Tax probes

EDITORIAL

All pending tax investigations and audits will be stopped on day one of the new administration, the incoming chief of the Bureau of Internal Revenue said last week.

“We have considered initially, for the first day (of our term), to recall all letters of authority (LOA),” Cesar Dulay told businessmen on the first day of the Sulong Pilipinas workshop in Manila.

The workshop was held by the incoming administration to consult with business leaders on specifics of its economic agenda, considering members of the business community told the incoming administration not to go hard on them.

The BIR issues a LOA to inform a taxpayer that he or she is being investigated for possible tax violations.But according to Dulay, he received information that probes conducted under LOA are being abused and could last for “two to three years.”

“We should put a cap on that period because it is an opportunity for what we can call negotiation (for corruption),” Dulay said.

Dulay also vowed to conduct an “immediate review” of revenue regulations to ensure tax requirements are reduced as part of ease of doing business.

Dulay’s pronouncements comes after a new spat between outgoing Internal Revenue commissioner Kim Henares and industry group Tax Management Association of the Philippines (TMAP) over the issuance of two revenue regulations weeks before Henares steps down.

Revenue Memorandum Order 24-2016 laid out tax probe rules for property buyers and sellers found not to have financial capacity to hold onto their assets. It was issued last June 7.

Meanwhile, Revenue Memorandum Circular 62-2016 clarified how banks and non-banks should treat “passed-on” gross receipts tax to their clients. It was issued June 13.

Henares said Dulay “could do whatever he wants within his power” once he takes over.

TMAP president Benedict Tugonon supported both plans, saying BIR should not be given excessive discretion against taxpayers.

He said a review of the issuances would allow the reversal of regulations he deemed are against the National Internal Revenue Code of 1997, saying it will “clear inconsistencies with the Tax Code and also take into account the tendencies of over regulation and simplification.”

On the dismissal of all LOA, the TMAP chief said there was a need to check BIR’s “very powerful” tool against taxpayers.

“The exercise of this LOA should be done with caution because this could be very destructive to taxpayers. We support moves to make the issuance of the LOA as objective as possible,” Tugonon said.