The BIR Master Plan

By Wilfredo U. Villanueva

First Published in Business World (1/28/2014)

National elections are just around the corner but the polls are the least of the Aquino administration’s more immediate concerns. Understandably, it wants to focus on instituting more reforms in the remaining two-and-a half years, or at least initiating changes in areas of governance that need improvement.

It is in this context that the Bureau of Internal Revenue (BIR) recently issued a Reform Master Plan (2013-2016). As with their counterparts in the private sector, the BIR deemed the start of the new year the opportune time to launch a portfolio of projects. Issued in October 2013 but only recently released, Revenue Memorandum Order (RMO) 29-2013 enumerates the BIR’s flagship projects aimed at vastly improving tax administration, particularly in dealing with requirements of taxpayers and in the filing, payment, and collection of taxes.

While enhancement programs are not new to the BIR, the current leadership has opted to establish a master plan which, hopefully, will be the blueprint for projects of its successors. The reform master plan also seeks to strengthen accountability within the Bureau by appointing specific project sponsors and managers; there is even a reform steering committee that approved the project lineup in September, after consulting the Deputy Commissioners and Assistant Commissioners.

Prior to RMO 29-2013, Commissioner Kim Henares already laid down her six-year strategic plan for 2011-2016. She also published her priority projects for 2013 and 2014. In October, she likewise released the BIR’s framework for information systems, which is “designed to identify critical Information Computer Technology (ICT) projects that will support and address the Bureau’s strategic thrusts and programs.” The reform master plan is largely a consolidation of all these action plans as well as other emerging priorities of BIR’s top management.

There are 31 ongoing projects included in the reform master plan and 13 new ones proposed to be included in the pipeline.

The projects are focused on seven areas of tax administration, namely: taxpayer service; registration; filing and payment; audit; collection enforcement; legal/enforcement/internal affairs; and support.

In this column last November 25, we discussed how the BIR institutionalized the online filing and payment systems and the benefits it has reaped in its decision to harness computer technology. The BIR website now gives taxpayers access to various online registration, filing, and payment systems for internal revenue taxes. These include the Electronic Registration (eReg), Electronic Accreditation (eAccReg), Electronic Filing and Payment System (eFPS), Electronic BIR Forms (eBIRForms), Electronic Reconciliation of Listings for Enforcement (eRELIEF), Electronic Sales (eSales), Electronic Submission (eSubmission), Electronic Official Record Book (eORB), and Electronic Documentary Stamp Tax (eDST).

Given the convenience afforded to taxpayers, the BIR plans to extend the use of electronic systems to the issuance of the Certificate Authorizing Registration (CAR) by introducing the eCAR, and to adopt an Online System for Transfer Tax Transactions (eOSTTT). In addition, the BIR proposes to come up with an Electronic Tax Information System (eTIS) to complement its Integrated Tax System (ITS).

Notably, the BIR is working double time to implement these projects, which are part of the Bureau’s commitment for the Asia-Pacific Economic Cooperation (APEC) meeting that the Philippines will host next year.

If successfully adopted, the eCAR may help curb the reported rampant transfer of properties without securing the required CAR and Tax Clearance since the web-based system will allow for the automated generation of the barcoded eCARs. For the BIR, the system can address revenue losses arising from spurious certificates issued for one-time transactions. Eventually, the BIR will also use the database to audit these transactions.

For taxpayers, the eCAR may help facilitate the conveyance of land and shares of stock. Under the current practice, for instance, after the requisite estate tax has been paid on the properties of a non-resident decedent, the Revenue District Office in Quezon City is required to fax a copy of the CAR to the BIR office which has jurisdiction over the real property for transfer to the heirs. The local BIR office is also tasked to certify the CAR for presentation to the Register of Deeds. Under the proposed system, the barcoded CAR can be readily presented to the Land Registration Authority and other concerned offices. The eCAR will also enable the government to continually update its zonal valuation database.

The eOSTTT, on the other hand, is a facility that will enable taxpayers to file their transfer tax transactions online. The system, which has a capability for automated computation of tax due and generation of tax returns, complements the eCAR project.

Also on the list of ongoing projects is the implementation of a Tax Ruling and Case Management System (TRCMS), where the BIR will have a central database of all issued rulings and pending cases. With this system, the Bureau can easily confirm whether a particular issue is the subject of an ongoing tax case, or if the issue has been the subject of a previous request for ruling.

In the area of collection enforcement, a major project involves the establishment of a Centralized Arrears Management to monitor all delinquent accounts.

Among the proposed projects, it is believed that the payment of taxes through credit cards will have the most impact among taxpayers, in terms of increasing the ease of payment of tax liabilities. Implementation details are expected to be released once the BIR has finalized arrangements with credit card companies. The BIR is also looking at endorsing delinquent accounts to collection agencies to cut down on administrative costs and to allow its personnel to further focus on improving its tax services.

The BIR is also studying the feasibility of online accreditation of importers and brokers, and online submission and processing of applications for tax clearance for bidding purposes. Closer to home, the BIR plans to implement an eLearning program for its personnel.

To non-believers, the BIR’s Reform Master Plan may seem overly ambitious in the breadth and scope of changes that it proposes to make. However, even if the BIR may not be able to achieve the ambitious program in a short time and in one fell swoop, it should nevertheless be lauded for taking that crucial first step towards the right direction.

Wilfredo U. Villanueva is the Tax Deputy Head of SGV & Co.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.