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Part Two
The Bureau of Internal Revenue has to play catch up due to the substantial deficit in tax collections for the first four months of the year. The BIR should be more visible in communicating to the taxpaying public what the new normal for the taxpaying community. Formulating innovative tax administra-tion and enforcement programs and strategies, messaging and retooling of processes and BIR staff should have been pursued, and should be given priority by the BIR.
Such programs may be pursued, including advance transfer pricing rulings, tax shelter reporting and disclosure, inter-related companies audit and monitoring of payment of taxes for online digital commerce transactions. These should be directed toward an efficient maximization of the tax collections for the remaining 7.5 months before the end of the taxable year. BIR strategy requires the maximum deployment in the field of all available BIR enforcement and support officers and staff to catch up with the “face time” that is normally required for taxpayer engagements. A great number of BIR staff should be mobilized and become front liners responding to the call of the country by collecting the “life blood” of the nation during these trying times. Per 2018 Annual Report of the BIR, there are about 6,500 BIR enforcement officers out of the 11,385 personnel of the agency. The leadership in the BIR National Office, Regional Offices and Revenue District Offices should step up to lead the collection efforts. The tax collectors and enforcers should be on the ground to ferret out the bigger and biggest “underground economy” tax avoiders and evaders. An issue- and risk-based approach should be the norm for focused tax audits of taxpayers that can be completed in a short period of time.
Part of the new normal for BIR-taxpayer relationship should be interactions being done in a synergistic and professional manner which is a departure from the traditional adversarial approach. The mindset of the BIR should shift more to being an enabler rather than a regulator. This will require the BIR putting in place simpler procedures, discarding unnecessary documents and requirements, consistent customer-centric behavior, using technology to speed up processing and minimize face to face engagements, among others. On the other hand, taxpayers should be more conscious of their civic duty of paying taxes and complying with tax rules. The best lessons learned from this Covid-19 response experience in collaborative government-private sector interactions should be done in the spirit of coopetition. Both parties, i.e., the BIR and taxpayers, should begin “competing” while cooperating to arrive at win-win outcomes.
In RMO 12-2020, the Development Budget Coordination Committee reduced the BIR’s 2020 tax-collection target to P2.26 trillion from P2.576 trillion in consideration of the pandemic’s adverse impact on the economy and tax collections. The amount of reduction, at P316 billion, represents a 12.2-percent decrease in the 2020 BIR collection goal.
Even with the reduced goal, the BIR still has a long way to go in bringing in the much-needed taxes by the end of the year. This is the big challenge that the BIR should hurdle.
Joel L. Tan-Torres is the Dean of the University of the Philippines Virata School of Business. He was the former Commissioner of the Bureau of Internal Revenue, the chairman of the Professional Regulatory Board of Accountancy and partner of Reyes Tacandong & Co. and the SyCip Gorres and Velayo & Co. He is a Certified Public Accountant who garnered No. 1 in the CPA Board Examination of May 1979.
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