LibraryWorks No. 07 - Introduction to Taxation Part 03

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LibraryWorks No. 07 - Introduction to Taxation Part 03

Post  Dune on Sat Feb 23, 2008 9:00 pm

Marcos Administration
The appointment of Misael Vera as Commissioner in 1965 led the Bureau to a "new direction" in tax administration. The most notable programs implemented were the "Blue Master Program" and the "Voluntary Tax Compliance Program". The first program was adopted to curb the abuses of both the taxpayers and BIR personnel, while the second program was designed to encourage professionals in the private and government sectors to report their true income and to pay the correct amount of taxes.

It was also during Commissioner Vera's administration that the country was further subdivided into 20 Regional Offices and 90 Revenue District Offices, in addition to the creation of various offices which included the Internal Audit Department (replacing the Inspection Department), Administrative Service Department, International Tax Affairs Staff and Specific Tax Department.
Providing each taxpayer with a permanent Tax Account Number (TAN) in 1970 not only facilitated the identification of taxpayers but also resulted to faster verification of tax records. Similarly, the payment of taxes through banks (per Executive Order No. 206), as well as the implementation of the package audit investigation by industry are considered to be important measures which contributed significantly to the improved collection performance of the Bureau.

The proclamation of Martial Law on September 21, 1972 marked the advent of the New Society and ushered in a new approach in the developmental efforts of the government. Several tax amnesty decrees issued by the President were promulgated to enable erring taxpayers to start anew. Organization-wise, the Bureau had also undergone several changes during the Martial Law period (1972-1980).

In 1976, under Commissioner Efren Plana's administration, the Bureau's National Office transferred from the Finance Building in Manila to its own 12-storey building in Quezon City, which was inaugurated on June 3, 1977. It was also in the same year that President Marcos promulgated the National Internal Revenue Code of 1977, which updated the 1934 Tax Code.

On August 1, 1980, the Bureau was further reorganized under the administration of Commissioner Ruben Ancheta. New offices were created and some organizational units were relocated for the purpose of making the Bureau more responsive to the needs of the taxpaying public.

Aquino Administration
After the People's Revolution in February 1986, a renewed thrust towards an effective tax administration was pursued by the Bureau. "Operation: Walang Lagay" was launched to promote the efficient and honest collection of taxes.

On January 30, 1987, the Bureau was reorganized under the administration of Commissioner Bienvenido Tan, Jr. pursuant to Executive Order (EO) No. 127. Under the said EO, two (2) major functional groups headed and supervised by a Deputy Commissioner were created, and these were: 1) the Assessment and Collection Group; and 2) the Legal and Internal Administration Group.

With the advent of the value-added tax (VAT) in 1988, a massive campaign program aimed to promote and encourage compliance with the requirements of the VAT was launched. The adoption of the VAT system was one of the structural reforms provided for in the 1986 Tax Reform Program, which was designed to simplify tax administration and make the tax system more equitable. It was also in 1988 that the Revenue Information Systems Services Inc. (RISSI) was abolished and transferred back to the BIR by virtue of a Memorandum Order from the Office of the President dated May 24, 1988. This transfer had implications on the delivery of the computerization requirements of the Bureau in relation to its functions of tax assessment and collection.

The entry of Commissioner Jose Ong in 1989 saw the advent of the "Tax Administration Program" which is the embodiment of the Bureau's mission to improve tax collection and simplify tax administration. The Program contained several tax reform and enhancement measures, which included the use of the Taxpayer Identification Number (TIN) and the adoption of the New Payment Control System and Simplified Net Income Taxation Scheme.

Ramos Administration
The year 1993 marked the entry into the Bureau of its first lady Commissioner, Liwayway Vinzons-Chato. In order to attain the Bureau's vision of transformation, a comprehensive and integrated program known as the ACTS or Action-Centered Transformation Program was undertaken to realign and direct the entire organization towards the fulfillment of its vision and mission.

It was during Commissioner Chato's term that a five-year Tax Computerization Project (TCP) was undertaken in 1994. This involved the establishment of a modern and computerized Integrated Tax System and Internal Administration System.

Further streamlining of the BIR was approved on July 1997 through the passage of EO No.430, in order to support the implementation of the computerized Integrated Tax System. Highlights of the said EO included the:
1. creation of a fourth Revenue Group in the BIR, which is the Legal and Enforcement Group (headed by a Deputy Commissioner); and
2. Creation of the Internal Affairs Service, Taxpayers Assistance Service, Information Planning and Quality Service and the Revenue Data Centers.

Estrada Administration
With the advent of President Estrada's administration, a Deputy Commissioner of the BIR, Beethoven Rualo, was appointed as Commissioner of Internal Revenue. Under his leadership, priority reform measures were undertaken to enhance voluntary compliance and improve the Bureau's productivity. One of the most significant reform measures was the implementation of the Economic Recovery Assistance Payment (ERAP) Program, which granted immunity from audit and investigation to taxpayers who have paid 20% more than the tax paid in 1997 for income tax, VAT and/or percentage taxes.

In order to encourage and educate consumers/taxpayers to demand sales invoices and receipts, the raffle promo "Humingi ng Resibo, Manalo ng Libo-Libo" was institutionalized. The Large Taxpayers Monitoring System was also established under Commissioner Rualo's administration to closely monitor the tax compliance of the country's large taxpayers.

The coming of the new millennium ushered in the changing of the guard in the BIR with the appointment of Dakila Fonacier as the new Commissioner of Internal Revenue. Under his administration, measures that would enhance taxpayer compliance and deter tax violations were prioritized. The most significant of these measures include: full utilization of tax computerization in the Bureau's operations; expansion of the use of electronic Documentary Stamp Tax metering machine and establishment of tie-up with the national government agencies and local government units for the prompt remittance of withholding taxes; and implementation of Compromise Settlement Program for taxpayers with outstanding accounts receivable and disputed assessments with the BIR.

Memoranda of Agreement were also forged with the league of local government units and several private sector and professional organizations (i.e. MAP, TMAP, PCCI, FFCCCI, etc.) to help the BIR implement tax campaign initiatives.

In September 1, 2000, the Large Taxpayers Service (LTS) and the Excise Taxpayers Service (ETS) were established under EO No. 175 to reinforce the tax administration and enforcement capabilities of the BIR. Shortly after the establishment of said revenue services, a new organizational structure was approved on October 31, 2001 under EO No. 306 which resulted in the integration of the functions of the ETS and the LTS.

In line with the passage of the Electronic Commerce Act of 2000 on June 14, the Bureau implemented a Full Integrated Tax System (ITS) Rollout Acceleration Program to facilitate the full utilization of tax computerization in the Bureau's operations. Under the Program, seven (7) ITS back-end systems were released in stages in RR 8 - Makati City and the Large Taxpayers Service.

Following the momentous events of EDSA II in January 2001, newly-installed President Gloria Macapagal-Arroyo appointed a former Deputy Commissioner, Atty. René G. Bañez, as the new Commissioner of Internal Revenue.

Under Commissioner Bañez's administration, the BIR is currently undergoing a process of transformation to make the agency taxpayer-focused. This is being undertaken through implementation of change initiatives that are directed to:
1. reform the tax system to make it simpler and suit the Philippine culture;
2. reengineer the tax processes to make them simpler, more efficient and transparent;
3. restructure the BIR to give it financial and administrative flexibility; and
4. Redesign the human resource policies, systems and procedures to transform the workforce to be more responsive to taxpayers' needs.

Measures to enhance the Bureau's revenue-generating capability are also being implemented. Foremost of these measures are the implementation of the Voluntary Assessment Program and Compromise Settlement Program and expansion of coverage/scope of the creditable withholding tax system. A technology-based system that promotes the paperless filing of tax returns and payment of taxes was also adopted through the Electronic Filing and Payment System (eFPS).

With the resignation of Commissioner Bañez on August 19, 2002, Finance Undersecretary Cornelio C. Gison was designated as interim BIR Commissioner. Eight days later (on August 27, 2002), former Customs Commissioner, Guillermo L. Parayno, Jr. was appointed as the new Commissioner of Internal Revenue (CIR).

Barely a month since his assumption to duty as the new CIR, Commissioner Parayno offered a Voluntary Assessment and Abatement Program (VAAP) to taxpayers with under-declared sales/receipts/income.

To enhance the collection performance of the Bureau, three basic strategies were initially adopted, and these are:
1. intensify the use of new systems (e.g. the Reconciliation of Listings for Enforcement or RELIEF System);
2. enhance the security of tax payments through the use of electronic broadcasting system and full implementation of eFPS; and
3. Tap non-traditional sources of revenues for additional collection.

Toward these ends, the Bureau has been implementing several work programs which are directed towards:
1. more effective taxpayer compliance control systems;
2. effective detection and elimination of revenue leakages;
3. Intensified enforcement of tax laws;
4. implementation of BIR-private sector good and honest governance programs;
5. organizational adjustments;
6. active support to legislative revenue measures; and
7. Deployment of productivity and effectiveness enhancement technology.

Some of the most significant initiatives undertaken under CIR Parayno's administration are:
1. expansion of VAT coverage to include professionals;
2. rollout of various e-services, which include Electronic Broadcasting, Web-based TIN application and processing and Electronic Raffle of invoices/receipts;
3. building of third party information through computer linkages and data matching;
4. enhancement of existing detection systems, which include conduct of Tax Compliance Verification Drives;
5. audit of exempt entities and cases involving non-remittance of withholding taxes;
6. conduct of special operations on high profile tax evaders;
7. establishment of linkage with private sector groups for joint monitoring and implementation of good governance projects; and
8. Establishment of the BIR Contact Center.[u][u]

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