The Tax Management Association of the Philippines (TMAP) presented to the Duterte administration a list of revenue regulations that the group believes should be revoked for being “antibusiness”.
TMAP President Benedict R. Tugonon said the association sent a letter to Finance Secretary Carlos G. Dominguez III to appeal for the repeal of several revenue regulations issued by former Internal Revenue Commissioner Kim S. Jacinto-Henares ostensibly to increase collection, but consequently resulted in lower tax compliance.
Among the administrative reforms on taxation that TMAP proposed are the return of the informal conference stage in the tax-assessment process; the reinstatement of the administrative mode of obtaining value-added tax refunds; and revocation of regulations that impose taxes even in cases wherein income has not yet been realized by the taxpayer.
Henares, when asked to comment on TMAP’s appeal to the new administration, questioned why it was only now that the TMAP had raised these issues.
Tugonon said these issues were formally raised before the Bureau of Internal Revenue (BIR) in the past, but were left unheeded.
Informal conference
TMAP wants the informal conference stage of the tax-assessment process to be reinstated to give due process to taxpayers. In 2013 Henares removed this portion in the assessment process on suspicion that the meetings between BIR examiners and taxpayers before the issuance of a Preliminary Assessment Notice (PAN) were a hotbed for corruption.
But Tugonon said the process could be corrupted at any stage for as long as there are willing taxpayers and examiners who will take part in it. “The solution against corruption is not to remove the informal conference but to strengthen the legal department of the BIR,” Tugonon told the BusinessMirror.
He explained that the legal processes in the BIR should be strengthened in such a way that a taxpayer contesting an assessment during the informal conference with the BIR examiner would be allowed to elevate the protest to the commissioner or his or her representative.
“Then if the commissioner would uphold the examiner in that appeal, then there would be many times wherein the taxpayer would already voluntarily pay,” he said.
Preliminary Assessment Notice
TMAP also wants to repeal the BIR’s current practice of peremptorily dismissing the taxpayers’ reply/protest to the PAN.
Tugonon explained that the Tax Code provides taxpayers with the opportunity to reply to the PAN, which should be considered on the merits by the BIR examiners instead of being ministerially dismissed.
In practice, instead of considering the merits of a taxpayer’s reply to the PAN, the BIR examiner would ministerially dismiss the reply and proceed directly to the issuance of the Final Assessment Notice (PAN), oftentimes without even reading the contents of the reply.
“I don’t think our legislators intended that the PAN is treated as a mere formality. The wisdom of the law is to give the taxpayer time to explain his side through his reply to the PAN before the FAN is issued,” Tugonon said.