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For 2016, the Philippines’ national budget is around P3 trillion and the Bureau of Internal Revenue (BIR) is tasked to collect around P2 trillion. Out of the BIR’s total collection target, about P1.243 trillion is expected to come from income taxes. That is how important income taxes are for the country, accounting for around 41% of the national budget. It is interesting to note, however, that a lot of countries are now shifting their focus to indirect tax. The primary reasons behind the global shift to indirect tax are discussed in an article released by Grant Thornton International (Grant Thornton) entitled “Rethinking Tax: The shift to indirect tax,” and I would like to share this article with you.

The Bureau of Internal Revenue (BIR) is continuously intensifying its efforts in collecting taxes. As a result, more taxpayers are receiving Letters of Authority and being subjected to various forms of BIR examination. Therefore, it is recommended that taxpayers prepare for possible tax audits not just by reconciling their books but also of equipping themselves with knowledge on tax laws and regulations, particularly on the due process applicable to tax examinations.

“I love the Philippines, I Pay My Taxes Right. It’s easy as RFP.” This was the tax campaign theme of the Bureau of Internal Revenue (BIR) launched in 2014. According to the BIR, the concept of love for the country was carried in the RFP campaign. RFP stands for Register, File and Pay which captures the basic steps that a taxpayer should follow to be able to comply with his obligation of “paying right taxes” for nation building. Failure to comply may result in significant financial consequences on the taxpayer, with imprisonment as a worst case.

Taxation will always be contentious. Many Filipino taxpayers still struggle to understand taxation and tax compliance; among them there has emerged the view that the Bureau of Internal Revenue’s (BIR) regulations and processes are far from ideal. So let’s examine the bold statement in the Bureau’s vision and mission -- “The Bureau of Internal Revenue is an institution of service excellence and integrity. We collect taxes through just enforcement of tax laws for nation building and the upliftment of the lives of Filipinos.” That guiding principle informs Revenue Memorandum Order (RMO) No. 6-2016, which was issued prescribing the strategic plan of the BIR for 2016 to 2020.

We may therefore be allowed to wonder, how will the BIR conduct the transfer pricing audit? What is the advantage of having transfer pricing documentation? How will the transfer pricing documentation affect our tax treaty relief application (TTRA)?

Taxation is the lifeblood of the government. For the government to function, it needs its citizens to contribute to this lifeblood. With the mandate to assess and collect national taxes, the BIR is starting off 2016 with two things: a collection goal through Revenue Memorandum Order No. 2-2016 and a number of programs to attain that as summarized in Revenue Memorandum Circular No. 14-2016.

Of the P3.002-trillion national budget, P702.9 billion is intended for infrastructure in 2016. The P702.9-billion capital outlay budget represents 23.4% of the 2016 total budget, and represents a 29.8% rise from 2015. According to the government, the programmed increase of infrastructure spending will bring the Philippines almost at par with the global benchmark of 5% infrastructure spending. Robust spending is good for the economy as it aims to link lagging communities to growth centers and people to opportunities. A significant increase in infra spending is also expected during this election year. Thus we see ongoing government projects all over the Philippines in various stages of completion.

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order (RMO) No. 4-2016 dated Jan. 25, 2016, which provides for additional guidelines on the BIR’s internal processing of applications for compromise settlement, abatement or cancellation of internal revenue tax liabilities provided for under Section 204 of the Tax Code, as amended.