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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Corporate income tax cut to 30% to lift business, generate more jobs

[ Manila Bulletin Online ] December 1, 2008

By EDU LOPEZ

Socio-economic Planning Secretary Ralph Recto is confident that the reduction of corporate income tax from 35 percent to 30 percent next year would pave the way for more business and job opportunities despite the global financial crisis.

"Lowering corporate income tax will help the private sector retained their employees. That makes us more competitive in the long term for more businesses to invest in the country," said Recto.

Recto, concurrently National Economic and Development Authority Director General, urged the private sector to consider business expansion as a result of reduced corporate income tax. The government is identifying investments and jobs that are at risk and putting in place the necessary contingency measures.

NEDA’s National Planning Policy Staff director Dennis Arroyo identified lower corporate income tax among the mitigating factors against the damage of the global economic slump in 2009.

Income tax exemption of minimum wage earners, declining oil prices, the 20 percent increase in infrastructure spending, robust overseas Filipino workers money inflows and weaker peso that boosts consumption spending could also propel economic growth next year.

NEDA expects the country’s gross domestic product (GDP) would grow between 3.7 to 4.7 percent in 2009 from this year’s projected 4.6 percent growth due to the slowdown in the services sector.

The industry sector in the third quarter of 2008 outperformed the services for the first time since the fourth quarter of 1997 on the back of the robust growth of public construction and sustained demand for real estate by the OFWs and business process outsourcing (BPO) sectors that both helped push total construction.

Arroyo said the global financial crisis, the export crunch and the apparently higher interest rates are affecting the fourth-quarter economic growth.

The Development Budget Coordination Committee’s target for export growth has been revised to one to three percent in 2009 from a high of seven percent.

"It’s a big slowdown due to the global recession in the United States, European countries and even China which contributed to the slower growth rate for exports next year," Arroyo said. BPO and tourism would be the main drivers of the service export sector’s growth in 2009.

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