BIR watching big-ticket items for tax compliance
Multimillion-peso transactions involving "big-ticket items" will be put under intense scrutiny by tax officials in an effort to determine whether the correct taxes have been paid.
"It is to the interest of both the taxpayer and the Bureau of Internal Revenue (BIR) that the circumstances and the details of ‘big-ticket items’ are immediately evaluated by the BIR for determination of what should be the proper tax treatment," states Revenue Memorandum Order 11-2010 dated February 2 and signed by tax chief Joel Tan-Torres.
Big-ticket items — defined as costing over P200 million — "can result in a treatment that requires the payment of taxes or may result in the exemption from taxation of a portion or the entire transaction."
In a text message, Tan-Torres said the P200-million threshold "was the consensus [of] senior tax officials." It will apply to single transactions.
The memo instructs the heads of the Large Taxpayers Service’s Regular and Excise units and of the Enforcement Service to write taxpayers requesting documents on these big-ticket items.
Prior to writing, they are to scour newspapers or monitor television news, the Websites of taxpayers and disclosures to regulators, among others, for information about these large transactions
Upon submission by taxpayers of the required documents, the heads of the three offices will check if taxes were paid correctly and on time, or whether there was tax avoidance.
They will draft a report to Tan-Torres about their findings. In case there is need for more investigation, tax officials will go through the books of taxpayers or conduct short audits.
Taxpayers who refuse to furnish the BIR the requested documents will be sanctioned, the memo said.
Tan-Torres declined to say how much additional taxes they expect to collect from the initiative, saying it was "hard to quantify."
"The benefits, however, are assured, such as timely monitoring of transaction and the tax consequence after these arise, prevention of aggressive tax planning on these transactions and more transparency on these significant items," he said.
The BIR must collect P830 billion this year. An unofficial tally showed that collections for January reached P59.4 billion, more than its P56-billion target.
The BIR order provides examples of big-ticket items. A retirement program for 30 executives, which entails the payment of P20 million per executive for a total of P600 million, is considered one. The sale of shares for the first time where at least P300 million is raised is another.
"A transaction is also a [big-ticket item] if this involves a request for ruling filed with the BIR where the amount of the transaction is over P1 million," the order states. — BusinessWorld
"It is to the interest of both the taxpayer and the Bureau of Internal Revenue (BIR) that the circumstances and the details of ‘big-ticket items’ are immediately evaluated by the BIR for determination of what should be the proper tax treatment," states Revenue Memorandum Order 11-2010 dated February 2 and signed by tax chief Joel Tan-Torres.
Big-ticket items — defined as costing over P200 million — "can result in a treatment that requires the payment of taxes or may result in the exemption from taxation of a portion or the entire transaction."
In a text message, Tan-Torres said the P200-million threshold "was the consensus [of] senior tax officials." It will apply to single transactions.
The memo instructs the heads of the Large Taxpayers Service’s Regular and Excise units and of the Enforcement Service to write taxpayers requesting documents on these big-ticket items.
Prior to writing, they are to scour newspapers or monitor television news, the Websites of taxpayers and disclosures to regulators, among others, for information about these large transactions
Upon submission by taxpayers of the required documents, the heads of the three offices will check if taxes were paid correctly and on time, or whether there was tax avoidance.
They will draft a report to Tan-Torres about their findings. In case there is need for more investigation, tax officials will go through the books of taxpayers or conduct short audits.
Taxpayers who refuse to furnish the BIR the requested documents will be sanctioned, the memo said.
Tan-Torres declined to say how much additional taxes they expect to collect from the initiative, saying it was "hard to quantify."
"The benefits, however, are assured, such as timely monitoring of transaction and the tax consequence after these arise, prevention of aggressive tax planning on these transactions and more transparency on these significant items," he said.
The BIR must collect P830 billion this year. An unofficial tally showed that collections for January reached P59.4 billion, more than its P56-billion target.
The BIR order provides examples of big-ticket items. A retirement program for 30 executives, which entails the payment of P20 million per executive for a total of P600 million, is considered one. The sale of shares for the first time where at least P300 million is raised is another.
"A transaction is also a [big-ticket item] if this involves a request for ruling filed with the BIR where the amount of the transaction is over P1 million," the order states. — BusinessWorld
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