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INTERNATIONAL TAX DIALOGUE (ITD) ASIA CONFERENCE The Peninsula Hotel, Makati City March 3, 2010. STRATEGIES FOR WIDENING THE TAX NET - Ways to Promote/Enforce the Registration of Hidden Taxpayers. By: NESTOR S. VALEROSO OIC – Assistant Commissioner Large Taxpayers Service – Regular
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INTERNATIONAL TAX DIALOGUE(ITD) ASIA CONFERENCEThe Peninsula Hotel, Makati CityMarch 3, 2010 STRATEGIES FOR WIDENING THE TAX NET - Ways to Promote/Enforce the Registration of Hidden Taxpayers By: NESTOR S. VALEROSO OIC – Assistant Commissioner Large Taxpayers Service – Regular Bureau of Internal Revenue, Philippines
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE BACKGROUND: Two (2) Taxing Authorities : • Local government under the Local Government Code, RA 7160, and • National government under the National Internal Revenue Code, RA 8424 as amended. Slide 2
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Government Documents as Prerequisite for Business Registration at the Bureau of Internal Revenue • For Single Proprietorship • - Certificate of registration of business name with the Department of Trade and Industry (DTI) • For Corporation • - Securities and Exchange Commission (SEC) Registration Certificate Slide 3
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE MSE Issues • Many Micro and Small Entrepreneurs or Single Proprietorships go into business without the formalities of registration. Slide 4
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Strategies to Promote/Enforce the Registration of Hidden Taxpayers Design of MSE Tax Registration Campaign (Philippine-BIR Experience) Slide 5
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • Intensive Tax Information Drive • Making the Public Know • Avail of the services of print, television and broadcast media • Regional and district offices conduct tax information drive per industry • Tax assistance personnel at the District are trained to process/facilitate taxpayers registration Slide 6
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • Tax Mapping Operations • or the Tax Compliance Verification Drive (TCVD) • Objectives: • Expand data base – capture unregistered taxpayers into the tax net • Enhance voluntary tax compliance • Giving assistance or information drive on taxpayer’s compliance requirement Slide 7
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • Tax Mapping Operations or the TCVD • Process: • District area divided into tax zones • Each Tax Zone assigned to Revenue Officers • Conduct of tax mapping saturation drive by Revenue Officers: • On-the –spot determination of taxpayer’s compliance • Fill-up data on Taxpayer Information Sheet • Issue reminder letter to taxpayers on their violations • Apprehend unregistered invoices/receipts found in the premises including unregistered POS/CRM • Issue BIR printed receipts (BPR) • Require unregistered taxpayers to register in 24 hours Slide 8
TCVD - AS COLLECTION INITIATIVES • Produces revenue impact thereby improving voluntary compliance by registered taxpayers • . TAX INFORMATION SHEET Slide 9
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • Proper Execution of Tax laws on Registration • Primary Registration • Enter into a Memorandum of Agreement (MOA) with the Local Government Unit for a one-stop-shop registration of businesses. • Require taxpayers to undergo a one-hour Tax Briefing, before the awarding of the Certificate of Registration • Secondary registration • Yearly and monthly tax compliance for • √ VAT/Percentage Taxes • √ Withholding Taxes • √ Income Tax • Secondary Registration • Registration of (1) Books of Accounts, (2) Sales Invoices or Official Receipts, (3) POS/CRM Slide 10
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • Monitor Tax Compliance • Increased tax base • Increased tax payments • Enhanced voluntary tax compliance Slide 11
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • Whistle-Blowing Scheme • Whistle Blowing in the Philippines has been encouraged/implemented Slide 12
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • Tax Audits and Systematic Information Cross-checking • Tax audits and systematic information cross-checking for identifying non-registered taxpayers has been institutionalized Slide 13
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE • IMPACT OF SMALL BUSINESS FORMALIZATION Small Business Formalization Increase Collection Increase Taxpayer Base Thru Data-capture Slide 14
T C V D • BENEFITS OF DATA/INDUSTRY ANALYSIS Common Violations Noted Per TCVD: Regional / District Level • Data Analysis thru Inverted Pyramid Cluster 1 * Sister companies farm out invoices as source of input * Use of unregistered delivery receipts * Maintained a carry over input VAT Contribute 70-80% collections 1 Top 300 TPs Cluster s Cluster 2 * Use of unregistered sales invoices / official receipts & delivery receipts * Use of unregistered invoice, O.R. and POS or CRM * Paid VAT below non-VAT 2 20% coll. Top 1,500 Corp. TPs Registered taxpayers collection 10% coll. Corp. & Individual Taxpayers Cluster 3 * Rampant non-issuance of invoices or receipts * Use of unregistered invoice, O.R., delivery receipts or POS / CRM * Operating w/out business registration * No Books of Accounts 3 Underground TPs ? Slide 15
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE RR7-QUEZON CITY Year 2001 - 2008 Note: 2007 collection decreased due to delisting of taxpayers Slide 16
REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE CONCLUSION / RECOMMENDATION • Simplify Procedures and Compliance Requirements • Align Strategy and Operations • Manage Change Slide 17