Publishing Department Order No. 29-87 dated March 6, 1987

March 20, 1987 REVENUE MEMORANDUM CIRCULAR NO. 10-87 SUBJECT : Publishing Department Order No. 29-87 dated March 6, 1987 TO : All Internal Revenue Officers and Employees For the information and guidance of all concerned there is published hereunder the full text of Department Order No. 29-87 implementing EO 45, which prescribes the guidelines and procedures on funding of financial incentives for BIR employees granted under EO 1042: "March 6, 1987 Department Order No. 29-87 Subject : Guideline and Procedures for the Implementation of Executive Order No. 45 Relative to the Creation of the BIR Special Fund under EO 1042. To : The Commissioner of Internal Revenue and All Others Concerned Pursuant to the provisions of Executive Order No. 45 amending Executive Order No. 1042, revenue personnel were granted financial incentives based on performance and collection efficiency which shall be funded from the BIR Special Fund in case of deficiency on the appropriation for the Bureau of Internal Revenue for Personal Services. This Order is issued to set forth the rules, regulations and procedures in the computation of annual additions to the BIR Special Fund. Sec. 1. Basis for the Special Fund The BIR Special Fund shall be created out of the real increase in revenue collections in a given year over that of the immediately preceding year but not to exceed 10% of actual collections over tax effort. Real increase in revenue considers adjustments for inflation, revenue effects of new tax measures, and other factors such as administrative reforms. The amount to accrue to the Special Fund must not exceed the ceiling which is equal to 10% of levels of tax effort provided in EO 45 as follows: casia 1986 8% of GNP 1987 8.5% of GNP 1988 9% of GNP 1989 9.5% of GNP 1990 10% of GNP 1991 10.5% of GNP 1992 11% of GNP 1993 11.5% of GNP 1994 and thereafter 12% of GNP Sec. 2. Procedure for the Computation of the Special Fund . A. Determine the Amount of Real Increase (RI) The following formula shall be used for the computation: RI = R - I CPI Where: R = increase in revenue collections computed of current year over that of the immediately preceding year. I = revenue effect of changes in tax measures, administrative reforms and other factors for the current year (from 1986 onward). CPI = Consumer Price Index for the current year. Sources of Figures: Collections - Gross Amounts before Refunds as recorded in the BIR books. GNP - Actual GNP for the Year from NEDA Report. CPI - NEDA Report. B. Determine the amount of the ceiling for the Addition to the Special Fund (SFC) for the current year . cd i The following formula shall be used for the computation: SFC = 10% x (C - T.E.) Where: C = Actual collections for the current year. T.E. = tax effort expressed as a given percentage of GNP under Section 1 hereof. C. The actual amount for the Special Fund To determine the actual amount which shall accrue to the Special Fund, compare RI with GFC. The actual amount to be allocated to the Special Fund annually shall be equal to RI but not to exceed GFC. Sec. 3. Repealing Clause . All regulations, orders or rulings previously issued which are inconsistent with this Order are deemed repealed or superseded. Sec. 4. Effectivity . This Order shall take effect immediately. (SGD.) JAIME V. ONGPIN Secretary of Finance" Under EO 45 as implemented by Department Order No. 29-87 financial incentives for BIR personnel shall be based on performance and collection efficiency. Benefits granted under EO 1042 shall be funded from the real increase in tax collections of the current year over that of the previous year but should not exceed 10% of the excess of actual collections over a prescribed percentage of GNP. In 1987 we should collect more than P57.375 B which is 8-1/2% of P675 B the projected GNP for 1987 to entitle BIR personnel to avail of the financial benefits granted in EO 1042. It is therefore, incumbent upon each and every BIR employee to exert his utmost effort to realize our collection target of P58.057 B for 1987. All concerned are hereby enjoined to ensure that this Circular reaches each and every employee of this Bureau. (SGD.) BIENVENIDO A. TAN, JR. Commissioner