BIR still optimistic about meeting its yearly goals

by Zen Hernandez
ABS-CBN News

Manny Pacquiao makes millions of dollars every time he laces up his gloves and goes to the ring. After all, he is acknowledged as the world's best pound-for-pound boxer.

His win against Ricky Hatton in May this year earned him over US$25 million, while his latest victory against Miguel Cotto earned him $13 million, excluding an expected windfall in his share of the pay-per-view (PPV) revenue.

He also signed several big endorsement contracts this year. But he won't be able to keep all his earnings.

The Bureau of Internal Revenue (BIR) says they expect to collect more in income taxes from the Pacman this year.

"Yung kanyang mga endorsements, yung share dun sa pay-per-view, malaki-laki rin daw yon, pati din siguro sa mga other activities like movies...Well, we anticipate na dapat mas malaki, ang balita namin mas malaki ang kinita nya for this year," says BIR Commissioner Joel Tan-Torres.

The BIR imposes a 32% tax on individuals with net incomes of P500,000 or higher on an annual basis.

So if, for example, Pacquiao earned $25 million or P1.175 billion for his fight against Hatton, and that was his only fight for the year, his income tax can reach P352 million!

And that's for one fight alone.

But the Pacman's lawyer explains Pacquiao does not get the full earnings and is lucky if he can take home 50 percent of it.

"Kung anong nababasa nyo sa dyaryo, hindi yun ang income ni Manny. Una, kailangan nya magbayad ng tax sa Amerika so less 30 percent sa Amerika. And then he has to pay his coach, na alam naman nating 10 percent, so that's already 40 percent. May iba pang gastos sa mga tao," says Pacquiao's lawyer, Jeng Gacal, a lawyer of Pacquiao.

Pacquiao has to pay for the expenses and salaries of the Team Pacquiao, which he brings whenever he fights.

He also says his winnings from the Cotto fight will go to several investments such as several properties.

"Nagpagawa ako ng building sa Manila, iyong MP Tower..., and then, bumibili ako ng bahay, at nagpapagawa din ng mga building din sa GenSan at sa iba't ibang lugar. Of course, nag-iinvest kami...Sine-save namin para sa kinabukasan ng mga anak namin," Pacquiao says in a recent interview with ABS-CBN's Dyan Castillejo.

For the BIR though, Pacquiao's contribution will help them increase their already low collection for the year.

However, they admit that with just two months to go before the year ends, it is already too late to reach the annual revenue target of P798 billion.

Due to revenue collection shortfalls coupled with increased rehabilitation spending due to recent typhoons and the economic crisis, the government has already breached its full-year budget deficit target of P250 billion.

It is now trying to privatize properties and assets to keep the deficit at the P280 billion level by year end.

Be tax agents, BIR tells 2010 bets

Source

The Bureau of Internal Revenue (BIR) asked on Saturday candidates in next year's national and local elections to start registering as tax withholding agents as the period for filing of certificates of candidacies (CoCs) with the Commission on Elections (Comelec) has begun.

BIR Commissioner Joel Tan-Torres issued the reminder as he discussed with newsmen the controversial revenue regulation imposing the five percent withholding tax on political expenses at the Balitaan sa Rembrandt forum.

He said the BIR will impose civil and even criminal sanctions on the candidates if they fail to register with the bureau and remit the said tax.

“We will exhaust all legal remedies before imposing sanctions, including the collection of the usual 25-percent surcharge and 20-percent penalty for late remittance,” he said.

Tan-Torres, however, stressed that candidates should comply with the requirement if they really love their country as taxes is the lifeblood of running the affairs of the government.

He said the measure is not a tax on cash contributions to candidates or political parties as it is imposed only when financial donations are spent.

“Insofar as the campaign expenses are concerned, the candidate or political party shall be the withholding agent as well as contributors of campaign materials and services,” the revenue chief said.

As withholding agents, the candidates should withhold five percent when purchasing campaign materials and services.

To illustrate, Tan-Torres said if the candidate spent P100,000 for purchase of campaign T-shirts, he should only pay the seller P95,000 and the balance should be remitted to the BIR.

Tan Torres also explained that the imposition of the five-percent withholding tax on campaign expenses is only one of the measures to increase the government's revenue take in the remaining two months of the year. The BIR is expected to generate P1.5 billion from this source. The revenue chief conceded that the huge collection shortfall of P39 billion sustained during the first nine months of the year can no longer be filled up, adding that “we are concentrating all our efforts to meet the collection target for November and December which totaled to around P130 billion.”

The BIR was tasked to raise P798 billion for the year, a goal that has become unrealistic due to worldwide economic recession and the passage of tax eroding laws like the reduction of corporate income tax and higher tax exemption grants for individual taxpayers.

BIR to go after estate taxes

Source

THE Bureau of Internal Revenue is eyeing revenues from estate taxes, which the agency admitted it has been lax to collect over the past decades.

BIR Acting Commissioner Joel Tan-Torres said his agency will soon be launching a project, called “Rest in Peace,” in a move to exact tax from the heirs of the deceased.

“You will be surprised how many people are not paying these taxes,” Tan-Torres said, but declined to cite figures on the revenues, as the plan is still on its initial phases.
According to BIR definition, an estate tax is a tax on the right of the deceased person to transmit his estate to his lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition.
It is not a tax on property but a tax imposed on the privilege of transmitting property upon the death of the owner. The estate tax is based on the laws in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary, BIR said.

Tan-Torres said that initially BIR plans to ask hospitals, memorial parks, among others, to notify the agency on the deceased individuals. In turn, they will also monitor the activities of these businesses to track those who already died.

A revenue regulation will be released before the said plan is implemented, Tan-Torres said.
According to BIR, there is a five-step plan to pay for the said tax.

Immediately after the death, the heir should file the estate-tax return to the revenue district office after paying to the bank the taxes. He should also submit all documentary requirements and proof of payment to the Revenue District Office having jurisdiction over the place of residence of the decedent.

“In case the available cash of the estate is not sufficient to pay its total estate-tax liability, the estate may be allowed to pay the tax by installment and a clearance shall be released only with respect to the property, the corresponding/computed tax on which has been paid,” BIR said.

Lipa revenue officer is BIR model employee

Source

A REVENUE officer assigned in Lipa City, Batangas, who reached the agency’s target despite the lack of personnel has been declared this year’s Bureau of Internal Revenue’s model employee.
Nilda Zamudio, Revenue Officer III of the Revenue District Office (RDO) in Lipa City, bested other six other finalists in Luzon from as far as Tuguegarao in the northern part of the country to the Bicol region.

The search is organized by the Tax Management Association of the Philippines (TMAP), but BIR officials themselves made the nomination. Only on its second year, this year’s search was limited to BIR employees in Luzon.

TMAP officials said they may expand the search to Visayas and Mindanao in the next few years.
Tammy Lipana, who announced the winner and is one of the judges, said Zamudio was able to reach outto the various chambers of commerce in her RDO’s area in order to reach its targets. She has only two revenue examiners in her group.
“In particular, one of the Filipino-Chinese chambers of commerce in the RDO cited: ‘The nominee [has] unselfish dedication to duty, competence and integrity, and her inner drive to live up to the noble tenets of public service’,” noted Lipana, who is chairman and chief executive officer of AB Capital and Investment Corp.
The judges also cited Zamudio for being the “face” of BIR as she always gives seminars on taxation to her fellow BIR employees and has lots of speaking engagements in schools, professional organizations, cooperatives and the local chamber of commerce in Lipa.
“Our awardee has achieved the difficulty of balancing career and having a family,” Lipana said.
Zamudio, who worked with BIR for the last 12 years and has four children, was once a teacher in Dela Salle University-Lipa, and she has used her teaching abilities to reach out to taxpayers.
In an earlier interview, she admitted that at times she would ask her husband Gerardo, an Air Force major, to spend their weekends together by driving with her to either the seminars that she will give or go to far-flung places to serve letters to taxpayers.
Gerardo, on the other hand, does not mind since he is also a public servant, working as the spokesman for the Air Force.
“We were just happy for her that she was recognized by this award. She can give inspiration to her colleagues,” he said.

Zamudio, however, believes that “one should not be so much conscious of the reward or the honor that you may be getting as a result of your job. It’s just a matter of working hard. For my coworkers, they have to remember that we are just a public servant. A public office is a public trust. We have to show our dedication.”

Her contributions in the BIR’s desire to reach out to all taxpayers are very vital since she represents the BIR, Zamudio’s Revenue District Officer Sulpicio Adapon said in his recommendation letter.

“As an examiner of the assessment section, she has been noted to be honest, very dedicated and approachable. She contributed in the increase of revenue collections of this district by performing quality audit and investigation,” he added.

The other finalists are Edwin Bacon from Calasiao, Pangasinan; Geraldine Anievas, Baguio City; Ema Dadufalza, Tuguegarao, Cagayan; Miriam P. Ventura, Tuguegarao, Cagayan; Maria Lena Nuguid, South Pampanga; and Cesar Letada, Legaspi City.

A few good men?

Source: www.manilatimes.net

SIXTO Esquivias 4th did an honorable thing recently—something that’s rare in government.

He resigned as Commissioner of the Bureau of Internal Revenue (BIR), citing the agency’s failure to meet collection targets under his watch. It was the second departure of a BIR chief in less than a year after his predecessor, Lilian Hefti, likewise left the bureau over differences with the Department of Finance (DOF) secretary.

The Attrition Law provides for the relief or transfer of BIR officials if they fail to hit collection targets.
Esquivias didn’t bother to wait for the law to take its course, and resigned ahead of the day of reckoning.

At end-September, the bureau had collected P577 billion, or P39.2 billion short of its nine-month goal of P596.2 billion. This year’s collections likewise were lower than last year’s P587.9 billion.

To be fair, the BIR is tasked to meet targets in a very difficult economic environment that has seen the country’s gross domestic product (GDP) growth slow sharply to 1 percent in the first six months from 4 percent last year.

The devastation caused by a series of typhoons would surely dampen further tax collections. Before he stepped down, Esquivias issued what amounted to a tax amnesty for businesses adversely affected by the typhoons and the floods that they brought about.

Add to the bureau’s hurdles a string of laws enacted over the past few years, the combined effect of which undermined its collection effort. These are the mandatory reversion of the corporate income tax rate to 32 percent from 35 percent previously as provided for in the Expanded Value-Added Tax Law, the higher personal exemption allowances provided by Republic Act 9504, the tax breaks granted by both the Personal Equity and Retirement Act (PERA) and the Tourism Development Act.

R.A. 9504 increased the level of personal exemption allowance of each individual taxpayer to a uniform amount of P50,000 regardless of their status. It also raised the additional exemption allowance for each qualified dependent from P8,000 to P25,000.

The PERA and the Tourism Act would cost the government a combined P10 billion in yearly foregone revenues.

All in all, the slew of tax-eroding measures would cost the government between P60 billion and P65 billion.

Like his predecessor, Esquivias had been pushing for a more realistic collection target in light of the poor economic environment and the host of newly passed revenue-eroding laws, but to no avail.

This makes us wonder why command responsibility seems to have stopped at the doorstep of the BIR chief, who after all reports to a higher authority, the DOF secretary. In fairness to the latter, he has been trying to rationalize the system of tax incentives and exemptions. But his efforts have come to naught in the face of lawmakers determined to shake the revenue trees for their own benefit.

Other resignations

Another government official who like Esquivias chose to step down on his own terms was the Department of Public Works and Highways (DPWH) secretary, Hermogenes Ebdane Jr.

His departure came in the wake of the floods caused by Typhoon Ondoy in Metro Manila. Despite the removal of flood control from among the DPWH’s responsibilities and its transfer to another agency, the department bore the brunt of the blame for the record flooding that submerged half of the National Capital Region.

But even before the typhoons struck, the DPWH secretary had been under fire for anomalies related to the misuse of the road user’s tax. A Senate committee looking into the matter had recommended filing graft charges against Ebdane.

The DPWH chief could have stuck it out and use his position to fend off the charges, but he opted to step down and face the music without the powers of a Cabinet member.

Of course, another reason he chose to give up his post is his declared quest for the presidency come May next year, especially after the ruling party picked an outsider over him. Not that Ebdane has a whale of a chance to clinch the highest office in the land.

Lastly, who could forget the one-time Socioeconomic Planning secretary who publicly clashed with the
Department of Energy secretary over the latter’s alleged coddling of the oil industry amid unreasonable increases in the price of the politically charged commodity?

Early on, former National Economic and Development Authority (NEDA) Director General Ralph Recto stepped down because according to him, he had plans of running for office next year.

To be sure, these three gentlemen don’t have spotless records. Indeed one of them may be charged in court for misusing public funds—something we don’t condone.

But they did what many who are still in power have refused to do ostensibly in a bid to use their office to pursue their political ambitions. Sometimes stepping down is the most honorable thing to do, and hanging on to power the most shameless effrontery.

Malacañang to Morales: It’s your call

By Joyce Pangco Pañares and Joel E. Zurbano

Source: www.manilastandardtoday.com

MalacaÑang is leaving it all up to Customs Commissioner Napoleon Morales to decide whether to stick to his post or follow the lead of a colleague who resigned after failing to meet his revenue target.

“We leave it to his conscience for him to do what he sees is right,” Press Secretary Cerge Remonde said, reacting to a question on the fate of Morales whose bureau fell 20 percent short of its collection goal from January to September.

Earlier, Internal Revenue Commissioner Sixto Esquivias IV resigned out of delicadeza after failing to meet his collection target. The BIR collected only P557 billion from January to September, or P39.2 billion short of its target for the period.

Customs’ total collections for the nine-month period reached P165.39 billion or about 20 percent below the target of P201.42 billion.

But Morales refuses to give up his post. “I have a job to do and I will do my best until the President tells me otherwise, at which time I will graciously hand over the reins to my successor,” Morales said.

Customs and revenue officials are either rewarded or penalized according to their collection performance, under the attrition law of 2005. But a special board composed of senior Finance officials could grant reprieve to underperforming officials if their collection shortfalls were justified.

Morales said that it was “improbable” to reach the bureau’s last quarter target of P64.72 billion.

“What we can do and will do is to maximize collections and ensure that the revenue leaks are plugged,” Morales said.

Despite the collection shortfall, the Customs is not a “non-performing agency,” Morales said.

The Customs remains an efficient collector of revenue for the national coffers, he said.

“In fact, we have an analysis report from the Department of Finance which shows we are P5.7 billion efficient in our cash collection,” he said.

The collection decline was a result of a 40-percent drop in crude oil importation, which in turn caused the loss of P9.5 billion in revenue, Morales said.

Even Esquivias’ replacement, acting BIR chief Joel Tan-Torres, said the bureau will be “hard pressed in meeting its collection target because of the revenue-eroding effects of legislative measures such as the increased special exemptions, optional standard deductions, and minimum wage tax incentives, among others.

“The revenue collection efforts of the BIR have seriously been impaired. I should also add the effects of a weaker global economy which also lowers the level of taxable economic transactions,” Tan-Torres said.

Tax collections represent three quarters of the government’s total revenue collections.

Editorial: Rough sailing ahead

Opinion

Source: businessmirror.com.ph

WITH barely six weeks left in the year, the government is scrambling to meet its target deficit for this year of P250 billion, or 3.2 percent of the gross domestic product, against all odds.

It’s going to be tough, no doubt. In the first nine months of the year, the deficit ballooned to P237.5 billion, only P12.5 billion shy of the target with three months to go.

It didn’t help that the major revenue-collection agency, the Bureau of Internal Revenue (BIR), had a dismal performance in the first nine months with a shortfall of P39.2 billion against its target. There are doubts it can meet its full-year revenue target of P798.5 billion. Such a shortcoming will surely worsen the budget deficit, now predicted to top P300 billion.

We really don’t know if the plan of the BIR officer in charge, Senior Deputy Commissioner Joel Tan-Torres, of going after temporary bazaars and retail establishments, requiring them to issue receipts to buyers, will make a dent in revenue collection.

The big tickets will matter more, and we refer to the sale of government assets to raise money and close the deficit. The Department of Finance (DOF) is eyeing to raise P30 billion from the asset sales.

Targeted for auction are three properties: the 103-hectare Food Terminal Inc. (FTI) in Taguig City for P14 billion; the government shares in Philippine National Oil Co.-Exploration Corp. for P12 billion; and the Fujimi property in Japan for P3 billion to P5 billion.

Sale of these assets may be easier said than done, however. The FTI property has been the subject of bidding three times, the last in October, when the Privatization and Management Office declared a failure of bidding for the third time.

The sale of Fujimi is encountering strong resistance, perhaps for sentimental reasons. The government may just have to drop the idea of selling it soon, because it is sure to encounter objections, particularly from senators.

The DOF is waging another war on another front to raise money and close the deficit: the passage in Congress of certain tax measures. Finance Secretary Margarito Teves has urged lawmakers in both chambers to pass three major revenue measures: a proposal to raise “sin” taxes on cigarettes and alcohol, legislation to rationalize the country’s fiscal incentives, and a bill to simplify the net income-taxation scheme. All these measures will raise some P35 billion a year.

But with the election fever heating up, DOF plans may just encounter rough sailing. Already, Senate Minority Leader Aquilino Pimentel Jr. raised the issue of “midnight sale” of government assets to finance the campaign of administration candidates—an accusation denied by both Malacañang and the Presidential Commission on Good Government.

Pimentel, for instance, questioned the planned sale of the Fujimi property, which houses the residence of the Philippine Ambassador to Japan, and which was acquired in 1943 through the efforts of then-President Jose Laurel Sr.

Among the other assets being sold, according to Pimentel, were the remaining government stakes in Petron and in San Miguel Corp., the sprawling complex of the National Center for Mental Health and the Welfareville or Boys Town in Mandaluyong City, the premises of the National Penitentiary in Muntinlupa City, the Home for the Aged in Quezon City and the Philippine Postal Corp.

Pimentel said sale of the assets by the Arroyo administration was meant “to make up for its deficiency in tax collection,” and this was being done “apparently without due regard to the strategic importance of maintaining government stake in these corporate enterprises.”

In fairness to the economic managers, they had sought to dispel the notion of this being a “midnight” selling spree, if only because plans for them had been announced and laid out a long time ago, and the process just takes time. Fine, but Pimentel’s point on “reckless disregard” of the strategic importance of certain assets merits consideration.

On the passage of tax measures, politicians in Congress will surely balk at the idea of raising taxes at this time, when they would soon be busy courting voters. The focus won’t be about solving the budget deficit, but on the election. In which case, everything else will have to wait.

Cigarette makers buck SICPA proposal

By Jess Diaz
www.philstar.com

Cigarette manufacturers opposed yesterday the $300-million proposal of Swiss firm SICPA Product Security SA to affix a high-tech, tamper-proof strip stamps on every pack of locally made cigarettes.

Chris Nelson of Philip Morris told the House ways and means committee that the proposal’s cost would be borne initially by manufacturers and eventually passed on to consumers.

“This translates to around P.50-P1 increase in cost per pack across the board for all brands – an amount higher than the excise tax increases in 2007, 2009 and 2011 for low, medium and high tax categories,” he said.

He said for Philip Morris, the cost of the stamps “translates to around P564 million to P1.1 billion a year.”

“For our bigger competitor, Fortune Tobacco, the figure is between P1.6 billion and P3.2 billion a year,” he said.

“It is a big blow to companies like ours still reeling from the effects of the global recession. More so the small players,” he added.

Nelson also expressed surprise over the increase in the cost of SICPA’s proposal, saying the initial estimate was only $266 million over seven years.

Deputy Commissioner Lilia Guillermo of the Bureau of Internal Revenue (BIR) informed the ways and means committee that the project would cost smokers P18 billion over the proposed seven-year engagement period.

La Union Rep. Victor Ortega, a member of the committee, questioned the huge cost, saying BIR officials gave an initial estimate of P12 billion in a previous briefing when the proposal was presented in 2007.

Guillermo said the increase of P6 billion was primarily due to inflation.

“A 50-percent inflation since 2007?” Ortega asked.

The BIR official said she would just submit to the committee a written report on how the cost increased by P6 billion.

She also said “there is nothing definite or final yet on the SICPA BOT (build-operate-transfer) project.”

She said the project aims to enhance the collection of excise taxes on cigarettes and would result in a 15-percent efficiency in BIR’s monitoring of the production and sales of cigarettes.

Susan Resurreccion of La Suerte said at present, the BIR assigns personnel in the plants of each cigarette manufacturer to monitor “removals” or withdrawal of cigarettes.

“I couldn’t believe that the BIR does not trust its own personnel and seeks the help of a Swiss company to improve its efficiency at the expense of manufacturers,” she said.

Antique Rep. Exequiel Javier, ways and means committee chairman, said the SICPA-BIR project would in effect increase the excise tax on cigarettes.

“That is the effect, and I don’t think you can do that. Only Congress can increase the rate,” he told Guillermo.

The strip stamps project has reportedly been approved by the National Economic Development Authority investment coordinating committee.

Congressmen buck SICPA deal

BY DENNIS GADIL

www.malaya.com.ph

Congressional leaders yesterday slammed the deal for a stamp tax technology on cigarettes and alcohol products being worked out between the Switzerland-based SICPA Product Security SA (SICPA) and the Bureau of Internal Revenue (BIR), saying it is heavily in favor of the Swiss proponent.

Antique Rep. Exequiel Javier, House ways and means chair, also said the BIR could not implement the SICPA proposal through the build-operate-transfer (BOT) scheme without the approval of Congress.

"If it’s a straight regular BOT system, then there’s no need for approval of Congress. But here, there’s a variation of the BOT which needs Congress’ imprimatur," Javier said during a briefing given by the BIR on the SICPA proposal.

He stressed the SICPA contract essentially involves raising revenues, which is the sole prerogative of Congress.

"You cannot raise revenues without Congress’ approval. Aside from the excise taxes that you’re collecting, you’ll be raising revenues. You cannot do it through the BOT," Javier said.

He also rejected claims that the Swiss firm’s tamper-proof stamp-tax technology called SICPATRACE System is "necessary" in combating smuggling and monitoring product withdrawals.

"There is a close monitoring by BIR of tobacco companies’ production. It’s hard to cheat on the volume of removals. There may be other reason for the proposal," he said.

BIR Deputy Commissioner Lilia Guillermo defended the SICPA proposal, saying it would not entail any cost to the government since it would be undertaken through BOT.

Guillermo also said the additional cost for adopting the SICPATRACE technology will be passed on to consumers.

Deputy minority leader Paranaque Rep. Roilo Golez questioned why SICPA would get the lion’s share of the revenues that would be generated from the introduction of the stamp-tax technology on cigarette and alcohol products.

Golez said that of the revenue haul of P31.6 billion, P20 billion or 58 percent will go to SICPA.

"The sharing scheme should be in favor of government. We should look further into this," he said.

Golez warned that the project might follow the way of the contract of Societe Generale de Surveillance (SGS) where government paid for the services without realizing the promised benefit of curbing smuggling.

Congressmen investigated the SGS contract in the 8th and 9th Congress, leading to its cancellation.

The government, however, had to pay SGS P6.2 billion in back payments. The final tranche of payment amounting to P3.16 billion was settled by the government just this year.

Officials from tobacco companies said the SICPA technology would be "ineffective and counterproductive."

Representatives from Philip Morris Philippines Manufacturing Inc. (PMPMI), La Suerte Cigar and Cigarette Factory, and Associated Anglo-American Tobacco Corp. attended the briefing.

Chris Nelson, PMPMI managing director, said the $300-million total project cost would deliver a painful blow on tobacco companies which are still reeling from the effects of the global recession.

Nelson said the SICPA contract has ballooned from $266 million to $300 million "without any given explanation for the increase."

The Philip Morris executive also said the SICPA proposal would result into an additional P0.50 to P1 increase in cost per pack across the board for all brands.

"This (would) be higher than the excise tax increases in 2007, 2009 and 2011 for the low, medium and high tax categories," Nelson said.

For PMPMI alone, Nelson said subscription to SICPA would translate to around P564 million to P1.1 billion a year in extra expense while for its bigger competitor, Fortune Tobacco, the figure would be between P1.6 billion and P3.2 billion a year.

Nelson blamed a BIR-commissioned study of the De La Salle University, which proposed the adoption of a technology similar the "track and trace mechanism" of SICPA.

The De La Salle study showed that the difference between the potential and actual collections only ranges from P625 million to P4.5 billion, and qualified that the variance cannot be attributed to tax leakage alone but to other factors as well.

"Even granting that it were so, the potential contribution of P4.5 billion is relatively small compared to SICPA’s claim that the additional revenue that its system could generate is P16.4 billion annually or P115 billion over seven years. This glaring discrepancy that should have raised a red flag, but did not," he said.

Blake Clinton Dy, assistant vice president of Associated Anglo-American Tobacco Corp., said the SICPATRACE system proposal is impractical, unreasonably burdensome.

"Given our small size and limited resources, the adoption of this new system, in addition to the impending increase in excise tax as mandated by law, would impose financial burden that would be punitive in magnitude, resulting in uncompetitive prices for our products thereby decreasing sales and ultimately leading to the cessation of operations," Dy said.

The BIR is currently meeting with a team of SICPA which planed in from Switzerland last week to negotiate the details of the contract.

The negotiations were an offshoot of a directive to the BIR from the Investment Coordination Committee of National Economic and Development Authority (NEDA-ICC) to proceed with the project.

Guillermo, who heads the BIR Information Systems Group, earlier said they will re-negotiate for the lowering of the project cost.

The Swiss firm is offering to install its own tamper-proof stamp-tax technology in the processing of cigarette exports as they leave the manufacturing plants to the tune of P12.2 billion in seven years or roughly P1.74 billion per year in exchange for curbing smuggling.

The project covers a period of seven years with the pre-operational costs estimated at P2.056 billion and the operational expense at P10.116 billion.

Oplan Kandado to continue under new BIR chief

By Iris C. Gonzales
Source: www.philstar.com

The new head of the Bureau of Internal Revenue (BIR) will continue the Oplan Kandado program put in place by his predecessor Sixto Esquivias IV.

“We will still implement that,” BIR Commissioner Joel Tan-Torres said.

Tan-Torres has assumed the functions of BIR chief pending President Arroyo’s appointment of a replacement for Esquivias.

Esquivias resigned last month amid intense pressure over the agency’s large shortfall in tax collection.

Tan-Torres said the Oplan Kandado program has helped generate revenues for the agency and may very well continue.

However, businesses have opposed the program, saying that it discourages the development of entrepreneurship in the country.

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

Launched in January this year, the Oplan Kandado program has seen the temporary closure of more than 230 establishments found to be violating the Tax Code.

As such, the BIR has raised more than P72 million in additional revenues from the implementation of the program nationwide.

The BIR believes the program is successful as its encourages voluntary compliance, fight tax evasion and enhance revenue collections.

Aside from Oplan Kandado, Tan-Torres earlier unveiled that the agency would slap a five percent withholding tax on all campaign expenditures and impose taxes on Christmas bazaars or the so-called tiangges.