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Aquino admin secures dismissal of BIR official

By Iris C. Gonzales (The Philippine Star) Updated July 28, 2011 12:00 AM

MANILA, Philippines - The Aquino administration has secured the dismissal of a ranking official of the Bureau of Internal Revenue (BIR) as well as the suspension of a local government treasurer being investigated for corruption.

The Revenue Integrity Protection Service (RIPS), the anti-corruption unit of the Department of Finance (DOF) has secured the dismissal of the BIR official for accumulating wealth disproportionate with his income as a public official.

RIPS won with finality its case against BIR Assistant Commissioner Edwin Abella, who was found guilty of dishonesty in 2005 for acquiring questionable wealth beyond his and his wife’s capacity.

The decision of the Ombudsman came out on Jan. 14, 2005.

In its decision, the Ombudsman said there was “substantial evidence” that Abella committed dishonesty for “acquiring vast amounts of money and properties manifestly out of proportion to his salary and other lawful means of income.

Based on the evidence filed by RIPS, the Ombudsman said it was impossible for the respondent’s net worth to increase from P3.8 million in 1999 to P8.4 million in 2002 with his earnings.

The Ombudsman found Abella guilty of not declaring in his Statement of Assets, Liabilities and Net Worth six properties he owned including real estate assets. One property was valued at P10 million.

The respondent appealed the Ombudsman’s decision, in a pleading dated Feb. 7, 2005.

Abella said the decision was “based on grave errors of facts and law and unfounded conjectures and surmises.”

However, the Ombudsman denied Abella’s motion for reconsideration in an order dated June 11, 2011.

“The respondent failed to present new evidence that would warrant a reversal of the questioned decision,” the order stated.

Meanwhile, the Ombudsman also suspended for six months without pay a ranking local government official.

Manila City Treasurer Liberty Toledo, which RIPS sued for grave misconduct and dishonesty.

The Ombudsman said: “Notwithstanding any motion, appeal, or petition that may be filed by the respondent… the implementation of this order shall not be interrupted within the prescribed period.”

With the order, the City government of Manila is expected to implement the suspension order five days from the receipt of the Ombudsman’s decision.

According to the case filed by RIPS, from 1999 to 2004, Toledo failed to declare millions worth of properties in her SALN.

The assets were found “grossly disproportionate” to her and her husband’s annual income, DOF-RIPS said.

“The evidence on hand sufficiently warrants the preventive suspension of respondent Liberty Toledo pending the conduct of administrative investigation of the instant case,” the Ombudsman said in the order.

As such, the Ombudsman said the with the nature of her duties and functions and “the influence that her position brings her continued stay in office may prejudice the investigation of the case.”

RIPS was established to investigate allegations of corrupt practices of officials and employees of the Department of Finance and revenue agencies.

To date, RIPS has already filed a total of 86 cases against 126 public officials, 51 of whom were suspended while 19 were already dismissed from service.
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Tax bureau orders all building owners to check on tenants

Posted on July 27, 2011 09:45:25 PM [ BusinessWorld Online ]
BY DIANE CLAIRE C. JIAO, Reporter

OWNERS of commercial establishments will now be required to ensure that their tenants are registered taxpayers, according to the latest issuance of the Bureau of Internal Revenue (BIR).

The BIR has begun its drive to track the untaxed sector with Revenue Regulations No. 12-2011, issued on July 25.

The latest tax regulation sets the reportorial requirements for establishments leasing commercial spaces.

“It shall be the primary responsibility of all owners or sub-lessors of commercial establishments/buildings/spaces to ensure that the person intending to lease their commercial space is a BIR-registered taxpayer,” the issuance stated.

Their tenants must have a tax identification number (TIN), a BIR Certificate of Registration and duly registered receipts, it added.

These requirements ensure that those engaged in retail remit value-added taxes and income taxes to the government.

“It is the duty of building owners to ensure that those they deal with are registered taxpayers,” BIR Commissioner Kim S. Jacinto-Henares said in a telephone interview yesterday.

“If not, they are aiding and abetting tax evasion,” she warned.

“I am only leveling the playing field. These commercial establishments pay taxes to the government, so their tenants must also do the same,” she explained.

Under the new issuance, building owners will now be required to submit, under oath, a tax registration profile of their lessees to the BIR twice a year.

They must provide the layout and unit addresses of their entire commercial space to the bureau, as well as the certified true copy of their lease contract per tenant.

Lessee Information Statements must also be passed to the BIR, indicating the registered names of the tenant, the TINs, the Authority to Print number for their official receipts and invoices, and the permit number for their cash register or other points of sale machines.

These will be submitted every Jan. 31 for all tenants as of Dec. 31 of the previous year, and every July 31 for the tenants as of June 30 of the current year.

Warned

However, for this year, the BIR has set a transition period, giving all building owners until Sept. 1 to submit their requirements for their tenants as of July 31.

Those who do not submit these requirements will be penalized by the BIR for willfully failing to pay taxes and supply correct information, subject to a fine of no less than P10,000 and imprisonment of up to 10 years.

Owners of commercial establishments who also falsify information will be charged with perjury, the issuance warned further.

A tax alert from Punongbayan & Araullo reminded lessors to start getting the required information from their tenants.

“Report accurate information because these may be used against you during tax examination,” the tax alert read.

“To ensure correctness of the information provided, you are advised to request for the source documents.”

Building owners must also ensure that the documentary stamp tax due on their lease contracts have already been paid, and that proof of payment will be made available at the BIR’s request.

Lastly, Punongbayan & Araullo urged lessors to require their unregistered lessees to begin the process already, to make it in time for the Sept. 1 due date of the report.

The BIR has identified the informal sector as one of the areas it will focus on to expand the tax base and increase revenues.

Ms. Jacinto-Henares had earlier estimated that the untaxed sector comprised 40% of the taxable population of the country.

The BIR, which accounts for some 70% of state revenues, is tasked to collect P940 billion this year. According to preliminary data, it had already collected P458 billion in the first half of the year, a 13.5% increase from the P403.5 billion netted in the same period in 2010. However, it missed the mid-year target of P460.3 billion.
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Tollways liable for local tax, court says

by Orland L. Mauricio
[ manilastandardtoday.com ] July 18, 2011

Toll plazas along the North Luzon Expressway from Balintawak to Sta. Ines (in Pampanga are considered branches or sales outlets of the Manila North Tollways Corporation and are therefore subject to payment of local business taxes and other fees under the National Building Code.

In a July 7, 2011-decision, Malolos City Judge Wilfredo T. Nieves of the Regional Trial Court – Branch 84, ruled that the tollways operator has no tax exemption privilege under its Supplemental Toll Operation Agreement with the government and ordered the company to pay taxes and other fees to the municipality of Guiguinto.

The STOA is a 1988-agreement executed by and between MNTC and the Phillippine National Construction Corp., whose legislative franchise to operate NLEX expired May 1, 2007. The agreement also included the Toll Regulatory Board, apparently to represent the government and the latter’s imprimatur to the contract.

The court ruling was a result of two civil complaints filed last February 2 and 9, 2009 by MNTC seeking to prevent Guiguinto from collecting permit fees under the National Building Code amounting to P2,283,474.20; unpaid mayor’s permit and other regulatory fees in the amount of P33,498.30 from January 2004 to January 2008; and business taxes and deficiencies for the year 2005 to 2007 in the amount of P67,443,765.93.

The tax assessments were contained in two notices sent by Guiguinto to MNTC on September 12 and October 14, 2008. In answer, MNTC wrote two protest letters contesting the assessments of back taxes but these were denied by Guiguinto which threatened to collect the unpaid taxes or close the MNTC offices in the town.

Guiguinto Mayor Isagani Pascual hailed the RTC ruling as a long, overdue verdict to assert the autonomy and right of municipalities hosting NLEX offices and toll gates to collect local business taxes and other fees under the Local Government Code.

Nieves dismissed MNTC’s claim that the NLEX service centers in Sta. Rita and Tabang, Guiguinto that sell transponders or Easy Tags, accept payments for loads, and cash payments from millions of motorists passing thru the two toll plazas and issue toll receipts are not “its branches or sales outlets conducting business within Guiguinto” but mere support facilities.

“MNTC wants the Court to believe that the big volume of its sales due to the millions of motorists passing thru its Sta. Rita and Tabang toll plaza are recorded only in its principal office in Caloocan City(Balintawak) where they are supposed to pay their business tax,” Nieves said.

The RTC ruling came on the heels of the reopening last July 11 of the third NLEX toll plaza in Barangay Tabe, also in Guiguinto. The Tabe Toll plaza had been closed for several years since Metro Pacific Tollways Corporation acquired the MNTC from the Lopez Group.

The court also declared that MNTC is not exempt from paying local business taxes by virtue of the STOA. “A cursory perusal of the STOA fails to show any provision exempting plaintiff from the payment of taxes, much less local business taxes. Neither was plaintiff able to present proof that it was granted the legislative grace of tax exemption.”

The Court decision also set aside the opinion offered by the Bureau of Local Government Finance, an office under the Department of Finance that oversees the fiscal and financial affairs of local government units.

“We are reviewing decision and there are ongoing discussions between Tollways Association of the Philippines, DOF, LGUs regarding proper allocation of local business tax,” said Marlene Ochoa, vice president for corporate communication of MNTC. MNTC has 15days from July 7 to contest the ruling.

Guiguinto legal counsel Edwin Cerezo said the Nieves ruling is a welcome development for other towns and cities along the north expressway route to assert their power to tax the NLEX toll plazas they are hosting.
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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.