Let's Talk Tax

Can the BIR’s 5-year plan make an impact?

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.

The BIR’s plan has as its focus to improve services to taxpayers, to increase voluntary compliance, and to enforce laws against those who do not comply. To achieve this, RMO 6-2016 outlines seven high-level strategic objectives:

First, attain collection targets and sustain collection growth. Being mandated by law to collect taxes, BIR’s collection target for taxable year 2016 is set at P2.025 trillion. The BIR continues to improve its ability to achieve the targets set by the government.

Second, improve taxpayer satisfaction and compliance. The BIR aims to gather information through consultation, meetings and dialogue with the community to identify improvements and recommendations for amendments to the law.

Third, strengthen good governance. BIR aims to enhance its performance through monitoring and evaluating of processes.

Fourth, improve assistance and enforcement processes. The BIR will make use of services that will ease the process for taxpayers to comply with their obligations. On the other hand, the BIR will also employ enforcement activities to identify and pursue those who deliberately evade or avoid paying tax.

Fifth, build and deploy contemporary information technology systems, processes, and tools. Because change is inevitable especially in the digital world, the BIR aims to maintain and enhance its online services to replace manual and paper-based services and processes.

Sixth, improve integrity, competence, professionalism, and satisfaction of human resources. The BIR strives to develop an organization with high levels of integrity that fosters the observance of high professional standards and demonstrates the values of the organization.

Last, optimize management of resources. The BIR ensures the highest standard of financial integrity, focusing on budget, asset and records management capabilities to ensure that BIR resources deliver their results.

The 7 high-level strategic objectives above appear to be very promising. Let’s just hope that with the experience gained from the past few years it can rectify some issues that hound the Bureau.

An example of the issue that should be addressed is the online filing of tax returns. There were glitches in the system which were discovered as a result of the sheer volume of taxpayers scrambling to fulfil their obligations.

Another concern of taxpayers is the BIR’s implementation of its tax assessment process. Taxpayers have hoped that part of the BIR’s Fourth Objective on improvement of enforcement processes would include revisiting tax findings by certain BIR examiners. These findings normally start at a huge amount, leaving questions about the BIR’s audit procedures and doubt over whether proper analysis was actually done.

On the other hand, with respect to the BIR’s Sixth Objective on improving integrity, many believe that this objective should be cascaded down to all levels of the Bureau. It would be a very disappointing on the part of the taxpayers if they encounter a BIR officer who asks for something in exchange for his speedy assistance.

Time will tell if the BIR’s initiatives are a match for its intended outcomes, and whether it achieves a balance between the mandate to collect tax and the objective of easing the tax process for the burdened taxpayer.

The BIR 5-year plan is supposed to run until 2020, while the term of the BIR Commissioner ends in June 2016 assuming she is not re-appointed. Whether the next administration retains the 5-year plan or makes improvements on it will be something to look out for.

Gretchel N. Lim is a tax associate of the Tax Advisory and Compliance division of Punongbayan & Araullo.