strategies for widening the tax net - ways to promote/enforce the registration of hidden taxpayers...

INTERNATIONAL TAX DIALOGUE(ITD) ASIA CONFERENCE

The Peninsula Hotel, Makati CityMarch 3, 2010

STRATEGIES FOR WIDENING THE TAX NET - Ways to Promote/Enforce

the Registration of Hidden Taxpayers

By:

NESTOR S. VALEROSOOIC – Assistant Commissioner

Large Taxpayers Service – Regular

Bureau of Internal Revenue, Philippines

Two (2) Taxing Authorities :

1. Local government under the Local Government Code, RA 7160, and

2. National government under the National Internal Revenue Code, RA 8424 as amended.

BACKGROUND:

REPUBLIC OF THE PHILIPPINESDEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Slide 2

Government Documents as Prerequisite for Business Registration at the Bureau of Internal Revenue

1. For Single Proprietorship - Certificate of registration of business name with the

Department of Trade and Industry (DTI)

2. For Corporation - Securities and Exchange Commission (SEC)

Registration Certificate



Slide 3

MSE Issues

Many Micro and Small Entrepreneurs or Single Proprietorships go into business without the formalities of registration.



Slide 4



Strategies to Promote/Enforce the Registration of Hidden Taxpayers

Design of MSE Tax Registration Campaign(Philippine-BIR Experience)

Slide 5

I. Intensive Tax Information Drive



Slide 6

Making the Public Know Avail of the services of print, television and broadcast

media Regional and district offices conduct tax information

drive per industry Tax assistance personnel at the District are trained to

process/facilitate taxpayers registration

Objectives:

a. Expand data base – capture unregistered taxpayers into the tax net

b. Enhance voluntary tax compliancec. Giving assistance or information drive on taxpayer’s

compliance requirement



Slide 7

II. Tax Mapping Operationsor the Tax Compliance Verification Drive (TCVD)

Tax Mapping Operations or the TCVD

Process:



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a. District area divided into tax zones

b. Each Tax Zone assigned to Revenue Officers

c. Conduct of tax mapping saturation drive by Revenue Officers:1. On-the –spot determination of taxpayer’s compliance2. Fill-up data on Taxpayer Information Sheet3. Issue reminder letter to taxpayers on their violations4. Apprehend unregistered invoices/receipts found in the

premises including unregistered POS/CRM5. Issue BIR printed receipts (BPR) 6. Require unregistered taxpayers to register in 24 hours

9

.

TCVD - AS COLLECTION INITIATIVES

Produces revenue impact thereby improving voluntary compliance by registered taxpayers

TAX INFORMATION SHEET BUREAU OF INTERNAL REVENUE

Revenue Region No. ____Revenue District Office No. _____

Group No. ____ Tax Zone _____Area Team No. _____ Sticker No. ______

TAX INFORMATION SHEET

1. Name of Taxpayer Address Occupation_________________________ ___________________________ _________________TIN: ____________________Business Trade Name: ________________________________________________________Business Address: _________________________________________ Tel. No. __________

2. Name of Spouse / Pres. Of Corp. Occupation Address_________________________ ___________________________ _________________TIN: ____________________

3. Number of Qualified Dependents: ______________________4. VAT [ ] Non-VAT [ ]5. Date Business Started: ____________________6. Motor Vehicle Owned

_______________________________________ Business Connected [ ] Personal [ ]7. Sources of Income: Est. Annual Gross Receipts/Gross Income:

_____________________________________ __________________________________8. Internal Revenue Tax Compliance:

a. Space Rented? Yes [ ] No [ ] From Whom? _____________________ Amount _________ Subject to EWT? Yes [ ] No [ ] Other Expenses Subject to EWT _________________________ Amount ______________________ Date Started _______________b. No. of Employees: _____ Subject to WT [ ] _______ Exempt from WT [ ] ________

9. Has Books of Accounts? [ ] Yes [ ] NoRegistered? [ ] Yes [ ] NoBooks Kept Where? [ ] Office [ ] BookkeeperUses Invoices / Official Receipts? [ ] Yes [ ] NoRegistered? [ ] Yes [ ] NoUses Cash Register Machines? [ ] Yes [ ] NoRegistered? [ ] Yes [ ] NoWhat Kind? __________________________________________________________________________

10. Name and Address of Accountant / Bookkeeper:_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Remarks: __________________________________________________________________________________

_______________________________ Interviewed By:Signature of Taxpayer _________________________________Date: __________________ Date: __________________

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a. Primary Registration Enter into a Memorandum of Agreement (MOA) with the

Local Government Unit for a one-stop-shop registration of businesses.

Require taxpayers to undergo a one-hour Tax Briefing, before the awarding of the Certificate of Registration

(1) Secondary registration(2) Yearly and monthly tax compliance for

√ VAT/Percentage Taxes √ Withholding Taxes √ Income Tax



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III. Proper Execution of Tax laws on Registration

b. Secondary Registration

Registration of (1) Books of Accounts, (2) Sales Invoices or Official Receipts, (3) POS/CRM



• Increased tax base

• Increased tax payments

• Enhanced voluntary tax compliance

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IV. Monitor Tax Compliance

• Whistle Blowing in the Philippines has been

encouraged/implemented



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V. Whistle-Blowing Scheme

VI. Tax Audits and Systematic Information Cross-checking



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• Tax audits and systematic information cross-checking for identifying non-registered taxpayers has been institutionalized



Small Business Formalization

Increase Collection

Increase Taxpayer Base Thru Data-capture

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IMPACT OF SMALL BUSINESS FORMALIZATION

Data Analysis thru Inverted Pyramid

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BENEFITS OF DATA/INDUSTRY ANALYSIS

T

C

V

D

Top 300

TPs

20% coll.

Contribute 70-80%

collections

Top 1,500 Corp. TPs

Corp. & Individual Taxpayers

Underground TPs

10% coll.

1

2

3

Regional / District Level Cluster 1

* Sister companies farm out invoices as source of input* Use of unregistered delivery receipts* Maintained a carry over input VAT

Cluster 2* Use of unregistered sales invoices / official receipts & delivery receipts* Use of unregistered invoice, O.R. and POS or CRM* Paid VAT below non-VAT

Cluster 3* Rampant non-issuance of invoices or receipts* Use of unregistered invoice, O.R., delivery receipts or POS / CRM* Operating w/out business registration* No Books of Accounts

Common Violations Noted Per TCVD:

Cluster s

collec

tion

Reg

iste

red t

axpay

ers

?



RR7-QUEZON CITYYear 2001 - 2008

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Note: 2007 collection decreased due to delisting of taxpayers

• Simplify Procedures and Compliance Requirements



CONCLUSION / RECOMMENDATION

Slide 17

• Align Strategy and Operations

• Manage Change

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SALAMAT PO!