Statement of the Functions of the International Operations Division up to Section Level

April 5, 1982 REVENUE ADMINISTRATIVE ORDER NO. 05-82 SUBJECT : Statement of the Functions of the International Operations Division up to Section Level TO : All Revenue Officers and Others Concerned I. OBJECTIVES This Order is issued to delineate the functions of the International Operations Division and its sections pertaining to tax treaty negotiation, interpretation and implementation, to avoid conflict and pinpoint responsibility among the divisions having to do with these functions. II. ORGANIZATION/FUNCTION The International Operations Division shall now have the following duties: 1. Develop, formulate and recommend policies and work programs and set up standards, guidelines, procedures and techniques relating to the assessment, investigation and collection of taxes from non-resident citizens and from non-resident aliens and foreign corporations deriving income from the Philippines; 2. Audit/re-audit income tax returns of non-resident citizens reporting foreign source compensation income only which were filed directly with the National Office; cd i 3. Undertake on a selective basis field audit of tax returns and investigate books of accounts of the following: a) Non-resident citizens; b) Overseas contractors deriving income from contracts abroad; c) Multi-national companies and individuals employed by regional or area headquarters of such multi-national corporation; d) Non-resident aliens deriving income from the Philippines; e) International Carriers. 4. Implement rules and regulations for the effective enforcement of Philippine tax laws relative to ratified tax treaties as it affects the aforementioned taxpayers; 5. Receive and process all tax returns coming from the various revenue posts abroad including the batching, sorting and numbering of said returns; 6. Issue certificate of clearance relative to tax dockets of non-resident citizens and non-resident aliens pertaining to transfer of properties and shares of stocks located in the Philippines subject to estate/gift taxes; 7. Exercise supervision over the assessment and collection functions and activities of all revenue attaches/representatives for purposes of evaluating assessment and collection performance; 8. Perform such other functions as may be assigned. The following are the specific functions of the sections under the International Operations Division: aisa dc A. Foreign Returns Section 1. Process and pre-audit individual income tax returns of non-resident citizens filed in the Central Office and returns of non-resident aliens receiving income from sources within the Philippines; 2. Undertake on a selective basis field audit of tax returns of said taxpayers; 3. Prepare assessment notices and letters of demand for tax liabilities of individual taxpayers falling under the jurisdiction of the International Operations Division; 4. Plan, manage, direct and execute comprehensive, year-round, international taxpayer service program which will provide full and responsive assistance to the said taxpayers; 5. Provide authoritative, prompt, courteous and responsive service on taxpayer requests through telephone, walk-in and correspondences regarding questions on filing returns, notices and assistance in actual preparation of returns; 6. Perform such other related functions as may be assigned. B. Tax Treaty Implementation Section The Tax Treaty Implementation Section of the International Operations Division shall have the following functions which are confined to the enforcement of the provisions of tax treaties: 1. Implement the tax rules and regulations on tax treaties; 2. Assist the Competent Tax Authority in administering the operating provisions of tax treaties; 3. Accumulate and analyze data concerning the effect and implications of foreign tax laws, Philippine tax treaties, Philippine revenue law changes, revenue rulings and revenue policy statements on international application; 4. Prepare, develop, plan direct and supervise international examination programs and coordinate technical matters regarding the application of specific treaty provisions in connection with tax audit performed by the various audit divisions of the National Office and the Regional Offices; 5. Prepare analytical studies on technical problems in the international area such as, tax avoidance and evasion schemes and review/prepare suggested tax forms and other materials on international taxation; 6. Compile data on the extent, nature, location of Philippine taxpayers' business and other interests outside the Philippines and similar data of foreign business entities doing business in the Philippines and request for data/information as provided in the "Exchange of Information" provisions of tax treaties; 7. Submit recommendations on proposed changes on legislation, regulations, revenue procedures, treaty provisions and other aspects of the international enforcement program; cdt 8. Process claims for tax refund of alleged erroneously collected internal revenue taxes arising from the application of tax treaty provisions including claims for exemptions; 9. Answer queries and assist taxpayers affected by tax provisions of different tax treaties; 10. Compile and furnish support data and information to the Policy Division and the International Taxation Division for use in formulating policies, laws, rules and regulations on tax treaties with foreign countries; 11. Assist the Secretariat at RP Tax Treaty Panel; and 12. Perform such other related functions as may be assigned. C. Multinational Companies Section 1. Administer international examination program for multinational corporations the returns of which are selected in accordance with guidelines or criteria prescribed by the Commissioner; perform support examination, with the participation of revenue examiners in other audit divisions and regional offices, if necessary, of transnational corporations and conduct investigation to get information as requested by other investigating units; 2. Coordinate examination program on resident foreign corporations and other cases, where appropriate, with national and regional enforcement programs; 3. Recommend new objectives, standards, and techniques needed to ensure high quality examinations; 4. Prepare and issue management information reports on examination errors, unfavorable patterns or trends, new or unusual examination techniques and unique technical issues relevant and applicable to the audit of multinational corporations; 5. Submit recommendations on proposed changes in legislation, regulations, revenue procedures, treaty provisions and other aspects of the international enforcement program; 6. Furnish advisory assistance on technical matters or problems involving transfer pricing and international allocation of income, assist in the performance of functions under tax treaties which principally involve the non-automatic exchange of information; 7. Accumulate, compile and analyze data concerning transfer pricing, international allocation of income and data on other foreign business operations of concern to the Philippines; 8. Perform such other related functions as may be assigned. D. Overseas Contractors Section 1. Administer the provisions of Presidential Decree No. 1167, otherwise known as the Overseas Contractors Decree and develop and implement examination program for overseas contractors; cd 2. Conduct on a selective basis field audit of tax returns of overseas contractors in accordance with guidelines and criteria prescribed by the Commissioner; 3. Maintain liaison with the Overseas Construction Board and coordinate with various offices of the Bureau of Internal Revenue, whenever called upon in the conduct of investigation; 4. Maintain liaison with the Overseas Construction Board concerning the taxation of overseas contractors; 5. Recommend proposed changes in legislation, regulations, revenue procedures and other aspects of the taxation of overseas contractors; 6. Accumulate, compile and analyze data concerning overseas contracts; 7. Perform such other related functions as may be assigned. E. International Carriers Section 1. Implement the taxation of international carriers and develop and administer the program for examination of the said enterprises; 2. Conduct field examinations relative to all the internal revenue tax liabilities of international carriers; 3. Implement the Memorandum of Agreements dated April 22, 1974 and September 7, 1979 between the Bureau of Internal Revenue and the Bureau of Customs to effect and expedite collections of internal revenue taxes due from international carriers; cd i 4. Process, evaluate and approve application for the issuance of international carriers release certificate as provided for in the said Memorandum of Agreement; 5. Compile and analyze information concerning international traffic insofar as these are relevant to the determination of tax liabilities of international carriers doing business in the Philippines; 6. Gather and furnish data needed by the tax treaty negotiating panel; 7. Establish and maintain clearing units for imports or exports as the need for more expeditious service may require; 8. Perform such other functions as may be assigned. III. REPEALING CLAUSE This Order revokes or supersedes all existing orders and provisions thereof which are inconsistent herewith. casia IV. EFFECTIVITY This Order takes effect immediately. RUBEN B. ANCHETA Acting Commissioner