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THE
impending—and long-awaited—agreement between the Bureau
of Internal Revenue (BIR) and the local treasurers’
group to share data regarding companies and enterprises
doing business in the latter’s respective areas should
raise hopes that, somehow, the government’s top revenue
generator can meet its targets this year despite all
adversity.
The
potential for such increase is clearly spelled out by
Quezon City Treasurer Victor Endriga, concurrent
president of the Philippine Association of Local
Treasurers and Assessors (Phaltra), at whose national
convention the agreement was expected to be signed.
According to Endriga, the sharing of corporate
taxpayers’ information between local government units (LGUs)
and the BIR will at least double the enterprise-tax base
of the national government.
Currently, he notes, the number of enterprises
registered with the BIR is way too small compared with
those registered with the treasurer’s office of the
local governments. In his own
Quezon City,
the local government has a list of over 65,000
companies, while the BIR only has about 30,000
registered firms operating in the area.
Part of
the reasons for such a situation, according to him, is
the BIR’s penchant for concentrating only on large
taxpayers and medium-sized firms—representing only about
1 percent of the total enterprises in the country.
The
micro and small enterprises, Endriga said, often do not
register with the BIR but are listed in the LGUs. If the
BIR tax base captures the small enterprises, a
corresponding increase in collection may be reasonably
expected.
The idea
to share information had long been in the pipeline, but
for some reasons very few understood its importance. For
a time, the LGUs were simply too happy to host companies
and enterprises in their territory and collect local
taxes and fees from them; forgetting, as Endriga pointed
out, that the LGUs, too, will benefit from an increased
BIR collection because this will spell higher internal
revenue allotments (IRA).
Moreover, the LGUs, through the order, can easily
countercheck which firms are not declaring their correct
gross revenues to dodge the payment of right taxes.
The new
Department of Finance (DOF) order, which embodies the
agreement with the local treasurers, sets in motion the
exchange of taxpayers’ information between the BIR and
the LGUs, either through soft copy in Excel format using
diskette or compact disc, or e-mail, or online via their
respective portal “for the purpose of evaluating tax
compliance and collection of correct amount of internal
revenue, local taxes, fees and charges.”
The
parties will furnish each other a yearly master list of
updated taxpayers as to the type of ownership classified
by industries for newly registered taxpayers of the
preceding year and taxpayers whose business permits were
renewed for the current year.
They
will also exchange master lists of retired businesses of
the preceding year, copies of assessment roll and list
of existing tax declarations.
The LGUs
will be giving their copies to the BIR on or before
April 15, while the BIR will submit its copies on or
before June 30.
Under
the DOF order, the BIR can also request the LGUs to
furnish the agency the records on the
contractors/suppliers engaged in projects in their
respective areas, market vendors, cockpit operators,
quarry operators/owners, cost and volume of production,
and receipts or sales and gross incomes pertaining to
any person, partnership, corporation or association
subject to internal revenue taxes.
On the
other hand, the LGUs can ask the BIR for copies of
income-tax returns, value-added tax returns and
percentage tax returns of any person, partnership,
corporation or association subject to local taxes, fees
or charges. These, however, will not be disclosed to any
unauthorized person, with due regard to the security of
the taxpayers’ information.
Yet,
while all this sounds promising, there’s one big fly in
the ointment: the sad fact that in many cases, local
businesses complain that doing business with their
respective LGUs is eating too much into their revenue
stream, and there’s barely anything left to pay the
national taxes. Not a valid excuse, strictly legally
speaking, but the complaints behind this mindset deserve
fair hearing. We know of many cases where the cost of
doing business is so high in certain areas just because
the LGUs there have a very business-unfriendly setup:
i.e., systems and procedures aren’t streamlined, so red
tape invites “fixing” and bribes, which jack up the
costs; or there are too many permits and fees to be
sought, and by the time an enterprise is through with
them, the marginal profit expected down the road has
been dissipated. In one city in Metro Manila, some
business-permit applicants wait for not less than three
months—sometimes as long as six—because the city
government’s zoning map does not jibe with the barangays,
whose chairmen strut around like kings and withhold
their own clearances.
Of
course, there are some exceptions: in Manila, Quezon
City and Makati, the systems have long been streamlined
so that local businessmen are encouraged to pay their
taxes and fees because the frontline services run
efficiently. But in many other places, the cost of
doing business is still jacked up by the failure of LGUs
to put their act together. Just ask the returning OFWs,
who often complain that even a monthlong leave from
overseas stints is not enough for them to have their
papers processed for a simple enterprise.
The
observation by the Phaltra chief, therefore, that the
BIR has, in the past, been too focused on big
corporations, should be taken with a parallel resolve by
both parties—the LGUs and the BIR—to keep the cost of
doing business low and reasonable, because at bottom,
this is where the first line is often drawn when someone
decides on whether to pay taxes, or whether to pay the
right taxes. The new data-sharing regime should ensure
that enterprises do not have an excuse to shun their
civic duty. |
