TAX DIALOGUE ON BENCHMARKING to tackle the issues of “HUGE TAX GAP AND THE LOW TAX EFFORT RATIO” OF THE COUNTRY

Yesterday, I had attended a seminar or tax dialogue conducted by the Bureau of Internal Revenue (BIR) headed by Mr. Ricardo B. Espiritu, Revenue Disctrict Officer at 7th Floor Conference Room, Revenue Region No. 8 Makati Regional Office Building, No. 313 Sen. Gil Puyat Ave., Makati City.

The event was attended by authorized representatives of companies with different nature of business within the jurisdiction of RDO. 50 South Makati as invited by the BIR . The BIR thru its Benchmarking Program is embarking on a Massive Tax Information Drive among taxpayers across industries to tackle the issues of “Huge Tax Gap and the Low Tax Effort Ratio” of the country. Tax Effort Ratio (TER) = Actual Collection (AC) / Gross Domestic Product (GDP) x 100%. They are encouraging the taxpayers to participate for improvement in the area of voluntary tax compliance. This system is used the measurement of tax compliance which is not new in the government agency.

The speaker of the event, Mr. Ricardo Espiritu said that the Benchmarking Program is a measure of tax compliance among taxpayers of different industries and to increase revenue collections. He informed that the present administration in the Country has no plan to increase tax rates but instead to increase tax measurement of compliance among the taxpayers. He believes that this system will help the BIR to detect tax fixers or leakages and improve collections particularly on Value-Added Taxes (VAT) and Income Tax.

Averages will be used as benchmarks for a particular industry. Taxpayers who will fall below the median or standard set by the BIR will be considered as high risk taxpayers. In fact, they will also identify the auditor of that company and could be considered as a high risk auditor. This program will particularly used to large taxpayers or big companies notified by the BIR who believes the possibility of a high tax collections compared to small businesses.

This system still has issues that will be considered . What if one of the company is declaring an unusual high revenues compared to other companies who really declaring right taxes? We need to understand the fact that each companies has different backgrounds in terms of consumption, sales, collections, clients, number of manpower and other related matters.

Anyways, the speakers in the said event informed that the average or median method is not absolute but they believe and has power of being prima facie correct. For those taxpayers who will fall below the standard will be issued a Benchmarking Letter Notice. Such taxpayers will be given a chance to amend their tax returns or if not they can respond the notice by showing proof to rebut findings of the BIR.

The directors also informed that those who will amend their tax returns will not be issued Letter of Authority to investigate the Books of Accounts of taxpayers fall below the benchmarking. Just in any case one of the taxpayers will avail  of it will  not be charged of any increments, interest and penalties, anymore.

After the seminar, a certificate of attendance were given to the attendees. I  asked one of the officer in the bureau a  soft copy materials related to the tax dialogue in the event but unsuccessful. Although she informed me that it will be available in their website www.bir.gov.ph of these days of the Benchmarking Program Campaign.

Hopefully, both of the taxpayers and its agency will participate the program for the benefit of common people and progress of the nation.

FILING AND PAYMENT OF INCOME TAX RETURN (ITR)

For individual taxpayers, corporations and other organizations should file or pay their Annual Income Tax Return for the Taxable/Calender Year ending December 31, 2010 through  Electronic Filing and Payment System (EFPS) and manual filing/payment to their respective revenue district office (RDO)  and authorized agent banks (AAB) applicable to them on or before April 15, 2011.

It is recommended for the taxpayers to file and pay their taxes on time regardless of their companies is no operation or has operation to avoid comprise penalties, interest & surcharges.

This is to inform also that today is the deadline of Quarterly Income Tax Return for Individual Taxpayers.

The finance and accounting department in the office has started filing and paying the tax dues through EFPS and Manual Filing/Payment of the different companies and its affiliates yesterday and today until 5:00 in the afternoon.

For individual and non-individual taxpayers should  file and pay the Income Tax Return (ITR) using the BIR form 1701 in triplicate copies (two copies for BIR or AAB and one copy for the taxpayer) together with the Summary Alphalist of W/holding Agents of Income Payments  Subjected to W/holding Tax (SAWT), if applicable and BIR for 1702 in triplicate copies together with SAWT and Audited Financial Statements which is filed in five copies (two copies for the BIR or AAB and three copies for taxpayer to be filed in Securities and Exchange Commission (SEC), respectively. The taxpayer could request additional copies in excess of the required attachments but should have paid a certification fee amounting to one hundred pesos for each copies.

Under the EFPS, the required attachments may be filed fifteen days after the submission of the ITR not later April 15, 2011.