Let's Talk Tax

Securing ICC made easy

It is said that taxation should not restrict trade. For when it does, the flow of a progressive economy is likewise hampered.

Importers have a reason to smile this time because last Aug. 31, 2016, the Commissioner of Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order (RMO) No. 56-2016. This amends the guidelines for securing importers clearance certificate (BIR-ICC) and customs brokers clearance certificate (BIR-BCC).

In the previous guidelines set by the BIR in RMO No. 10-2014, only importers and customs brokers who satisfy certain accreditation criteria shall be issued ICC or BCC. With the list provided under the previous regulation, we have observed importers scrambling to comply with the requirements. The struggle of many cannot be denied, especially when it is coupled with untimely city regulations causing port congestion. One must undergo a rigorous process to prove qualification as an importer. The processes take too long and if misfortune strikes, the ICC issuance becomes uncertain.

In 2015, the BIR tried to ease requirements in securing BIR-ICC and BIR-BCC through the issuance of RMO No. 01-2015. At that time, the objective is to expedite processing of such clearances. Thus, the BIR let go of two requirements -- submission of a certified true copy of the Certificate of Registration issued by the BIR and the Securities and Exchange Commission (SEC) Registration and Articles of Incorporation. There’s a caveat though as the BIR added requirements on several certifications from various BIR divisions. Unfortunately, an applicant needs to secure six certifications.

The BIR may have realized that RMO 10-2014, as amended, may cause unreasonable burden to importers and brokers alike by issuing several amendments. But even with the said amendments it would seem that the BIR is still holding a tight grip on implementing rules that are the very reason why securing tax clearance is very hard.

There is no significant change with the general objective from RMO No. 10-2014 to RMO No. 56-2016. The aim is still to protect the interests of the public by ensuring that they are dealing with legitimate importers and brokers. The difference lies on the process laid down among these issuances.

The new requirements were cut down from ten (10) documents or more, some of which are laborious to produce or secure, to only six to seven documents. Before, a taxpayer needs to secure a lot of certifications issued by the BIR itself. Now, the only document that needs to be secured from the BIR is the delinquency verification.

In securing delinquency verification, one must not have a delinquent account. The ICC/BCC shall nevertheless be issued for applicants with delinquent accounts provided the following have been complied with: the liabilities involved were subject to a pending application for compromise settlement or abatement of penalties; and, the amount being offered for payment has been fully paid upon the application for compromise settlement or abatement of penalties.

However, in cases where during the three (3) year validity period of the BIR-ICC/BCC, the application for compromise settlement/abatement was denied, as the case may be, the taxpayer shall be notified of such denial. The taxpayer will be given a period of thirty (30) days within which to fully settle the unpaid liabilities, otherwise, the BIR ICC/BCC issued shall immediately be revoked.

The provisions stating the documentary requirements for the application is quite straightforward. The RMO such as this does not leave any room for so much interpretation of the officers examining the application. Experience tells us that these interpretations, most often than not, defeat the purpose of the regulation, more so that they do not create a fair playing field between the regulators, like the BIR, and the taxpayers.

There is also a clearer provision on the timeline of processing, which I hope will strictly be followed. The RMO stated that the BIR-ICC or BIR-BCC should be released within five (5) days from the submission of complete documents. Request for delinquency verification, on the other hand, should be acted upon within twenty four (24) hours, unlike before when such request takes at least three days, which may drag to another one week.

Has change really set in? We still have to see. Though, expediency of the entire process does not wholly rely on passing a good regulation or RMO, I can say it is a good start. It is my humble view that having competent and adequate staff, upgrading tools needed to process application and developing internal tactical processes of the BIR should couple this.

The Philippines is still far from the likes of other developed countries where ease of doing business is at best. If it’s not too much to ask from our authorities, may we at least try to slowly become such. By issuing more regulations of this kind, it will bring us farther from where we are now. And may this momentum of the so-called change for the better, be done in perpetuity.

Eliezer P. Ambatali is a tax associate of the Tax Advisory and Compliance division of Punongbayan & Araullo. P&A is an audit, tax, advisory and outsourcing services firm and is the Philippine member of Grant Thornton International Ltd.

As published in Business World, dated 13 September 2016