Tax managers are seeking further amendments to the Tax Code, which are aimed at making the issuance of implementing rules and interpretations by the Bureau of Internal Revenue (BIR) more predictable.
In a statement, the Tax Management Association of the Philippines Inc. (TMAP) said it was proposing a new set of amendments to the National Internal Revenue Code of 1997 to “address significant taxpayer issues arising from the sudden, radical change in interpretation by the BIR.”
“It has been observed that the Department of Finance (DOF) and/or the Bureau of Internal Revenue have released numerous issuances which ‘re-interpreted’ certain provisions of the Tax Code, resulting in unauthorized administrative legislation which, apart from undermining the rule of law, are unjustly onerous and oppressive to taxpayers. These administrative legislation mark a significant departure from long-established best practices that have guided both the taxpayers and the BIR in the interpretation and implementation of tax laws,” TMAP said in a draft bill on Tax Code amendments that it had submitted to Congress.
“According to affected sectors, the administrative legislation of the DOF or the BIR has deleterious effects on businesses, and is a disincentive for local and foreign investors who are unable to rely on a fair, reasonable, consistent, and stable tax system,” the group added.
In the draft bill, TMAP wanted the section on the “Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases” to have the following phrase inserted: “Any circular, order, memorandum or similar issuance of general application made by the Commissioner pursuant to his exclusive and original power to interpret tax laws under this section shall not be operative until after due public notice and hearing and publication in accordance with existing laws are strictly observed.”
According to TMAP, such amendment “will ensure that proper consultation and due process are observed by the [BIR] Commissioner in the exercise of his power to interpret tax laws.”
The BIR and industry groups, including TMAP, had been at odds over various rules issued by the agency, as their interpretations have varied.
Under the same TMAP proposal, the issuance of tax rules and regulations by the DOF secretary likewise “shall not be operative until the requirements of public notice and hearing and publication… are strictly observed.”
TMAP’s proposed amendments to the Tax Code also include codifying “long-standing interpretations upheld by past BIR administrations, such as the deductibility of expenses, protesting assessments, appeals process on VAT (value-added tax) refund claims, and preservation of books of accounts.”
Also part of TMAP’s proposal was the strict implementation of a system that provides for the payment of VAT refund claims within the mandatory 120-day period. Ben O. de Vera