. BIR’s target is already a downward revision from an original P968.3 billion, amid expectations of slower economic growth this year.


But even for last year, the BIR has argued that difficult economic conditions mean it would fall short of its P844.95-billion target, collecting P810 billion at most.


In the 10 months to October last year, BIR fell 4% short of its P671.349-billion target for that period, collecting P644.811 billion, data from the Finance department has shown.


The LTS was expected to contribute 47.7% to the BIR’s target last year at P403.05 billion, while revenue regions were expected to generate P407.26 billion. The LTS target was 6.24% less than the P429.86 billion collected by the unit in 2007.


Tammy Lipana, Isla Lipana & Co./PricewaterhouseCoopers chairman and senior partner, said "I can only surmise that, based on the BIR’s experience from June to November when they transferred some large taxpayers to district offices, collections from said taxpayers dropped. Thus, to improve monitoring and servicing of large taxpayers, the BIR decided to re-enlist them in the LTS."


Philippine Chamber of Commerce and Industry President Edgardo G. Lacson said "the reason why it [big firms under RDOs] is being reverted to the LTS is there was no firm criteria why large taxpayers were delisted. Some of them were complaining. BIR reacted to the sentiment and brought them back. If you are paying higher taxes, you deserve better service and better accommodation like less hassle and less harassment."


Former Finance Undersecretary Emmanuel P. Bonoan, who is now chief operating officer and vice-chairman for tax and corporate services of KPMG Philippines Manabat Sanagustin & Co., said: "I think the new BIR chief should be given the widest leeway to organize BIR with the caveat that taxpayers should not be overly inconvenienced." — Ruby Anne M. Rubio

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KNOWING YOUR BIR REGULATIONS AND ISSUANCES

Revenue Regulations (RRs)
are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes

Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio

Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.