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Are BIR rulings confidential?

Atty. Eleanor L. Roque Atty. Eleanor L. Roque

A few weeks ago, I attended a meeting where it was discussed that Bureau of Internal Revenue (BIR) rulings are no longer published.

Suddenly losing my appetite, I decided to forego dessert and coffee and instead, concentrated on listening to the discussion. The speaker said that BIR rulings must be kept private because they contain confidential information of the taxpayers which can violate the taxpayer’s right to confidentiality. In some cases, it was noted that even bank account details are included in the rulings necessitating the need to keep them private.

I was baffled by this policy of the BIR. Didn’t the Duterte administration promise full public disclosure and transparency of government records under Executive Order No. 2 dated 23 July 2016? If so, why would this administration keep BIR rulings confidential when rulings have always been published under most previous administrations?

BIR rulings are issued to taxpayers who request clarifications or confirmations on how a particular provision of the Tax Code and other tax rules apply to them and their transactions. In some cases, the rulings are required before a particular business deal can be considered tax-exempt or subject to tax relief or tax deferral. The rulings, therefore, are official interpretations of the BIR of tax laws, rules and regulations as applied to real life situations and transactions.

Publication of BIR rulings is of paramount importance because of three reasons. First, rulings guide the taxpayers on how particular tax laws apply to them. It informs the taxpayers on how the BIR will treat their transactions. The publication of rulings provides a guide to taxpayers in their tax planning exercise and in ensuring that their transactions comply with the requirements of the BIR. Equally important, rulings officially inform the taxpayers if there is a change in the interpretation of the law instead of the taxpayers just relying on hearsay or informal discussions with tax authorities.

Second, publication of the rulings ensure that tax laws are applied to taxpayers uniformly. It provides stability and predictability on how tax rules are applied by the BIR. Since the rulings are published, taxpayers will be informed if their transactions qualify for the same treatment as disclosed in a previous ruling. If the tax authorities will have a different treatment for a similar transaction, the tax authorities must clarify in the ruling why a different treatment is necessary. Thus, publication ensures that the interpretation of the tax authorities is in accordance with law and devoid of any abuse of discretion.

And third, publication of the rulings prevents graft and corruption. Multimillion peso tax exemptions are granted through the issuance of BIR rulings. Publication of such interpretation by the tax authorities ensures that any decision to tax or exempt a particular transaction has sufficient legal basis as it will be open to public scrutiny. Publication ensures that the tax authorities are made accountable for their rulings.

No less than the Supreme Court has emphasized that the right of the citizens to information is essential to hold public officials accountable to the people. Unless the citizens have the proper information, they cannot hold public officials accountable for anything. Citizens can only participate meaningfully in public discussions leading to the formulation of government policies and their effective implementation if they are armed with the right information. An informed citizenry is essential to the existence and proper functioning of any democracy. (Chavez vs. Public Estates Authority, et. al., G.R. No. 133250).

The right of the taxpayers to information is guaranteed by no less than the 1987 Constitution. Section 28 of the Declaration of Principles and State Policies state that “Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest.”

More importantly, Section 7 of the Bill of Rights states that “The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.”

The above constitutional provisions are self-executing. They cover documents pertaining to official acts and decision which fully covers BIR rulings. The constitutional provisions supply the rules on how the right to information may be enjoyed by guaranteeing the right and mandating the duty to afford access to sources of information. The only limitations that can be set by laws are reasonable conditions and limitations upon the access such as hours and manner of inspection to prevent damage of records and avoid undue disturbance of work of the government employee having custody of the records.

It must be emphasized that government agencies are without discretion in refusing disclosure of, or access to, information of public concern. “The duty to disclose the information of public concern, and to afford access to public records cannot be discretionary on the part of said agencies. Certainly, its performance cannot be made contingent upon the discretion of such agencies. Otherwise, the enjoyment of the constitutional right may be rendered nugatory by any whimsical exercise of agency discretion.” (Legaspi vs. Civil Service Commission, G.R. No. L-72119).

BIR rulings have been published and are accessible to the public from as far back as I can remember. The oldest ruling published in the database I am using dates as far back as 1956. The issue of confidentiality has never been a deterrent in the publication of rulings in the past. While tax rulings are designated as private rulings, the word private does not mean that they cannot be published. The designation of private only means that the ruling is applicable to the specific taxpayer and the circumstances as disclosed in the ruling.

If the only reason for making them private is that they contain sensitive personal information such as bank details, then that information can be easily removed from the ruling. In the first place, I cannot think of a situation where the bank account details of the taxpayers are necessary to be put in the rulings as a particular account number should not affect the tax treatment of a transaction. Otherwise, conniving officials and taxpayers can just decide to hide behind this reason to prevent the public from inquiring into the specifics of a corrupt transaction. Hence, the better action is probably not to include unnecessary confidential information in the BIR ruling knowing that they will eventually be published.

Eleanor Lucas Roque is a head and principal with the Tax Advisory and Compliance division of Punongbayan & Araullo. P&A is a leading audit, tax, advisory and outsourcing services firm and is the Philippine member of Grant Thornton International Ltd.


As published in BusinessWorld, dated on 23 May 2017