No Finance- BIR rift

Source:www.manilastandardtoday.com

Kibitzers should stop fanning speculations that there is a rift between Finance Department and the Bureau of Internal Revenue. Whether or not there is one, what is important is for the two agencies to be able to work together to meet the country’s revenue targets and decrease the budget deficit levels that are threatening to balloon to record levels.

The intrigue about a rift was fanned earlier following talks that BIR Commissioner Sixto Esquivias IV was smarting from a reported move by the Palace to name Presidential Adviser on Revenue Enhancement Narciso Santiago as Deputy BIR Commissioner in charge of large taxpayers.

Some quarters had attempted to fan the reported animosity, fanning speculations that Esquivias was not consulted on the appointment and that the entry of Santiago was an affront to the former’s capability to meet the agency’s revenue targets.

The news of Santiago’s prospective entry into BIR, of course, later proved to be inaccurate. Santiago today remains a presidential adviser and is using whatever leverage his office has to help the BIR do its job.

And the BIR indeed needs all the help it can get.

Last May, the bureau’s collection was reportedly P4.2 billion short of its target. The deficiency for that month was double the P2-billion shortfall in the April collection.

The dim revenue picture, however, appears to have found a saving grace in the value-added tax. News reports quoted a BIR official as saying that “VAT is keeping us [BIR] afloat”.

“Without it [VAT], our collection would decrease further,” the reports quoted the BIR official.

The agency has a total goal of P850 billion for the entire year. The target has already been lowered from the initial P865.6 billion which Esquivias reportedly said “will be a tough task for the BIR”.

Given the huge target and the saving role of the BIR’s VAT collection, it seems that there is now bigger argument against a reported bid by a Malaysian-led group to get a P500-million plus VAT exemption from the BIR.

The VAT exemption bid is being worked out by some members of the board of directors of the Philippine Racing Club Inc. headed by Santiago Cua Sr. known in local Chinese circles as Cua Sing Huan and controversial Malaysian-Thai Surin Upatkoon known in Asian Chinese circles as Lau Khin Kun.

Yes, this is the same Surin Upatkoon who figured prominently in a major political controversy in Thailand after he allegedly fronted for the Singaporean giant Temasek Holdings for the takeover of the Bangkok’s Shin Corporation.

Cua, Upatkoon and several other PRCI directors had engineered the transfer of the P12-billion Sta. Ana racetrack to a paper company called JTH Davies in a swap deal that had been opposed by Filipino shareholders due to alleged lack of transparency in the transaction.

The transfer to JTH Davies, however, cannot be consummated because of the VAT implications—Cua, Upatkoon and the rest of the group have to shoulder some P500 million in VAT to have the transaction completed.

The group has opted to work out a VAT exemption from the BIR. Resigned BIR Commissioner Lilian Hefti came close to granting the exemption but the alert eyes of Finance Secretary Gary Teves caught the scheme and put his foot down.

The Cua-Upatkoon group, through a Makati-based accounting firm, wrote a strongly-worded letter to the BIR, hinting that it would take drastic legal action if the BIR does not grant the exemption.

As far as we know, up to this date, Teves has not blinked despite the Cua-Upatkoon pressure.

We hope Esquivias would likewise hold his ground. The P500 million in foregone VAT collections could spell disaster for his 2009 performance.

Already, some kibitzers are hinting that Esquivias would blink in this VAT exemption pressure play. The speculation is based on the fact that Esquivias is not an ordinary horse-racing aficionado. It appears the BIR chief was actually an owner and breeder of race horses. At one point, Commissioner Esquivias was even the president of the Samahan ng mga Horse Owners ng Pilipinas or SHOP.

Kibitzers want to infer that Esquivias is predisposed to grant the exemption because he was seen last March in an intimate huddle with PRCI executive vice president and former civil service commissioner Ramon Ereneta during the anniversary of the Philippine Racing Commission. Ereneta doubles as spokesman for the Cua-Upatkoon group.

Observers disagree with the view. Given Esquivias’ huge shortfall and humongous collection target, it is unlikely that he would give in to a bid for half-a-billion in exemptions from fellow horse racing aficionados and directly collide with the hard-line position of his boss, Teves on this issue.

That would also run counter to Esquivias’ own drive for better revenue collection. His Oplan Kandado has earned applause and is credited for boosting revenue collection.

We don’t think Esquivias would want himself to be seen as padlocking establishments with a few thousands in tax payment deficiencies while giving a giant horse racing concern half-a-billion in VAT exemptions.

Esquivias may love horses and horse racing. But it is safe to presume he loves his country more.

Withholding tax exemption of low-income suppliers backed

Alexis Douglas B. Romero

www.bworldonline.com

THE FINANCE department does not oppose a proposal that will exempt low-income agricultural suppliers from the 1% creditable withholding tax, provided that the Bureau of Internal Revenue (BIR) will ensure the submission by withholding agents of the list of their suppliers.

In a memorandum to Finance Secretary Margarito B. Teves dated July 3, the Finance department’s research and information office said this will ensure that the suppliers will pay the proper amount of taxes and, in turn, reduce the chances of leakages.

"To lessen the possibility that the small farmers/suppliers will not properly declare their sales/incomes for income tax purposes, or not file a return at all, the BIR should ensure the strict submission of the list of agricultural suppliers by the withholding agent-corporation or withholding agent-individual," the memorandum read.

Last May, President Gloria M. Arroyo ordered the Finance department to augment the income of corn farmers by removing the 1% withholding tax charged to corn millers but is being passed on to low-income corn farmers.

The directive came after corn millers from General Santos and Cotabato raised concern over the said tax, claiming this will affect the cash flow of farmers with small operating capital, since part of their income tax is collected in advance.

In response, the BIR had said it will craft a revenue regulation that will exempt corn farmers and other low-income agricultural suppliers under certain conditions.

Under the draft revenue regulation submitted by the BIR to the Finance department, the 1% creditable withholding tax will apply only to purchases in excess of a cumulative amount of P300,000 within the same taxable year.

Hence, small suppliers with gross sales of P300,000 and below will not be subject to a 1% withholding tax.

The regulation will cover small suppliers who sell corn, palay, rice, cassava, sugar cane, coffee, fruits, vegetables, marine food products, poultry and livestock.

To avail of the incentive, the farmers should be regular suppliers or should have made at least six transactions with businesses or individuals engaged in trade.

The draft regulation also designates the top 20,000 corporations and the top 5,000 individual taxpayers engaged in business as withholding agents, or those that will collect the 1% withholding tax from their suppliers.

Top 20,000 corporations include firms with gross sales of at least P10 million, gross purchases of at least P5 million, annual income tax of at least P200,000, and value added tax payment or payable of at least P100,000.

The top 5,000 individual taxpayers include those whose gross sales of at least P10 million and those with gross purchases of at least P5 million, annual income tax due of at least P200,000 and VAT payment or payable of at least P100,000 for the preceding year.

Previously, only the top corporations served as withholding agents.

But the BIR has decided to expand this category to include the top individual taxpayers in its bid to strengthen the monitoring of business transactions and to ensure that the proper amount of taxes are paid.

In the same memorandum, the Finance department said the revenue regulation will not lead to losses and will only delay the collection of income tax since the money that was supposed to be paid in advance will no longer be withheld.

"The proposal will only defer the government’s collection of income tax from the small agricultural farmers/suppliers since their exemption is only from the payment of the creditable withholding tax of 1% on their sale. The small farmer/supplier is still required to file his annual income tax return," it stressed.

BIR overshoots June target by P3 billion

By Iris C. Gonzales
www.philstar.com

The Bureau of Internal Revenue (BIR), the government’s main revenue earner, collected P56 billion in June or P3 billion more than the target for the month of P53 billion, a ranking BIR official said yesterday.

The latest collection data is also P1.9 billion higher than the P54.1 billion generated in the same period last year.   

BIR deputy commissioner Nelson Aspe, citing preliminary data, attributed the higher-than-expected figures for the month of June to the agency’s Oplan Kandado program.

The program, launched in January, seeks to penalize business establishments that do not pay the right amount of taxes.

Under the program, business operations of non-compliant taxpayers will be suspended and their establishments temporarily closed if they are found to have violated certain tax laws.

Grounds for closure include failure to file a value-added tax (VAT) return, understating taxable sales or receipts by 30 percent more of the correct amount in the case of a VAT-registered taxpayer, or failure to register the business.

The closure of a business establishment shall last for at least five days and shall be in force until the taxpayer rectifies the violation. The order shall only be lifted by the BIR when there has been subsequent filing or amendment of returns with the payment of the tax as well as penalties.

As part of the program, the agency has temporarily shut down various establishments including three businesses in the island resort of Boracay in Aklan, La Suerte Grocery & Bakery in Magalang, Pampanga for failure to declare more than P50 million in income in 2008; Charmy Food Phils., Inc., a manufacturer of soybean products in Pasig City, for not declaring P40 million in sales for 2005 to 2008; and Arra’s Fine Dining, a Korean restaurant in Makati City for understatement of its taxable sales in 2008 by more than P20 million.

As of June 2009, the agency has already padlocked 40 establishments under the program.

The BIR has become aggressive with its Oplan Kandado program as it is under heavy pressure to meet its revised collection target for 2009 of P798.5 billion, adjusted downward from the previous program of P850 billion. For next year, the BIR is tasked to collect P875.1 billion.

It's his birthday

As a matter of rule, i am on leave every 1st of July...

I have to send G back to Nueva Vizcaya last Tuesday after she traveled last Sunday with me to Ilagan. At least G would be with his father on his 52nd birthday of 1st July.

Michael can't leave his classes in Baguio and I had to attend the meeting in Tuguegarao, as well as attend the meeting with PICPA Isabela as a Guest Speaker (when Dr. Andy Cabuyado, one of the pillars of the chapter mentioned that i am no guest in the real sense because he made us realize that i am one of the "ORIG" members of PICPA Isabela being a member since 1989 up to this date).

My mini-butaka, lovely token from PICPA Isabela

As it turned out, the scheduled meeting in Tuguegarao is of prime importance because all the members of the Assessment Group, as well as the RDO had to attend. When i was invited as Guest Speaker, i begged off because of conflict of schedule. The PICPA Meeting was supposed to be in the morning of July 1st, too. I only learned late Tuesday that they reset the same in the afternoon for me to be able to catch up.

Anyway, i made amends 4th of July. Methinks, as agreed by the chef at the back of father and daughter in the top picture saying - OK!

Preview of the Send-Off for Nora

The send-off for the Chief of the Assessment Section,
Ms. Nicanora T. Calimag, being prepared.
She had been with the District Office for 30 years.

The stairs going up the 3rd floor with white flowers, as she wished.
Balloons in white, pink and violet all over, courtesy of Len-len, RCO of Cauayan.

Before i remember to get shy and staffers come in,
i tried a piece or two with the Dr. J Band of Ilagan.
The band is gratis, courtesy of the Mayor, Dr. Jay
thru Ms. Tessie Bagunu and Ms. Jocy Lora

Rizal shrine in Bayombong

Senate President Juan Ponce Enrile and Nueva Vizcaya Gov. Luisa Lloren Cuaresma (left) lead the ribbon-cutting rites marking yesterday’s formal opening of the 7.3-hectare Rizal shrine in Barangay Casat, Bayombong town where a 16-meter Rizal statue, touted to be one of the tallest statues of Dr. Jose Rizal, stands. Joining them are (from second from left) Jordanian-born Mahmoud Asfour, the chief financier of the shrine; Bayombong Bishop Ramon Villena, Dr. Emelita Almazora of the National Historical Institute; and Ilocos Sur Vice Gov. Jerry Singson, national deputy commander of the Knights of Rizal. Charlie Lagasca Source

Jordanian fulfills tribute for Pinoys' kindness

Source: PIA Nueva Vizcaya
Ben Moses Ebreo

Bayombong, Nueva Vizcaya (29 June) -- All is set for the formal opening of the P40-million Rizal Shrine that Jordanian Mahmoud Asfour made for his admiration of the values of the Filipinos and their national heroes.

Built in barangay Casat, some 7 kilometers from the national highway here, the Dr. Jose Rizal and National Heroes Shrine constructed on top of a hill infront of his mansion is also a venue to other charitable institutions for Novo Vizcayanos such as children's park, food processing, flower making, cosmetology and saloon, eye and dental clinics, physiotherapy and sports injury clinic, livelihood training center and function halls on the first level.

The second level offers amenities such as two huge fountains, wide skating rink, tile chairs, gardens with assorted flowers, areas for gathering and helipad. The uppermost level features the Rizal shrine, which Asfour claimed as the biggest in the world surrounded by 15 other national heroes with marble tiles.

"I built this project to help poor families by way of providing them jobs and for cultural learning on the teachings of Dr. Jose Rizal," Asfour, 59 said.

An official of the Order of the Knights of Rizal, an organization that seeks to promote and emulate the values, virtues and services of Dr. Jose Rizal, Asfour said the Rizal shrine including its base measures 38.6 feet in height.

He said he personally designed Rizal's head and enhanced its durability to become an "earthquake proof edifice."

"This area is covered by a faultline and therefore I do not want this to be destroyed," he said.

Rizal's body is built with fiber glass covered by a metal layer with bronze color. The body weighs 1.2 tons while the base weighs 1.3 tons, according to Asfour.

The other heroes were built in their normal sizes but with huge concrete bases. They weigh 800 kilos each, Asfour said.

Even before its completion, the Rizal shrine which has become a tourist attraction in the province has been visited by Asfour's friends, local officials, high ranking national government dignitaries and ordinary tourists.

Beside the Rizal shrine is the 6.5 hectare plantation areas for assorted fruits and trees, such as 138 mango trees, bananas and coconuts in preparation for fruit processing ventures.

"I will start these projects next year," he said including cogon manufacturing and pottery making.

The project, According to Asfour will be formally inaugurated on June 19, the birthday of Dr. Jose Rizal.

A mobile teaching school will also be purchased inorder to teach the values of Rizal among children in the villages, he said.

Asfour who settled in this town in 1991 married Marriam, now 47 with their children Abdullah, 21, Hakim 19, and Abeer 10. Abdullah and Hakim are taking up computer engineering course at the St. Mary's University here while Abeer is on her 6th grade.

In 2001, the provincial board here has recognized his deeds and services and passed a resolution adopting him as a son of Nueva Vizcaya.

For Asfour, funding livelihood projects and sponsoring scholarship grants were his ways of repaying a debt of gratitude to one Filipino.

His good impression of Filipinos began when his car bogged down in the middle of a desrt in Saudi Arabia before the Gulf War. Stranded in the desrt for two days, he said he was already dying from hunger and thirst when a Filipino truck driver found him and gave him water, shared a sandwich and then brought him home.

Since then Asfour started to pay Pinoy's kindness by helping Filipino overseas foreign workers, sponsoring scholarship grants, provided livelihood projects, donated pump wells, farm implements, built houses for the poor and financial aid to fund raising projects.

He also pays salaries of several teachers, health workers and hospitalization of sick indigent families in the province.

A former vice president of Citibank International and a former official of the International Monetary Fund, Asfour was a member of the IMF team that studied the country's application for a P128 million loan.

In July 2005, Asfour's bid for a Filipino nationality was issued by President Gloria Macapagal - Arroyo after it was concurred by both the houses of congress and senate.

"If I see abandoned children and their parents, I help them. I reconstruct families by giving them something to work with for their income," Asfour said.

Revenue collections to rise 10% next year

By Lawrence Agcaoili

the.manilastandardtoday.com

Philippines expects tax collections to improve 10.4 percent next year due to an anticipated slight recovery in the economy.

Documents from the Finance Department show that tax take of the government in 2010 would reach P1.195 trillion, or equivalent to 14.3 percent of the gross domestic product and P113 billion higher than the programmed tax collection of P1.082 trillion this year.

The Finance Department expects the collections of the Bureau of Internal Revenue to increase 9.6 percent to P875.1 billion from P798.5 billion this year due to higher GDP growth.

It sees collections of the Bureau of Customs rising 13.2 percent to P309.5 billion from P273.3 billion due to increased oil prices and higher import growth of 9.9 percent next year from a projected 12-percent decline this year.

However, the government expects non-tax revenues to fall 17 percent to P129.9 billion next year from a projected P156.5 billion this year because of lower proceeds from the sale of big-ticket state assets.

The government expects to raise only P2.5 billion from privatization next year from about P30 billion this year.

Expenditures, meanwhile, are expected to inch up by over 3 percent to P1.534 trillion from P1.489 trillion as the government steps up spending to stave off recession.

As a result of improved tax take, the government sees the budget deficit declining to P208.4 billion, or 2.5 percent of GDP next year, from P250 billion this year.

The Cabinet-level Development Budget Coordination Committee earlier agreed to raise the budget deficit ceiling from P199.2 billion after scaling down the GDP growth target due to the dismal figures in the first quarter of the year.

The DBCC scaled down the GDP growth target to a range of 0.8 percent to 1.8 percent this year from the revised range of 3.1 percent to 4.1 percent after the growth slackened to 0.4 percent in the first quarter of the year from 3.9 percent in the same quarter last year.

The DBCC sees the GDP expanding by at least 2.6 percent next year.

Adverse external developments, including the financial crisis in the US, have forced the Philippines to abandon its commitment to balance the budget last year and by 2010 under the Medium Term Philippine Development Plan.

The country’s budget deficit swelled to P68.1 billion last year from P12.4 billion due to weak tax take and accelerated spending.

The deficit increased by 556 percent to P123.2 billion in the first five months of the year from P18.8 billion in the same period last year after revenues fell 5.4 percent while expenditures jumped 15.5 percent.

Before the Rizal Shrine Inauguration

It's the 4th of July, Mahmoud Asfour's Rizal Shrine shall be inaugurated.

The grand inauguration shall be done by the Senate President,
the Bishop of Nueva Vizcaya, and other dignitaries.

Up the hill, Rizal's monument is now bare to the naked eye

A major event for Nueva Vizcaya brought about by Mahmoud Asfour's Rizal Shrine.
A cultural show was participated in by the universities and schools in the province.

Government eyes P1.195 trillion in taxes next year

By Iris C. Gonzales
www.philstar.com.ph

The Philippines expects to collect P1.195 trillion in taxes next year or P113 billion higher than the programmed tax collection of P1.082 trillion this year.

The P1.195 trillion is equivalent to 14.3 percent of gross domestic product (GDP) while the P1.082 trillion is equivalent 13.9 percent of GDP.

According to documents from the Department of Finance, the Bureau of Internal Revenue (BIR) is tasked to collect P875.1 billion in 2010 from its P798.5 billion revenue goal this year or an increase of 9.6 percent.

The expected increase in the BIR’s tax take is due mainly to the expected improvement in economic growth next year. The economy, as measured by GDP, is expected to expand by 2.6 percent in 2010, an improvement from the 0.8 percent growth expected this year.

The Bureau of Customs, meanwhile, has been given a collection goal of P309.5 billion in 2010 or 13.2 percent higher than the revised revenue target of P273.3 billion this year.

The expected increase in the collections of the BOC will come from higher import growth of 9.9 percent from the projected 12 percent contraction this year as well as higher oil prices.

The rest of projected tax revenues for 2010 will come from other offices such as the Land Transportation Office (LTO), the Commission on Higher Education and the Bureau of Fire Protection.

On the other hand, the government expects non-tax revenues to fall by 17 percent to P129.9 billion in 2010 from the projected P156.5 billion this year on the back of an expected decline in privatization proceeds.

The government expects to raise only P2.5 billion from privatization in 2010 from about P30 billion this year.

As for expenditures, the government expects this to increase by over three percent to P1.534 trillion in 2010 from P1.489 trillion this year.

Fiscal authorities said the government needs to boost spending to pump-prime the economy amid the ongoing global financial turmoil.

As a result of the improved tax take next year, the government expects the budget deficit to improve to P208.4 billion or 2.5 percent of GDP from the projected P250 billion this year or 3.2 percent of GDP.

The Cabinet-level Development Budget Coordination Committee (DBCC) earlier revised the deficit ceiling for 2009 to P250 billion from the previous program of P199.2 billion or 0.2 percent of GDP.

BIR bugs BSP for back taxes

Written by Jun Vallecera

businessmirror.com.ph

THE Bureau of Internal Revenue (BIR) is again hounding the Bangko Sentral ng Pilipinas (BSP) for money, claiming the 16-year-old new central bank owes it back taxes worth P1.5 billion for taxable year 2005 alone.

The BIR claim is actually worth several billion pesos, but BSP officials said they are now in talks with BIR Commissioner Sixto Esquivias IV to resolve a liability incurred in the course of stabilizing the economy.

“We are already in discussion with the BIR about this. Again, we will argue that the taxes they levied against us were for the financial and monetary stability of the entire economy,” Deputy BSP Governor Diwa Guinigundo said on Thursday.

He would not reveal the exact amount, but Esquivias, whose collection performance in the first five months lagged from a year ago by P20.5 billion, wants the BSP to exercise good corporate citizenship and pay up.

He estimated the BSP must have paid between P15 billion and P16 billion in various taxes to the government the past 10 years alone.

Guinigundo said the BSP pays all kinds of taxes except those imposed on documentary stamp tax, or DST.

The BSP’s tax-exempt status incorporated in its 1993 charter expired five years later, but the central bank has since contributed more than P100 billion to the national coffers in the form of dividend payments to the national government, as well as tax and interest rebates. This, Guinigundo noted, on the strength of its capital base of only P10 billion.

He said other central banks have not been taxed by their governments, like the Bank Negara Malaysia, whose board has the option not to give a single ringgit if it so chooses.

There are draft proposals in both houses of Congress granting the BSP immunity from all kinds of taxes but these have not moved an inch since their filing many years since.

Guinigundo also said the proposed BSP capital infusion requiring the creation of a special-purpose vehicle as issuing entity for a planned bond sale had been thrown out as impractical for purposes of generating new money for the BSP.

How the planned bond sale will proceed from this point, and who actually gets to issue the sovereign IOUs, is the subject of continuing discussions with government.

“We’re still working out the details but basically the underlying instrument is still the MYOA,” Guinigundo said, referring to the multi-year obligational authority which is essentially a line that guarantees each government agency a direct link to the nation’s budget.

The new capital-raising mechanism for the BSP effectively becomes an account receivable based on the MYOA that covers the additional P40 billion that the BSP needs as capital, Guinigundo explained.

The new mechanism needs the approval of the BSP’s policy-making Monetary Board on top of a separate legal opinion to be issued by the Department of Justice on the matter, he added.

It was important that government honor its commitment as sole stakeholder in the BSP to give it the full P50-billion capital infusion prescribed in its charter, Guinigundo said.

A fully capitalized central bank enhances the confidence not just of the country’s creditors and the credit watchers, but more important, the confidence of the investing community as well, he said.