BIR Ruling [DA-412-00]

November 28, 2000 BIR RULING [DA-412-00] Senate of the Philippines Pasay City Attention: Sen . Renato L . Compaero Cayetano Chairman, Committee on Justice and Human Rights Gentlemen : This refers to Senate Bill Number 1779 entitled "AN ACT TO REWARD INFORMANTS WHO HELP IDENTIFY, LOCATE AND RECOVER ANY ILL-GOTTEN WEALTH OF THE LATE PRESIDENT FERDINAND E. MARCOS, AND HIS WIDOW, IMELDA R MARCOS AND OTHER DEFENDANTS/RESPONDENTS IN ILL-GOTTEN WEALTH CASES WHEREVER LOCATED AND BY WHOMSOEVER HELD AND FOR OTHER PURPOSES' This Office recognizes the important role of informers and the dangers they are into in providing informations that may lead into the correct payment of taxes. On this note, Section 282 of the Tax Code of 1997 was enacted granting informer's reward to persons instrumental in the discovery of violations of the National Internal Revenue Code and in the discovery and seizure of smuggled goods. However, said cash reward is subject to income tax, collected as a final withholding tax, at the rate of ten percent (10%) pursuant to the same provision. We strongly oppose the passage of this bill on the following grounds: 1. The informers concerned are properly compensated under Section 7 of the proposed bill; ECSaAc 2. Its tax exemption provision will diminish revenue collection; and 3. It is discriminatory in nature as this will benefit the informers in Marcos wealth only. Other informers role are as equally important and dangerous as that of the Marcos case. Very truly yours, DAKILA B. FONACIER Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group