BIR Ruling [DA-308-97]

September 1, 1997 BIR RULING [DA-308-97] Mr. Donald Z. Marasigan Technical Staff Chief Committee on Ways and Means House of Representatives Quezon City S i r : This refers to your letter dated August 21, 1997 requesting for our comments and views on House Bill No. 9789 entitled "An Act Providing for an Organic Act for the Autonomous Region in Southern Philippines'' for purposes of your forthcoming deliberations on the matter, particularly on Article X (Fiscal Autonomy) thereof. In reply, hereunder are our comments on specific provisions of said House Bill No. 9789: (1) Sec. 108. "All . . . shall pay their corresponding taxes, fees and charges in the province, city or municipality in . . . ." Sec. 109. "All . . . shall pay their income taxes . . . through the province, city or municipality . . ." We propose that the above provisions be clarified to emphasize that the collection of national internal revenue taxes shall still be done by the Bureau of Internal Revenue (BIR) through its regional and district offices. Sec. 108, as it is worded now, might be interpreted to mean that payment of national taxes will no longer be done through authorized agent banks (AABs) of the BIR. This will have an adverse effect on the major efforts of the BIR to improve tax collection systems such as the adoption of an electronic data transmission scheme and the introduction of the Returns Processing System of the BIR Tax Computerization Project. EAcTDH Insofar as taxpayers operating within but having their head offices outside the area of autonomy, Sec. 109 should insert a clause to the effect that the BIR should apportion the taxes paid by these taxpayers to ensure that appropriate credit should be given to the province, city or municipality whose natural resources are utilized/exploited. (2) Sec. 111. "The province or city concerned shall automatically retain its share . . . remit the balance to the National Government on a monthly basis . . . ." We reiterate our position that the National Government should be tasked with the duty of apportioning the taxes collected and then remit the share of the entitled local government units (LGUs), and not the other wary around. We cannot overemphasize the urgency of the governmental need for taxes. To adopt a separate position may seriously jeopardize the immediate availability of funds for governmental expenditures. However, if Congress wishes, a provision making it mandatory for the National Government to, within a specified period of time, make the remittance to the LGUs otherwise officials concerned can be held criminally responsible, can be placed. (3) We propose to amend Sec. 112(b) as follows: "b. Out of said internal revenue tax collections, fifty percent (50%) of the tax collected under Sections 100 (Value-added tax on sale of goods), 102 (Value-added Tax on sale of services), and 112 (Tax on persons exempt from value-added tax), of the National Internal Revenue Code (NIRC), as amended, in excess of the increase in collections for the immediately preceding year . . . ." Our proposal is anchored on the fact that Sec. 113 (Room occupancy tax on hotels, motels, etc.) and Sec. 114 (Caterer's tax) have already been deleted from the National Internal Revenue Code by Sec. 20 of R.A. No. 7716, otherwise known as the Expanded VAT Law. Very truly yours, (SGD.) ESTELITA C. AGUIRRE Acting Commissioner