Stop bribing BIR examiners

“Even if you pay the right taxes, the Bureau of Internal Revenue (BIR) will still audit and assess you to pay more taxes.” Agree? Undeniably, this is a common sentiment among taxpayers which has resulted in lower voluntary payments.

It’s either they allocate a “budget” to compromise their tax assessments, or they get away with not paying the right taxes due to the culture of corruption embedded in our tax system—where both tax collectors and taxpayers are involved.

Commissioner Caesar Dulay acknowledged the corruption in our tax system during the launch of the Seal of Honesty (SOH) Certification Program last May 31.

He thus asked the help of the taxpayers to promote a culture of integrity and honesty to fight the culture of corruption in BIR.

However, there’s more to this than meets the eye. We have an inefficient tax system due to a very narrow taxpayer base, high compliance costs and low voluntary compliance among the self-employed and professionals.

And the ongoing audit and investigation of BIR is not helping at all.

In fact, less than 2 percent of the total collections is contributed by payment of deficiency taxes from the assessment of BIR examiners.

This means that even if we stop the annual audit, as long as we encourage voluntary compliance especially from large taxpayers, we can collect taxes to fund the social services and infrastructure projects of the government.

Further, the BIR audits practically the same companies every year.

Ironically, their tax assessments are getting higher despite the fact that they get audited every year.

Aren’t we supposed to improve the compliance of taxpayers through audit?

As a former BIR examiner, I know exactly what happens the moment a Letter of Authority (LOA) is served to a taxpayer. It’s either they “cooperate” or they get a huge assessment.

However, the moment you start “cooperating” they keep coming back not just with higher assessment but higher bribe money while you remain non-compliant with lower voluntary compliance.

What’s the real risk? Even if they audit a company every year, if the Commissioner finds prima facie evidence of tax fraud, a company may still be subject to investigation and worst, a tax evasion case.

I agree with the Department of Finance’s estimate that we can collect at least half a billion pesos more from just improved tax administration.

However, we cannot leave everything to the government.

As we always say, if we want a better Philippines, we need to be better citizens, better taxpayers.

As responsible citizens, we need to pay the right taxes. But honest tax payment may not be enough. We need to demand honesty as well from our business partners, employers/employees, suppliers, customers and even government.

In this regard, BIR in partnership with the Center for Strategic Reforms of the Philippines (CSR Philippines), launched the Seal of Honesty (SOH) certification program to promote a culture of integrity and honesty in paying taxes.

Commissioner Dulay believes that to fight the culture of corruption, we need to promote a culture of integrity and honesty.

First, we need to pay the right taxes. Then, stop bribing BIR examiners!

Here are some frequently asked questions about SOH certification program:

1. What is the Seal of Honesty Certification Program?

Seal of Honesty (SOH) is a certification program spearheaded by CSR Philippines in partnership with the Bureau of Internal Revenue (BIR) and the Department of Trade and Industry (DTI) to promote a culture of honesty and integrity in paying taxes. SOH supports and complements the Integrity Pledge of the Integrity Initiative (II), signed by professionals and corporations for ethical and corporate good governance.

2. Who is CSR Philippines?

Center for Strategic Reforms of the Philippines Inc. (CSR Philippines) is a non-stock, non-profit and non-government organization which aims to help Micro, Small and Medium Enterprises (MSMEs) find a solution to concerns such as low productivity and competitiveness and lack of access to new technology.

3. Who can apply?

All taxpayers, both individuals or corporations, may apply to get SOH especially:

a. The self-employed and professionals;

b. Family businesses, regardless of size and industry; and

c. Those being audited by BIR regularly.

4. What are the criteria to qualify?

Individual and corporate taxpayers who will subscribe to the certification program will commit to:

a. settle all open cases and pending assessments;

b. observe full and honest compliance to all BIR regulations and requirements at all times;

c. sign the Integrity Pledge to promote and uphold honesty and integrity in paying taxes, and in dealing with all government agencies, customers and suppliers without compromises;

d. commit not to bribe or to stop bribing BIR examiners;

e. increase their voluntary compliance by at least 20 percent in total tax payments for those who are regularly audited by BIR, based on the level of their compliance.

5. What are the benefits of subscribing to the certification program?

Upon confirmation of the Evaluation Committee under the Office of the Commissioner of Internal Revenue and approval of the Board of Accreditors, the following incentives will be extended to certified taxpayers:

a. Issuance of annual tax clearance, without prejudice to information not available at the time of issuance

b. Last Priority Audit

c. Other privileges which DTI and other government agencies may also extend to certified honest taxpayers —CONTRIBUTED