Let’s Talk Tax
By Philip Conrad D. Vales
“What love can be purer and greater than love of country? What love? No other love, none.”
“A nation will perish, because not of evil men, but of good men who just watch and did nothing.”
These lines may sound as if they were written by career novelists for their protagonists’ speeches in their best-selling books. You may think that the eloquence of these texts may be regarded only as fictional — that it could not have been expressed in real life by actual people.
Well, you are mistaken. These powerful words were from our very own Andres Bonifacio and Apolinario Mabini, respectively. Our heroes. For sure, they would have been law-abiding citizens and advocates for progressive policies for the benefit of many.
But is it possible to identify present-day heroes, particularly in our tax system? Let us look at each of our three branches of government.
The main concern of taxpayers is the immediate passing of the general tax amnesty bill. When the tax amnesty bill is enacted, our legislators can be the heroes saving taxpayers from distress. Do recall that when the current tax amnesty law was approved, the general tax amnesty portion was vetoed and what remained were the reprieve provisions on estate tax and delinquent taxes.
The 18th Congress commenced with its sessions this month, and two bills are now pending in the House of Representatives attempting to give the general tax amnesty provision a hero’s comeback. House Bills No. 191 and 3671 are with the House’s Committee on Ways and Means. A noteworthy development is that both bills incorporated the relaxation of the bank secrecy law, which could pave the way for the passing of a general tax amnesty bill.
We hope that the new tax amnesty law comes into effect within the year. If this happens, taxpayers will rejoice like persons in distress saved by their knights in shining armor — our Congress.
Under the executive branch of government, we have the Bureau of Internal Revenue (BIR), the government’s tax collection and enforcement arm.
We hope that the BIR continues to revisit its policies and procedures. For one, many taxpayers were happy when the Notice of Informal Conference (NIC) Stage was revived, since it resulted in additional time for the BIR and taxpayers to discuss the latter’s accounting procedures and recording processes. Consequently, the number of initial tax findings by the BIR is now lower compared to when the NIC Stage was removed. Nonetheless, many taxpayers hope that the BIR audit/examination procedures prior to the NIC Stage are revisited and improved.
Another area needing a movie-like “training montage” is the BIR’s processing of ruling applications. BIR ruling applications are vital processes for certain commercial transactions that would make use of available exemptions. Sadly, a disadvantage of applying for a BIR ruling is the unpredictable processing time for these issuances.
Looking at the last few issuances, though, it could be noted that the BIR has been continuously listening to the clamor of taxpayers. Continuous improvements for a streamlined and effective tax processes would indeed make the BIR a hero.
Taxpayers look upon our courts as the arbiter of their disputes with the BIR. Some consider our judiciary as the savior from certain unreasonable tax assessments made by the BIR.
Recent developments include court decisions recognizing the importance of a letter of authority (LoA) before a BIR examiner can proceed to audit a taxpayer. According to recent jurisprudence, a mere indorsement letter is not an LoA and does not grant authority to a revenue officer. Hence, actions taken pursuant to a mere endorsement letter are void. The courts recognize that an LoA is indispensable to protect the taxpayers from an invalid assessment by unauthorized persons.
Of course, there are also cases decided against taxpayers where a tax violation was proven to the court.
Impartiality is a key characteristic of any arbiter and, most importantly, to a hero.
Certainly, we taxpayers have our own obligations to the government.
In our own way, we are heroes ourselves. Our taxes are the lifeblood of the government. Without our contributions, government services may decrease — or worse, discontinue. This is why keeping ourselves abreast of the developments in our tax laws and paying the proper taxes will gain us hero points.
Each peso we contribute to government use brings us closer to hero status. Celebrate yourself this coming National Heroes Day! This day was established in recognition not only of well-known heroes like Andres Bonifacio and Apolinario Mabini, but also of unsung heroes who have contributed to society in their own way.
As nationalistic as our national heroes were, they would have strived to pay the proper taxes and advocate for tax reform that would better serve the country, whose freedom they fought tooth and nail to secure. So should we.
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
Philip Conrad D. Vales is a tax associate of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.