A Tax Reform on the CPA Board Exam Syllabus by Richard R. Ibarra

Recently, there are movements with various groups advocating for the immediate adjustment of the 19 years old tax reform in the Philippine Tax System.  The tax reform movements are lobbying for the bracket on individuals’ earnings and reducing the existing income tax rate both for individuals and businesses to a more reasonable and competitive rate.  To date, there are pending bills in Congress supporting for those reforms. However, it remains a concern for the current Administration.

On a lighter side, I welcome the significant development in the course syllabus of the CPA Board Exam.  Under the old syllabus, Taxation and Business Law (BLT) is taken as one subject in the seven areas covered by the examination.  This time BLT was segregated into two independent subjects: as Taxation and Regulatory Framework for Business Transaction which would have equal weights with the total six other subjects. The implementation of the revised syllabus shall commence in the May 2016 CPA board examination.

What makes the subject reform more interesting is the inclusion of additional topics, namely: Taxation in the Local Government Code, Fiscal incentives vested the Philippine Economic Zone Authority (PEZA) and Board of Investment (BOI) enterprises, availment of the Tax Treaty Relief, Senior Citizen Law, and Magna Carta for Disabled Persons. These changes would make the future accountants more conversant and knowledgeable in the tax rules.

I have been in the tax practice for almost a decade and with the academe handling taxation subjects for six years. For me, I would say that there is a huge gap between what is being taught in school against the actual work in the tax practice.  Thus, with the inclusions of the new topics it is hoped that it will cover the common discussions and issues relevant to actual practice.

Taxation is a very dynamic discipline.  It is anticipated that there will always be changes on the rules and regulations.  In fact, on year-to-year, the Bureau of Internal Revenue (BIR) has an average of 130 revenue issuances.   A summary for the last five years, is as follows: 

   BIR Issuances            2015     2014    2013    2012    2011 

Revenue Regulations       13         11        18        18        11

Revenue Memorandum    72         89        76        91        61

Circulars

Revenue Memorandum    23         39        37        28        48

Orders

Total                                108       139       131     137     120

* As of November 9, 2015 lifted from the BIR website 

While the reforms are welcome, it is also important that the review of the syllabus be done at regular intervals to adapt to the changes in the business world.  

The challenge that comes with the reform in the tax syllabus to be implemented by the Board of Accountancy is how the Academe (which should include the review schools) will adapt with the significant developments and still continue to provide quality instruction material in less than two years.

Furthermore, I noted that Taxation is one of the least favoured subjects among the accounting students.  For this reason, the instructional design must also help increase the interest of these students on the subject matter.

Since taxation is a combination of law and accounting discipline, the subject is considered tough.  Thus, the materials to be developed must be able to exhibit an authority and creativity to make the learning easy to comprehend and arouse the interest of the students.   So what will constitute a good material for academic purposes?  

First, all the related provisions of the Tax Code must be cited.  These must be explained in the light of business perspective. The rationale of the related provisions must be covered in the discussion.  The potential grey areas must be raised and put in proper context to minimize erroneous interpretation.   

Second, it would be more helpful if the discussions will be illustrated with most recent court decisions, Bureau of Local Government Finance rulings and BIR rulings. This way the discussions would be more practical and could create better insights.

Lastly, the topic would be more interesting if the discussions would give not only the tax implications, but also the impact on the accounting side.  It must show how to reconcile the differences both in the tax and accounting treatment of a particular transaction.

I look forward to the tax materials to be developed for academic purposes. It must be practical and easily understandable.

It is my desire and hope that the changes in the CPA course syllabus in Taxation will continue to strengthen the analytical skills of our future professionals.  The reforms should also prepare them to face challenges in the actual practice in the field of taxation.

Lastly, I envisioned that the reforms in the tax syllabus will make young accountants more inclined to join the tax practice. The new breed of tax professionals should not only be able to provide potential tax saving mechanism to the company, but more importantly, ensure that the company or taxpayer-client is compliant with the existing tax rules and regulations.