IN one of his recent Cabinet meetings, President Duterte reportedly walked out from the meeting in frustration of a report that some project applications have been pending before the National Economic and Development Authority (Neda) for 25 years.
Indeed, despite the President’s call for speedy processing of transactions in the government, we still experience delays in many of our government transactions, including delays in the processing of business permits, implementation of government infrastructure projects and delays in the resolutions of court cases, among others.
In tax practice, we also encounter delays in many transactions with the Bureau of Internal Revenue, foremost of which are the processing of requests for BIR rulings, execution of court decisions, and issuance of Certificate Authorizing Registration (CAR) on sale of real properties and shares of stocks.
In the processing of CAR, particularly on sale, exchange, or donation of properties, Revenue Memorandum Circular (RMC) 48-2018 requires the issuance of CAR within a maximum period of 20 working days from the submission of complete documentary requirements. Despite this, there are still applications for CAR that are pending for years.
In the execution of court decisions, unacted refund claims still abound despite the finality of court decisions granting the taxpayer-claimant’s request for refund. One factor that delays the BIR’s processing of refund claims is the production of inter-office certification on the existence of the taxpayer-claimant’s outstanding tax liabilities. Under Revenue Memorandum Order 29-2014, the certification is valid only for one month from date of issue, so that the moment the certification reaches the requesting office, the one-month validity period has already lapsed, thus, delaying the processing of the claim. The process will have to be repeated again and again until such time that, by chance or by luck, the certification would reach the requesting office prior to the expiry of its one-month validity period. Hopefully, though, RMO 42-2018 and RMC 16-2019 will address this concern, where validity of the inter-office certification has been extended to six months.
In the request for rulings, both at the BIR’s International Tax Affairs Division (ITAD) and at the Law Division, it is not uncommon to receive a feedback that the request for ruling is still far from the queue, despite the fact that the request has been pending for years.
It is laudable that there are measures put in place to avoid these delays. Under RMO 72-2010, the ruling must be available for release after 60 working days from the date of receipt of the application or from the date the complete documentary requirements are received by ITAD, whichever comes later. As for matters without issue on income characterization, the same RMO 72-2010 requires that the ruling must be available for release after 30 working days from the date of receipt of the application or from the date the complete documentary requirements are received by ITAD, whichever comes earlier. Of the said period, the ITAD shall have 40 or 20 working days, as the case may be, to process and evaluate the said application, while the Legal Service/Legal Inspection Group shall have 20 or 10 working days, respectively.
Notwithstanding these rules, various requests for rulings remain unacted upon. Has there been faithful compliance with these rules? Why do these delays continue to burden our taxpayers despite a number of rules set in place to arrest these delays? Is the BIR really undermanned?
It is fortunate that, as you are now aware, tax treaty relief applications for interests, dividends and royalties payments are no longer mandatory, although, in lieu of the TTRA, filing of Certificate of Residence for Tax Treaty Relief is still required. The good thing is that, preferential treaty rates for dividends, interests and royalties shall already be applied and used outright by the withholding agents upon submission of CORTT, without waiting for a confirmatory ruling from the BIR.
However, for income other than dividends, interest and royalties, the provisions contained in and the procedures required in RMO 72-2010 shall continue to apply, and obtaining ruling shall continue to be required.
Delays in government transactions need immediate attention if only we want to keep pace with the fast-moving time. We expect the BIR to adhere to all of these issuances and to craft even more reasonable rules to address swift resolution of all transactions the BIR is mandated to implement. We call on all concerned to take part in the process in line with the President’s directives to expedite processing of transactions in all government offices and to align our government transactions with international standards.
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The author is a partner of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of WTS Global.
The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at rodel.unciano@bdblaw.com.ph or call 403-2001 local 140.