“Bakit kasalanan ko? Parang kasalanan ko.”
This is a famous line of Bobbie, portrayed by Bea Alonzo in the movie “Four Sisters and a Wedding.” The line was uttered by Bobbie after Teddie, her older sister, was caught lying of having a successful career abroad. Teddie confessed that she lied because she is envious of the achievements of Bobbie. Bobbie voiced this line to tell her family that she should not be blamed for being successful because everything she is doing is for her family.
This line has gained popularity. Many Filipinos use it to this day whenever they are being wrongly held accountable for certain things or issues. I would like to utter the same line for our faithful and diligent taxpayers.
They file their tax returns and pay their taxes. They are the constant subjects of tax audits since they are captured in the BIR database. An entity or a person is in the radar of the BIR once he or she registers as a taxpayer. The BIR cannot tax entities and persons who conduct their business in the country and earn income here but are not registered.
For example, foreign corporations that carry out activities through online platforms or through permanent establishments are not in the BIR database. Individuals and corporations, especially the non-residents, who transact with these foreign entities, are also able to escape the BIR’s claws. As discussed by Atty. Dawilan in his last column, foreign entities that do business through permanent establishments are unable to comply with their tax obligations, primarily because there is no mechanism at present for them to register as taxpayers in the Philippines.
This apparent deficiency makes it hard for the BIR to investigate and audit them. Thus, our government’s collection efforts are geared towards taxpayers that are registered. This same deficiency makes us therefore question the fairness and equity as well as the effectiveness of our tax system and administration. It seems to be weak. Our government should intensify its efforts and actions to address this kind of inadequacy. Our honest taxpayers should not be put at a disadvantage and be placed in a more difficult situation just because they are the registered and compliant ones.
Not only are faithful taxpayers the focus of the BIR in tax investigation cases, they are also not adequately protected in their dealings with the BIR.
In tax audits, for example, we have seen them bear the burden on matters that are not their own doing. To illustrate, those who have filed an application for a tax treaty relief are assessed by the revenue examiners for deficiency taxes for lack of BIR’s approval on their application. Yet, their request has been pending for resolution for too long with the Bureau’s office. It is not the fault of these taxpayers if they could not obtain the BIR’s approval if they have done their part and have sufficiently established that they are entitled to tax relief. However, they are still being penalized for any delay on the part of the BIR.
Sometimes, taxpayers are also required to submit various accounting records and books of account that have already been submitted to the BIR as part of their regular compliance. The BIR already has custody of the documents that they are asking the taxpayers to produce. Thus, taxpayers should not be held liable if they fail to submit documents that have already been submitted. But this is not what happens. In this instance, a subpoena may be issued and the taxpayers will be summoned. Taxpayers are then forced to retrieve old documents and incur administrative costs to comply in the fear that criminal prosecution will ensue if subpoenaed documents are not submitted.
Also, in refund applications, taxpayers will still have to undergo an audit process, when they are just trying to recover excess taxes paid to the government.
No matter how our taxpayers faithfully comply with their tax obligations, they will always seem to be flawed and lacking in the eyes of our tax authority unless the current system in the BIR is put in check. I hope that the current administration can hear the cries of taxpayers, so that Bobbie’s lines will never be uttered again.
The author is a junior 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 mabel.buted@bdblaw.com.ph or call 8403-2001 local 160.