Category Archives: Bureau of Internal Revenue

BIR responds to complaints on new OR regulations

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A June 6, 2013, press release from the Department of Finance, Bureau of Internal Revenue

The full implementation of Revenue Regulation No. 18-2012 requiring the issuance and used of new sets of receipts on July 1, 2013, shall proceed as scheduled. Commissioner of Internal Revenue Kim S. Jacinto-Henares said, “The complaints against the new regulations are without any basis since the tax agency had issued Revenue Regulations (RR) No. 18-2012 last year and published the same in the January 3, 2013 issue of the Manila Bulletin informing everyone that existing receipts will expire on June 30, 2013. We believe that six months is enough preparation for everyone to comply with such requirement.”

RR No. 18-2012, published on January 3, 2013, provides among others that taxpayers must apply for the printing of their new receipts at least 60 days, or April 30, before the expiry of their old receipts on June 30, 2013 and start issuing the same on July 1, 2013.

Commissioner Henares added, “the BIR issued Revenue Memorandum Order (RMO) No. 12-2013 on May 2, 2013, to provide for penalties since very few taxpayers were complying with the said regulations.”

The BIR said that taxpayers who apply for authority to print receipts beyond April 30, 2012, shall pay a penalty of P1,000.00. However, those who apply for said authority beyond June 30, 2013 and/or on or before June 30, 2103, but failed to use the new sets of receipts starting July 1, 2013, shall pay the maximum penalty (of P50,000) as provided for in Section 264 of the Tax Code.

The tax agency gave the following rationale for the issuance of the regulations: 1) The BIR’s discovery of businesses registered with the tax agency that are not really engaged in any business except to sell invoices thereby defrauding the government of billions in tax revenues. These businesses sell their invoices to entities, which are either engaged in smuggling and/or purchasing goods without receipts. When BIR looked for these companies, mostly Small and Medium Enterprises, they cannot be found; 2) The BIR’s finding that a lot of invoices that were printed in the ‘70s are still being used and the need to clean these up by providing an expiry period; and 3) The issuances are aimed at reforming the process of accrediting printers to address complaints against some BIR personnel engaged in the printing business who make it difficult for taxpayers to register and/or secure authority to print unless they get to print the receipts of said taxpayers. The regulations disqualify printers with relatives working in the BIR.

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BIR collection for April 2013 exceeded target by 4.43%

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A May 20, 2013, press release from the Department of Finance, Bureau of Internal Revenue

For the month of April 2013, the Bureau of Internal Revenue (BIR) collected P148.99 billion in tax revenues, P32.77 billion or 28.20% more than collections made in April 2012. Or, P6.33 billion or 4.43% more than the goal for April 2013 of P142.66 billion.

For April 2013, collections from BIR operations amounted to P145.64B, P32.21B or 28.40% more than collections made in April 2012. Or, P6.84B or 4.93% more than the goal set for BIR operations for April 2013 of P138.8B.

Collections from non-BIR operations amounted to P3.35B, P0.55B or 19.87% more than collections made in February 2012 or P0.52B or 13.42% less than the goal set for non-BIR operations for April 2013 of P3.87B.

Collections by the Regional Offices amounted to P52.02B, or P12.58B or 31.9% more than the collections made in April 2012, continuing with the Regional Offices’ double-digit growth performance.

Collections by the Large Taxpayer Service amounted to P93.62B, P3.74B or 26.53%% more than collections made in April 2012.

Aside from the various reforms being instituted by the Bureau of Internal Revenue and the Run After Tax Evaders program, the increase in collection can be attributed also to the intensified tax campaign launched by the Department of Finance and the Bureau of Internal Revenue, including an appeal from the President for people to pay the right taxes and a multimedia advertising campaign.

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Lamborghini buyer charged with tax evasion

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A May 16, 2013, press release from the Department if Finance, Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) today filed criminal charges with the Department of Justice against Napoleon Segui Villapando for Willful Attempt to Evade or Defeat Tax for taxable year 2007 under Sections 51(A)(1)(a) and 74, in relation to Section 254 of the National Internal Revenue Code of 1997, as amended (Tax Code) and for Deliberate Failure to File Return and Pay Tax for taxable year 2007 under Section 255 of the Tax Code.

Based on documents gathered by the BIR during the investigation, Villapando, a resident of Mandaluyong, was able to acquire from Norsophil Metal Resources, Inc. a Lamborghini 2-Door Coupe Sports Car worth P20 million in 2007. Despite the acquisition of said luxury vehicle in 2007, Villapando only declared a gross income of P225,078.60 in the same year.

Investigators further discovered that Villapando did not file any Income Tax Return (ITR) for taxable years 1999-2002 and 2005. In fact, he only declared a combined gross income of P718,575.78 for the four-year period 2003, 2004, 2006, and 2007. His income taxes for the said years were withheld and remitted by his employer Norsophil Metal Resources, Inc. as Villapando represented that he was earning purely compensation income which, thus, qualified him for substituted filing.

The tax records of Villapando showed that he has no financial capacity to acquire said vehicle. Thus, his acquisition must have been made possible by income he earned from other sources aside from his compensation as an employee.

The BIR used the Expenditure Method of tax investigation to compute Villapando’s unreported income, which amounted to P19.77 million or 8,786%.

The Expenditure Method states that if one’s expenditures exceed his reported income for a given year and the source of the funds to make the expenditures is unexplained, such expenditures represent unreported income.

Under Section 248(B) of the Tax Code, an underdeclaration of taxable income by more than 30% constitutes a prima facie case of fraud tantamount to tax evasion.

As consequence of such acts and omissions in violation of the provisions of the Tax Code, Villapndo was assessed an aggregate deficiency tax liability for taxable year 2007 amounting to P15.84 million, inclusive of surcharges and interests.

The case against Villapando is the 165th filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.

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BIR collection for the First Quarter of 2013 up by 6.56%

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An April 19, 2013, press release from the Bureau of Internal Revenue

For the first quarter of 2013, the BIR collected Php244.1 billion in tax revenues, P233.41 billion from Bureau of Intern Revenue (BIR) operations and P10.65 billion arising from non-BIR operations.

Compared to the collections in the first quarter of 2012 when the BIR generated P229.04 billion, this year’s first quarter actual collections is ahead by P15.02 billion, or an increase of 6.56%.

This year’s first quarter collection from BIR operations increased by P19.43 billion over last year’s collection of P214 billion or an increase by 9.08%. Continuing the trend from last year, the regional offices increased its collection by 20.01%, while the large taxpayer service increased its collection by 3.16%. However, collection from non-BIR operations decreased by 29.28% or P4.41 billion.

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DOF, BIR urge professional associations to support tax campaign

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An April 10, 2013, press release from the Department of Finance, Bureau of Internal Revenue

tax-awareness-month-small-bannerIntensifies tax campaign launch for run up until April 15 tax deadline

In their efforts to increase the country’s tax effort from the current level of 12.8% to 16% in 2016, the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) are undertaking new information gathering initiatives as part of their tax campaign.

According to Secretary of Finance Cesar Purisima, the BIR will continue to work with the Professional Regulation Commission (PRC) in comparing its list of professionals from its database, as well as coordinate with other professional associations to achieve the department’s initiatives through collaboration and information sharing.

According to the PRC, there were 2,046,266 active professionals registered last year: 149,981 certified public accountants (CPAs), 126,204 civil engineers, 124,409 doctors, 51,639 dentists, and 30,712 architects.

This implies that the aggregate number of active professionals from just 5 out of the 76 professions regulated by the agency already, at 482,945 exceeds the total number of self-employed, business and professionals who paid their taxes last year, at 402,934.

Meanwhile, SSS records in 2011 showed that there were 687,011 active paying self-employed members.

In a previous statement, BIR identified 1.8 million registered self-employed, businesses, and professionals for the same year, versus the PRC’s number of professionals alone registering two million, supporting the claim of the large registry gap.

In 2011, there was a 1.4 million gap between actual filers and registered self-employed, business and professionals in the BIR, which means only 22.4% filed their returns.

“We urge our country’s professional associations to support our tax campaign. Everyone will benefit from paying the right taxes when government and private sector work together,” Purisima said.

The finance department has sent its first batch of letters to the Philippines Institute of Certified Public Accountants, the Philippine Institute of Civil Engineers, the Philippine Dental Association, the United Architects of the Philippines, the Philippine Medical Association, and the Social Security System.

“The DOF and the BIR will continue to reach out to other organizations as necessary, as well as provide workshops similar to what BIR Commissioner Henares organized for the Philippine Basketball Association,” added Purisima.

In a press conference held last month by DOF’s Purisima and BIR Commissioner Kim Henares held a press conference calling out to citizens, particularly the self-employed, the professionals and business owners to pay the correct taxes.

Some businessmen with gross sales higher than P150 million were found to have paid remarkably low taxes, while an investigation by the BIR of a prominent business association comprising of sole proprietors and enterprises revealed that the association only paid P41,844 for one year while the average income tax due should have been P322,500.

Records showed that in 1.8 million registered business and professionals in 2011, only 402,934 or 22.4% filed their tax returns, identifying a 1.4 million gap. Meanwhile, SSS records showed 687,011 active paying self-employed members, supporting the claim that there is a large gap between actual filers versus registered individuals.

DOF and BIR continue to intensify their tax campaign by airing No Pay, No Way TV commercials until tax deadline on April 15. One such commercial features a bridge with two lanes: taxpayers simply walking to cross to the other side, and non-taxpayers hanging onto the bridge’s railings to cross to the other side. Print advertisements outline how taxes pay for the country’s necessary infrastructures to provide for every citizen’s rights, particularly education.

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Actress Solenn Heusaff charged with tax evasion

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An April 5, 2013, press release from the Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against Solenn Marie Adea Heusaff for willful attempt to evade or defeat tax and for deliberate failure to supply correct and accurate information, resulting to non-payment of taxes due thereon, in violation of Section 254 and Section 255 of the NationalInternal Revenue Code of 1997, as amended (Tax Code).

Charged with Heusaff was her Certified Public Accountant Teofilo C. Magno Jr. who certified the former’s Financial Statements in violation of Section 257 of the Tax Code.

Heusaff is an actress, television host, model, singer, and endorser of various products in the Philippines.

Records of investigation showed that Heusaff was issued Letter of Authority No. 211-2013-00000014 for the examination of her books of accounts and other accounting records for all internal revenue taxes covering taxable year 2011.

In order to ascertain the true income received by Heusaff for the said taxable year, access letters were sent to business entities that engaged her services. Replies to access letters received from Heusaff’s withholding agents/payors revealed that she received income payments amounting to P13.38 million in 2011. Further investigation revealed that she declared a gross income of only P6.73 million in her Income Tax Return (ITR) for taxable year 2011.

A comparison of the gross income declared by Heusaff in her 2011 ITR as against the income she earned for the same year certified by her income payors disclosed that she substantially underdeclared her taxable income for 2011 by P6.65 million or by 99%.

Consequently, Heusaff was sued for a total tax liability amounting to P3.6 million for deficiency income tax covering taxable year 2011, inclusive of surcharges and interests.

Independent CPA Magno for his part was sued for issuing an unqualified opinion in his certification of the financial statements of Heusaff despite the latter’s aforementioned underdeclaration in her reported income.

The case against Heusaff and Magno is the 158th filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.

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Trader of office supplies charged with tax evasion

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An April 4, 2013, press release from the Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against Kristian P. Soriano for willful attempt to evade or defeat tax, deliberate failure to supply correct and accurate information in his Income Tax Return (ITR) and Value Added Tax (VAT) Returns for taxable year 2010 and Perjury, in violation of Sections 254, 255 and Section 267 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Soriano is a sole proprietor engaged in the trading of various office supplies under the name and business style Natriks Enterprise with business address at No. 1039 Pat Antonio  Street, Sta. Mesa, Manila. Charged with SORIANO was his Certified Public Accountant Crisanto M. Laguardia Jr. who certified the former’s 2010 Financial Statements in violation of Section 257 of the Tax Code.

Records of investigation showed that Soriano was issued Letter of Authority No. 211-2013-00000021 for the examination of his books of accounts and other accounting records for all internal revenue taxes covering taxable year 2010. The case originally stemmed from Letter Notice No.032-TRS-1000-000058 reflecting an underdeclaration of sales by Soriano.

Said underdeclaration was validated after confirmation by the Philippine National Police (PNP) that they paid Soriano P133.66 million in 2010. The income payment to Soriano by the PNP was certified by the Commission on Audit (COA). Compared to the declaration of SORIANO in his 2010 ITR of P935,382.77, investigators ascertained that the former underdeclared his sales for the same year by P125.16 million or by 13,381%.

Under Sec. 248 (B) of the Tax Code, an under-declaration of taxable income by more than 30% is considered substantial underdeclaration and constitutes a prima facie case of fraud tantamount to tax evasion.

Consequently, Soriano was sued for a total tax liability amounting to P101.90 million for deficiency taxes covering taxable year 2010, inclusive of surcharges and interests, broken down into P71.29 million for Income Tax and P30.61 million for VAT.

CPA Laguardia for his part was charged for issuing an unqualified opinion in his certification of the 2010 Financial Statements of Soriano despite the latter’s aforementioned underdeclaration in his reported sales/income.

The case against Soriano and Laguardia is the 160th filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares. It is likewise a RATE case of Revenue Region No. 6, Manila.

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DOF, BIR, BOC close ranks against oil smuggling

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An April 2, 2013, press release from the Department of Finance

The Department of Finance (DOF), Bureau of Customs (BOC), and Bureau of Internal Revenue (BIR) together have undertaken a campaign to curb oil smuggling and bring smugglers to justice.

“One of this administration’s priorities is to combat smugglers directly, especially in high-risk commodities such as oil. We in the DOF and its attached agencies are using a proactive, information-driven approach to fight oil smuggling. This is part of establishing tuwid na daan for all businesses in the Philippines,” Secretary of Finance Cesar Purisima said.

According to the latest data from the Department of Energy, Philippine oil demand amounted to 106.9 million barrels in 2011. However, current BOC data only records 67.6 million barrels of oil imported in the same year, signifying a discrepancy of 39.3 million barrels that is likely made up through smuggling.

As part of the DOF’s Run After The Smugglers (RATS) campaign, nine cases have been filed against oil smugglers since the start of the Aquino administration, with total dutiable value of products amounting to P37.97 billion.

Last year, the BIR issued Revenue Regulation 2-2012, which would have changed tax administration on petroleum products to require upfront payment of tax and duties on imported oil. If the oil was to be used within special economic zones and qualifying for tax exemptions, tax-exempt parties would have been able to file for refunds under RR 2-2012.

Implementation of RR 2-2012, however, was delayed for nearly a year due to a petition filed by Congressman Carmelo Lazatin of Pampanga’s 1st district, which resulted in a temporary restraining order issued on March 16, 2012 by Regional Trial Court Branch 58 judge Philbert Iturralde. Iturralde followed up the TRO by issuing a writ of preliminary injunction against RR 2-2012 on April 4, 2012.

It took almost a year for the Court of Appeals to reverse Iturralde’s order on February 14, 2013. In the decision, the CA said, “The contested RR was issued as a corrective measure to ensure the collection of correct taxes from whom they are due, as explicitly delineated in the introduction of said rules.”

The decision further stated: “It cannot be overemphasized that any injunction that restrains the collection of taxes, which is the inevitable result of the suspension of the implementation of the assailed RR is a limitation upon the right of the government to its lifeline and wherewithal.”

The BOC has been instructed to implement the RR and should hold oil importations until payment of VAT and excise tax.

In addition to the smuggling cases filed, the BIR is conducting detailed audits of subject companies that the department has identified to be high-risk smugglers.

DOF responds with targeted efforts

In response, the DOF has mobilized various initiatives to address oil smuggling.

The Department of Finance and its attached agencies have visited seven major district ports to gather data, among them major oil importing ports such as the Port of Limay. The first wave of visits were undertaken from February 5 to March 15, and the second wave of visits will begin by April to the Manila International Container Port, the Port of Manila, the Port of NAIA, and the Port of Batangas, another major oil importer.

The DOF will also soon implement a system of port accreditation for commodities at high risk of smuggling. Only particular ports will be accredited for importation of sensitive commodities such as oil and steel, subject to standards and technical requirements. Accredited ports are to submit to the DOF monthly reports that will be cross-checked with data from the Department of Energy and the Philippine Ports Authority, on a per volume, and per vessel basis.

“The port accreditation system will prevent ‘port shopping’, and hinder unethical importers from literally evading tax collection,” Purisima said.

All importers of sensitive commodities will also be asked to submit annual rolling import plans indicating quantity, type, source, and location of intended port arrival.

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BIR collection for February 2013 grew by P5.82 billion

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A March 19, 2013 press release from the Bureau of Internal Revenue

For the month of February 2013, the BIR collected P74.52 billion in tax revenues, P5.82 Billion or 8.48% more than collections made in February 2012. Or, P2.598 Billion or 3.37% less than the goal for February of P77.12 billion.

For February 2013, collections from BIR operations amounted to Php72.42  Billion, Php11.06  Billion or 18.03% more than collections made in February 2013.  Or, PhP 1.22 Billion or 1.65% less than the goal set for BIR operations for February 2013 of PhP 73.64 Billion.

However, collections from non-BIR operations amounted to only Php2.1 Billion, Php5.24 Billion or 71.39% less than collections made in February 2012.

Collections by the Regional Offices amounted to P27.13 Billion, or Php 4.74 Billion or 21.17% more than the collections made in February 2012, continuing with the previous year’s trend of double digit growth registered by the Regional Offices.

Collections by the Large Taxpayer Service amounted to P45.29 Billion, PhP6.32 Billion or 16.22% more than collections made in August 2011, a marked improvement over the previous year’s single digit growth rate.

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PBA Talk ‘N Text player charged with tax evasion

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A March 14, 2013, press release from the Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice against Jim Olmedo Alapag for willful attempt to evade  Income Tax for taxable years 2007 to 2010 and Value Added Tax (VAT) for taxable years 2007 to 2012; for deliberate failure to file his Income Tax Returns (ITRs) for taxable years 2007 to 2010; and for deliberate failure to file his VAT returns for taxable years 2007 to 2012, in violation of Section 254 and Section 255 of the National Internal Revenue Code of 1997, as amended (Tax Code).

Alapag is a professional basketball player in the Philippine Basketball Association (PBA) currently playing for the Talk ‘N Text Tropang Texters team of Smart Communications, Inc. He is registered with Revenue District Office No. 47, East Makati as VAT taxpayer with Tax Identification Number (TIN) 222-776-820. His registered address is at 16F Ramon Cojuangco Bldg., Makati Ave., Makati City.

Records of investigation showed that the athlete was issued Letter of Authority No. 211-2013-00000016 for the examination of his books of accounts and other accounting records for all internal revenue taxes.

In order to ascertain the true income received by Alapag for the taxable years in question, access letters were sent to corporations/entities that engaged his services as a professional athlete in the PBA. Certifications of income payments furnished by PLDT and SMART to the BIR disclosed that he received income payments amounting to P32.28 million from 2007 to 2012.

Due to Alapag’s willful failure to file his ITRs and consequently his failure to declare his income from the aforesaid companies that issued certifications of income payments made to him for taxable years 2007, 2008, 2009, and 2010, he failed to pay income tax for the aforesaid taxable years amounting to P10.39 million,inclusive of surcharges and interests. Further, as a result of his willful failure to file VAT returns for taxable years 2007 to 2012, Alapag also failed to pay Value Added Tax for the aforesaid periods amounting to P7.47 million, inclusive of surcharges and interests.

Consequently, Alapag was sued for a total tax liability amounting to P17.86 million, inclusive of surcharges and interests, covering taxable years 2007 to 2012.

The case against the pro-baller is the 156th filed under the Run After Tax Evaders (RATE) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.

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