At last, expanded relief from tax evaders

           Who says that the Bureau of Internal Revenue (BIR) is not doing its best to combat rampant tax evasion?

Anyone who thinks the BIR doesn’t mean business in going after tax evaders must be barking up the wrong tree, says Deputy Commissioner Estelita Aguirre, the agency’s main person in charge of the Reconciliation of Listings Enforcement (Relief) System.

Relief is the BIR’s main weapon to pin down the hundreds of thousands (or probably millions) of iron-faced corporate and individual tax evaders in the Philippines.
          Relief was formulated to provide nationwide comprehensive control and monitoring at the BIR central office, where transactions between taxpayers’ summary list of sales and purchases are processed and matched against their declarations in their value added tax (VAT) returns.
         
Relief vs ‘leaks’
          Relief is the BIR’s answer to critics who claim that the system is full of “leaks”.
          Admittedly, the BIR constructs audit trails via the VAT’s input-output feature of matching invoices and receipts of actual sales against purchases, but this is being done on a very limited scale at the Revenue District Office (RDO) level.
          First implemented in 1997 under then BIR Commissioner Liwayway Chato, the laborious system has now moved from a semi-manual process into a high-tech, foolproof mechanism that will prompt every taxpayer to declare accurate taxes.
          BIR’S system used to be handled by 40 encoders who manually consolidated and matched, sales, importation and purchases. “Every time they discovered discrepancies, they went to the warehouse, found the submitted documents and compared them to the original forms,” Aguirre says.
          She admits that because the manual system was slow in tracking tax misdeclaration and under-declaration, the agency wasn’t able to do anything to recover billions of pesos of mis- and under-declared tax dues.

Where’s the money
          According to Aguirre, the manual system was able to track down P3 billion worth of under-declaration and misdeclaration. “That enormous amount prompted us to develop a perfect system,” she says.
          It was in 2002 when the agency was able to improve the system. Now a computerized processing of summary of sales and summary of purchases replaces the encoders who did the task manually.
          The more efficient process soon yielded a discovery of an additional P6 billion worth of misdeclared and under-declared tax all over the Philippines. Sadly, however, none of these tax evaders was prosecuted.
          In June 2003, an even-more improved version of the system emerged upon orders of Commissioner Guillermo Parayno. The present version, which is all-computerized, eliminates human intervention.

          “It’s like a cycle that we were able to perfect because of eagerness to plug the leaks in VAT collection,” explains Aguirre.

Sophisticated

          The current version, now called “Expanded Relief” because of its sophisticated features, cost the BIR P3.5 million to develop. Expanded Relief requires electronic transmission and matching of all the lists of sales, importation and purchases.
          Under the current mode, VAT taxpayers submit a summary of sales, purchases and importations in diskettes. Submitted diskettes are then uploaded into the Relief server, called the Integrated Tax System.
          The ITS provides data from the VAT returns of taxpayers and then matches their records automatically. Once any of the submitted summaries don’t match with any of the entries, a transmission of the discrepancy is automatically sent to the RDO, where it is committed for verification.
          Aguirre points out that aside from tracking millions of pesos in discrepancies, another good result of the system is educating the taxpayers not to take their tax identification number (TIN) for granted.

          The official says, the BIR found out that many taxpayers submitted wrong TINs, which required taxpayers to rectify the error. “Whether  it was due to negligence or carelessness, we were able to find out that many taxpayers are not careful when it comes to writing their TIN,” she says.

Low fine

          One of the reasons why the country’s clampdown on tax evaders is not as successful is the very low fine imposed on tax evaders.

According to the tax law, a 30% tax mis-declaration is punishable only by p25,000 fine plus a jail term of not more than four years upon the discretion of the court.
          Lucky tax evaders can remain scot-free even if they are convicted if they apply for probation. This is the sole reason why big-time tax evaders are a rare species in jail, according to Aguirre.
          Whether Expanded Relief can put an end to tax evaders’ happy days remains a big question. Since the implementation of the system last year, the BIR has already filed seven big tax under-declaration cases amounting to more than P9.2 billion.

          This is just the tip of the iceberg, as the BIR further discovered P149.13 million worth of tax discrepancies in July 2002 and P106.93 million in June 2002 alone.

          Data obtained from the agency reveals that the majority of those in the large taxpayers’ bracket deliberately cheat the government in the form of tax  discrepancies ranging from 31%-92%.

          One of the 12 taxpayers found cheating the government in June 2002 had P55,656,433.28 worth of due taxes, but only declared P19,333,191.83. The difference was a whopping P36,323,241.45.

          According to Deputy Commissioner Licerio Evangelista, head of the BIR Prosecution Group, the agency needs the help of other government agencies to be able to send at least one big-time tax evader in jail.

Big tax evaders in jail zero

          Just recently, Evangelista’s office filed seven big tax evasion cases amounting to over P9.2 billion at the Department of Justice (DOJ).

          Charged were Goldwell Construction Supply for gross under-declaration of sales (P389,532,113.35), Cellpage International Corp. for non-declaration of sales (P4,316,319,881), Synergy Distribution Inc. for gross under-declaration of sales (P615,430,629.60), TID International Inc. for gross under-declaration of sales (P410,074,525), L.M. Camus Engineering Corp. for failure to pay VAT income and withholding tax (P630,164,631.61), Eastpoint Marina for non-declaration of sales of condominium, and Ackers Philippines Inc. for gross under-declaration of sales (P3,285,841,077.26).

          The Expanded Relief program is not yet completely successful. Last March 2, the Metropolitan Trial Court of Manila Branch 23 issued an arrest warrant for Chi Weng Neng and Gigi Amorin of TID International but to no avail. The two were charged in their capacity as general manager and corporate secretary of TID, respectively. As Evangelista claims, Justice Undersecretary Manuel Teehankee even formed a special task force to handle the huge tax cheating cases.

Source: PHILIPPINE GRAPHIC