MANILA, Philippines – Six big business groups have collectively expressed opposition to a Bureau of Internal Revenue (BIR) regulation requiring taxpayers to submit a detailed income report starting next April, in addition to their income tax return.
Their stand is contained in a joint position paper submitted to the House committee on ways and means, which conducted hearings on the regulation upon the request of Valenzuela City Rep. Magtanggol Gunigundo.
Officers of the Philippine Chamber of Commerce and Industry, Tax Management Association of the Philippines, Management Association of the Philippines, Employers Confederation of the Philippines, Philippine Exporters Confederation, Inc., and Financial Executives Institute of the Philippines signed the position paper.
The controversial BIR regulation compels taxpayers, whether individual or corporate, to declare earnings which in the past were not required to be disclosed.
These include interest income, royalties, dividends, and gains from the sale of shares of stock and real estate. These earnings are subject to a final tax. In the case of interest income, the final tax is 20 percent.
The new rule explicitly warns taxpayers that they could be prosecuted for perjury or for making a wrong declaration if they don’t report all their earnings or if they make an inaccurate report.
In their joint opposition to the regulation, the six business groups said the reporting requirement violates the National Internal Revenue Code, which exempts certain taxpayers from filing an income tax return, in which they declare their income.
These taxpayers include those receiving purely compensation income, those from whose earnings the corresponding tax has been correctly withheld and those whose sole income has been subjected to a final tax.
The business groups said the reporting requirement is redundant since tax collecting or withholding agents such as banks are required under the law to report to the BIR the amount of taxes they withheld from their clients.
The report would just be an unnecessary burden on millions of taxpayers, they said.
Banks, represented by the Bankers Association of the Philippines, have also opposed the reporting regulation, citing the “administrative nightmare” they might have to go through, referring to millions of certifications they would have to issue to their depositors indicating their interest income.
Last Tuesday, when the House ways and means committee last met, Cagayan de Oro City Rep. Rufus Rodriguez articulated the sense of his colleagues against the reporting requirement.
“It violates our people’s right to privacy, it contravenes the Bank Secrecy Law and it is against our country’s interest as it will scare away bank depositors, savers and investors,” he said.
The collective opposition of lawmakers and business groups to the regulation prompted Finance Secretary Cesar Purisima to make the detailed income declaration optional on the part of taxpayers.
Purisima told the ways and means committee that the targets of the reporting rule are professionals and self-employed individuals, who, he said, paid only an average of P5,600 each in income tax in 2010.
“That means that they are making less than what ordinary workers earn. If each of them pays an additional P100,000, which they can easily afford, the government will have P150 billion more for social services,” he said.
He said the government would find other ways of collecting more taxes from this particular group of taxpayers, including “testing” the optional detailed income report on them.
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By: Jess Diaz
Source: The Philippine Star, December 10, 2011
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