Bureau of Internal Revenue
Republic of the Philippines

For the year 1999, the Bureau implemented various programs in order to enhance voluntary compliance and improve productivity. This resulted to the following major accomplishments which contributed to the improvement of the collection performance of the BIR:

ON ENHANCING VOLUNTARY COMPLIANCE

1. INCREASED COLLECTION

The following collection measures contributed to the increase of 1.23% in tax collection over the previous year:

Implementation of the Self-Assessment Program wherein the following initiatives were undertaken:

i ) Intensify the collection effort through voluntary compliance which resulted to the collection of P 341.320 billion.
ii) Expand the coverage of the large taxpayers monitoring system to include additional 300 large taxpayers effective May 2, 1999, thereby bringing to 500 the total number of large taxpayers covered by the system.
iii) Monitor the tax compliance of large taxpayers, which includes large excise taxpayers, resulting to a total collection of P 131, 978 billion which represents 38.67% of the total BIR collection for 1999.
iv) Monitor the collection and remittance of withholding tax by the government and private sectors as follows:

1. Government Sector

a) National Government Agents (NGAs) P 2.793 billion
b) Local Government Units (LGUs) P 575.813 million
c) Government-Owned and-Controlled Corporations (GOCCs) P 3.123 billion

2. Private Sector

a) Private companies ( re: implementation of CTRP)

Implementation of the Delinquent Accounts Program through the following activities:

i ) Intensify the collection drive on Delinquent Accounts which resulted to the collection of P 0.08 billion. Said collection resulted to closure of 5,937 cases.
Ii) Collection of taxes from stop/non-filers determined through the Taxpayer Record Update Program. In line with this, the Stop-Filer Capability (Returns Compliance System) was implemented in five (5) Revenue Regions and the Large Taxpayers Division which resulted to the collection of P 57.672 million.

Implementation of the Economic Recovery Assistance Payment (ERAP) Program which grants immunity from audit and investigation to taxpayers who have paid at least 20% more than the tax paid in 1997 for income tax, VAT and/or percentage taxes. The ERAP Program, which was implemented from February 26 until July 15, 1999, resulted to a total collection of P 21.186 billion from 92,107 tax returns filed by 74,745 taxpayers.

Monitoring the tax compliance of special industry groups through the institutionalization of new systems and procedures as follows:

i ) Centralized filing and payment system for insurance companies at a bank designated by the Insurance Commission (IC) which resulted to the collection of P 8.033 billion from 151 insurance companies.
ii) Direct remittance of tax payments by commercial and universal banks (CUBs) to the Bangko Sentral ng Pilipinas through Electronic Fund Transfer Instruction System. This resulted to the collection of P 42.789 billion from 55 Cubs
iii) Centralized filing and payment system for stockbrokers at banks duly designated by the BIR and the Philippine Stock Exchange (PSE). This resulted to collection of P 3.055 billion from 175 stockbrokers covered effective May 1, 1999.

Reconstitution of the Banks and Insurance Special Audit Team to continue with the investigation of banks and insurance companies with focus on the correct payment of documentary stamp tax, specifically on interbank call loans (IBCL), reverse repurchase agreements (RRP), special savings and trusts accounts. The team also investigated the correct and timely remittance of withholding taxes especially on interest paid on deposits and deposit substitutes and other benefits granted to bank officers and employees. As of December 1999, collections from banks, insurance and other financial intermediaries amounted to P 240.234 million with an assessment of P 27.398 billion.

Conduct verification of the 1997 tax liabilities of inter-related taxpayers with focus on the use of tax haven, foundation and other tax favored entities; inter-company loans and advances; inter-company financing; shifting of income and expenses to tax favored affiliates; and excessive allowances paid to major shareholders and directors not subject to withholding. This resulted to the collection of P 4.190 billion with an assessment of P 15.180 billion.

Implementation of the BIR-Land Regulatory Authority (LRA) Project in 7 Registers of Deeds in Metro Manila which resulted to the identification of 47 fake/spurious/questionable documents and total payment of taxes for Certificate Authorizing Registration (CAR) and Tax Clearance Certificate (TCL) documents amounting to P 152.854 million.

Conduct of audit of tax returns on selected taxpayers by the revenue District Offices through the issuance of RMO No. 67-99, which resulted to the collection of P 1.596 billion. Deficiency tax assessments amounting to P 9.107 billion have been issued involving 12,433 cases.

Implementation of Office Audit Program, pursuant to RMO No. 71-99 which prescribes the audit program in the Assessment Division of the Regional Offices. This resulted to the collection of P 785,573.48 from 149 cases since its implementation in October, 1999.

Conduct of quality audit of excise taxpayers, which resulted to the collection of P 33.180 million, and assessment amounting to P 4.843 billion. As a result of audit, tax evasion charges were field against one (1) oil firm with the City Prosecution Office, Pasay City.

Development of tax fraud cases which resulted to the collection of P 96.486 million from 140 cases and recommendation of 16 cases for insurance of Assessment Notice involving the amount of P 2.994 billion. Moreover, 25 tax fraud cases had been recommended for criminal prosecution.

2. BROADENED TAX BASE

Broadening of the tax base was undertaken through the following initiatives:

Resolution of fifteen (15) cases on real property valuation taken up by the Technical Committee on Real Property Valuation (TCRPV) and approved by the Commissioner of Internal Revenue. Moreover, several activities were undertaken to resolve issues on real properties and zonal valuation: i ) Conducted public hearings on zonal values in 12 districts.
ii) Acted on the requests/protests filed by 19 taxpayers/concerned citizens regarding revaluation or classification of real properties.
iii) Uploaded existing zonal valuation records in the National Office Database for National Office Management Information System (NOMIS) of the Integrated Tax System (ITS).

Continue with the intensification of the Taxpayer Record Update Program which resulted to the registration of 3,814,375 taxpayers.

3. INCREASED TAXPAYER’S SATISFACTION

The Bureau recognizes the need to increase the satisfaction of taxpayers as an effective approach to enhance voluntary compliance and intensify the public’s awareness of the country’s tax system through the following initiatives:

Processing of 786 claims for Vaule-Added Tax (VAT) credit/refund amounting to P 3.065 billion, approval of 706 claims for Tax Credit Certificates amounting to P 1.794 billion and issuance of 40 VAT refund claims amounting to P 140.620 million.

Conduct of performance audit to determine adherence to existing laws, rules and regulations, policies and procedures through the following activities:

i ) Issuance of Letters of Authority (LAs) and Revenue Verification Orders (RVOs) pursuant to RMO No. 36-99
ii) Issuance of Certificates Authorizing Registration (CARs) on transactions involving real properties pursuant to RMO No. 36-99.

Likewise, the conduct of performance audit on the implementation, the conduct of performance audit on the implementation of assessment programs and other assessment-related activities involving the Revenue District Offices (RDOs), Assessment and Special Investigation Divisions were undertaken in fifteen (15) Revenue Regions.

Monitor closely the performance of the Taxpayer Service Counter in each Revenue District / Regional Office nationwide to make sure that these counters are manned by competent personnel having the proper information materials and facilities to serve as a "one-stop-shop" servicing the taxpayers’ needs.

Conduct of Massive tax information and education campaign through external briefings on, among others:

i ) Forms
ii) Registration and Limited Bank Data Entry (LBDE) System
iii)Withholding Taxes
iv) Filing of Returns
v ) Year-end adjustment
vi) Salient features of the National Internal Revenue Code (NIRC)
vii) ERAP Program

Enhancement of BIR Forms incorporating the new provisions of the CTRP law resulting in the creation of 35 major external forms and 11 minor external forms. Coinciding with this activity, the Bureau conducted 10 Bureau-wide briefings for BIR personnel and 3 briefings participated in by taxpayers informing them of the new and revised tax returns and certificates.

Moreover, in order to ensure the sufficiency and availability of these BIR Forms, 8,768,615 sets of various forms were allocated and distributed to the regional and district offices nationwide.

Launching and implementation of the following BIR Raffle Promo to encourage and educate consumers to demand sales invoices/receipts:

i ) Humingi ng Resibo, Manalo ng Libo-libo – April 10, 1999
ii) Humingi ng Resibo, Milyun-milyon ang Panalo (BIR Anniversary Draw) – July 15, 1999
iii) Humingi ng Resibo, Milyun-milyon ang Panalo (Millennium Draw) –December 20, 1999

The effective implementation of the BIR Raffle Promo Program won the "National Gawad for Outstanding Public Information Program" and generated additional collection from VAT amounting to P 4 billion.

Issuance of 238,500 pre-generated TIN cards and 154,137 plastic TIN cards for both individual and business taxpayers.

1. Improved BIR Processes

In order to support the attainment of the Bureau’ s objective of enhancing voluntary compliance, several initiatives were undertaken in improving BIR processes:

Implementation of the Internal Audit Program to strengthen the internal control systems of the Bureau and improve the quality of performance of the different offices/divisions in the National and Regional Offices. Relative thereto, the following activities were conducted:

i ) Inspection of delivered goods and services to ensure that these delivered goods and services conformed with standards and specification stated in the contract and in accordance with the provisions of the General Accounting and Auditing Manual (GAAM). A total of 1,239 requests for inspection were acted upon.

ii) Mobilization of the Finance Division in the Regional Offices to conduct fiscal audit of cash, non-cash and other property accountabilities of revenue collection/accountable officers. As a result of the fiscal audit conducted, 14 cases of violations of existing Revenue Rules and Regulations on remittance of collections and the provisions of GAAM committed by the Revenue Collection/Accountable Officers were reported and appropriately acted upon.

iii) Creation of 57 Regional Internal Audit Teams (RIAT) to conduct spot-check of cash, non-cash and other property accountabilities of revenue collection/accountable officers in the region. A total of 15 revenue collection and accountable officers were found to have violated revenue rules and regulations out of the 954 revenue officers audited by the RIATs.

iv) Creation of 2 National Internal Audit Teams (NIAT) to conduct audit and inventory taking of obsolete BIR forms, pamphlets, other information materials and semi- expendable materials in the National Office as well as internal audit and inventory of non-serviceable properties such as equipment, vehicles, furniture and fixtures, and other properties for disposal. This resulted in the implementation of improved processes and procedures in handling the same.

Approval of the BIR organizational restructuring per EO No. 175 by President Estrada last November 3,1999 which focuses on the core operational functions of the BIR such as collection, assessment and enforcement, including regulatory functions relative to excise tax administration. It also aims to strengthen administrative control over large taxpayers.

The highlights of EO 175 included: 1) improved monitoring and administrative control of large taxpayers through the establishment of the Large Taxpayers Services in the National Office (NO) and Large Taxpayers Division in Regional Office with identified taxpayers; 2) centralized monitoring and service to excise taxpayers through the establishment of Excise Taxpayers Service in the NO; 3) improved collection of accounts receivable with the re-establishment of the Collection Enforcement Division under the Collection Service; 4) improved monitoring of availments of tax exemptions/ incentives through the establishment of Audit Information, Tax Exemption and Incentives Division; and 5) optimum utilization of resources with the consolidation of Financial Service and Administrative Service.

Conduct of BIR Annual Strategic Planning Session on November 4 to 7, 1999 for the formulation of the Bureau’s 2000 to 2003 Programs. Present during the Session were the Commissioner, Deputy Commissioners, Assistant Commissioners, Regional Directors and Revenue Data Center Heads. Also present were the top economic managers of the country, namely: Department of Budget and Management Assistant Secretary Laura Pascua, NEDA Director-General Felipe Medalla and Department of Finance Secretary Edgardo Espiritu. As basis in the formulation Bureau’s Strategic Plans, Commissioner Rualo gave the policy directions which included the strengthening of large taxpayers administrations, widening of the tax net through linkages with other agencies and third party information, raising BIR resources to a level required for effective tax administration. As a result of the Session, 14 priority Programs were formulated for implementation in CY 2000 which were prescribed through the issuance of RMO No. 84-99.

Implementation of the Information Technology (IT) Application and Tax Computerization which resulted to the following accomplishments:

i ) Implementation of the ITS Rollout Program to ensure the timely rollout of site and application systems, to wit:

ii ) Launching of the Makati Satellite Data Center in March, 1999 and the Office-Based Computerization Program in 2 RDOS of RR No. 7 last June 1, 1999.

iii ) Implementation of the network gateway between the BIR and Land Registration Authority (LRA), and Register of Deeds. To date, the BIR- LRA Project is being enforced in 14 Registers of Deeds.

iv) Conduct of the Y2K simulation activities wherein the BIR was given a Y2K readiness certification by the Presidential Commission on Year 2000 Compliance.

v ) Conversion of all Accredited Agent Banks using diskette transmission to Electronic Data Transmission.

Conclusion and signing of a tax treaty between RP-China in Beijing, China on November 18,1999. Likewise, 2 Tax Treaty negotiations were successfully concluded, namely: i) RP-Czech Republic on April 29,1999 in Prague, Czech Republic; and ii) RP-Turkey on May 7,1999 in Ankara, Turkey.

2. Well-Trained and Respected Workforce

In order to provide the BIR with a wide array of personnel development programs for an improved tax administration, several initiatives were undertaken as follows:

Conduct of various training programs which contributed significantly in enhancing the knowledge and skills of revenue personnel.

Furthermore, the BIR employees also participated in 26 training programs involving professional/technical courses conducted by private institutions and other government agencies.

Implementation of the BIR Scholarship Program participated in by a revenue personnel in foreign training grant abroad and the participation of 14 revenue personnel in the Local Scholarship Program of the Civil Service Commission.

Conceptualization of the Training Development and Delivery System (TDDS) of the BIR with the a assistance of the Deutsche Gessellschaft fur Technische Zusammernarbeit (GTZ). The system, which addresses the needs of the internal and external stakeholders of the Bureau, aims to provide an effective and efficient system in the development and implementation of all the training programs from the BIR personnel.

Participation of selected Bureau officials/ employees in observation tours conducted in different countries, i.e., New Zealand, Australia and San Salvador, to enhance their knowledge and skills and gain valuable/relevant experience in Human Resource Management.

Establishment of training centers/training rooms in Revenue Region Nos. 4-San Fernando, Pampanga, 7- Quezon City, 8- Makati City, 13- Cebu City and 19- Davao City.

Conduct of the nationwide Search for the 1999 BIT Tax Wizards which was participated in by 520 revenue personnel with Salary Grade of 17 and below. The Search, which was again conducted to keep the revenue personnel constantly abreast of the changes in tax laws, started with the elimination round wherein the Regional and National Office finalists were determined. The Grand Finals was held on July 29,1999 at the BIR National Training Center wherein 24 finalists competed for the top position. The results of the Grand Finals are as follows:

Implementation of the Personnel Integrity Program through the conduct of the quantity investigation of administrative cases involving erring revenue personnel. This resulted to the filing of 54 formal charges against BIR Personnel, to wit:

Corollary to the Formal Charges issued, 26 Preventive Suspension Orders were issued to erring revenue personnel.

Instituted administrative cases against erring revenue personnel, which resulted in the prosecution of 49 personnel. The breakdown of penalties imposed is as follows:

3. World – Class Working Environment

In spite of the cost-cutting and austerity program and austerity program of the government, the Bureau implemented the following measures in order to provide a good/world-class working environment for its workforce:

Implementation of the Preventive Maintenance Program which involves repair of BIR building, equipment, vehicles and facilities.

Implementation of the Disposal Program wherein different unserviceable vehicles and properties are disposed through sale or donation to institutions in need of said vehicles and properties. Moreover, 5,049 pads, 3,317 sets of obsolete, damaged and cancelled accountable forms, 62,585 pieces of obsolete video tape and 9,800 pieces of cancelled documentary stamps were disposed.

Conduct of Records Management, which resulted to the disposal of about 7,423.07 kilos of valueless records which generated the amount of P 21,212.75 for the Bureau.

Operation of the Bureau’s in-house printing using the newly-acquired printing machines and equipment which can print non-carbonized forms, posters, books, calling cards and other printed materials. For 1999, the BIR printing office has printed 1,615,850 copies of BIR Forms and other materials.

Provision of compensation benefits to the Bureau personnel, namely: i ) 1998 Productivity Incentive Bonus;
ii) Loyalty Cash Award;
iii) Year-End Bonus and Cash Gift;
iv) Anniversary Bonus;
v ) Clothing Allowances;
vi) Mid-Year Bonus and Cash Gift; and
vii) Additional Compensation Allowance (ACA).

Implementation of the Oplan Linis-Libro Program which aims to clear the BIR books of accounts with regards to settlement of outstanding cash advance, reversion of outstanding accounts payable, settlement of notices of suspensions and disallowances and reconciliation of the Bureau’s equipment against the books:
i ) Liquidation of 89 outstanding cash advances in the amount of P 16.705 million.
ii) Settlement of 26 notices of suspensions and disallowances in the amount of P 18.336 million.
iii) Conduct of physical inventory and reconciliation of 225 equipment in the amount of P5.735 million.
vi) Settlement of 8,791 money claims in the amount of P 1.470 billion.
v ) Settlement of 5,073 tax refunds in the amount of P 124.250 million.