Allocation of the BIR Collection Goal for CY 2000

December 28, 1999 REVENUE MEMORANDUM ORDER NO. 02-00 SUBJECT : Allocation of the BIR Collection Goal for CY 2000 TO : All Assistant Commissioners, Regional Directors and Other Officers Concerned I. CY 2000 Overall Collection Goal The revenue target of the Bureau for CY 2000 is P397,227 M broken down into: P390,789 M for existing measures, P5,438 M for Comprehensive Tax Reform Program and P1,000 M for Other Measures which for this year covers the Redefinition of Automobiles. (Table 1) cdll II. Data Used Collection data from January - October, 1999 were used as basis for allocation and were gathered as follows: 1. Collection data on Income Taxes (except the tax on T-bills and Travel Tax), VAT, Other Percentage Taxes and Other Taxes were gathered from BIR Form 12.09 furnished by the Revenue Accounting Division. 2. Collection data on T-Bills and Travel Tax were directly sourced from the Bureau of Treasury. 3. Collection data on Excise Taxes were gathered from the Excise Tax Service. 4. Collection data on Large Taxpayers were gathered from the Large Taxpayers Division. Collection data in determining excise taxpayers and large taxpayers refer to the 630 large taxpayers identified by the Large Taxpayer Service and the 100 excise taxpayers identified by the Excise Taxpayer Service. III. Allocation by Implementing Group Pursuant to the structure changes under Executive Order 175 (Organizational Restructuring of the Bureau of Internal Revenue to Improve Administrative Control over certain categories of Taxpayers), the BIR goal was allocated to the three implementing groups: Large Taxpayers Service (LTS), Excise Taxpayers Service (ETS) and the Revenue Regions. The goals for LTS and ETS were first derived for each major type of tax. The balance of the goal by tax type was then allocated to the regions. IV. Methodology for Goal allocation by Implementing Group (Table 2) A) Large Taxpayer Service (LTS) 1. Determine the percent share of collection from the 630 identified large taxpayers to total BIR collections for January-October, 1999 by major tax type. 2. Apply the large taxpayer percentage share of collections to CY 2000 goal for each major tax type. 3. Add estimated goals per tax type to arrive at the total CY 2000 LTS goal. B) Excise Taxpayer Service (ETS) 1. Determine the percent share of collection from the 100 identified excise taxpayers to total BIR collections for January-October, 1999 by major tax type except for excise tax. 2. Apply the excise taxpayer percentage share of collections to CY 2000 goal for each major tax type except excise tax. 3. Assign the entire excise tax goal of P63,306 M to the Excise Taxpayer Service. 4. Add goals per tax type including the excise tax goal to arrive at the total CY 2000 ETS goal. C) Regions 1. Refinement of Regional Collections by Major Source Refine the regional collections reported in the January-October, 1999 BIR Form 1209 by deducting the following: a) Collections of taxpayers which have transferred to other regions. b) Collections from identified large taxpayers in the region to be transferred to the Large Taxpayer Service c) Collections from identified excise taxpayers in the region to be transferred to the Excise Taxpayer Service. d) Deduct actual collections on special taxes for January-October 1999 from total BIR collection net of collection from identified large taxpayers and excise taxpayers by type of tax to arrive at the adjusted totals by type of tax. Excise tax collections are excluded in the computation of the basis for the regional goals. llcd 2. Treatment of Special Taxes a) Treasury Bills The goal on tax on collections from T-Bills of P16,942 M is given only to RR6 - Manila, since it has jurisdiction over Bangko Sentral ng Pilipinas (BSP) which collects the tax for the BIR. b) Stock Transaction Tax The goal on Stock Transaction Tax under the "Other Percentage Tax" type in the amount of P4,796 M is allocated to RR 7 - Quezon City since the Philippine Stock Exchange is located in RDO No. 43 - Pasig City. c) Travel Tax The goal on Travel Tax in the amount of P171 M is given to RR 6 - Manila since the Philippine Tourism Authority which collects the said tax for the BIR is located in Manila. 3. Regional Goal Allocation for each region by major tax type (Table 3) a) Determine percent share of refined regional collection to total adjusted BIR collection for each region by major tax type. b) Allocate regional goal for each major tax type by applying percentage share to total adjusted BIR collection, by major tax type. c) Add the goals for special taxes to the four (4) major tax types for each region. 4. Monthly Allocation of Goals a. Compute the total goal for each month by major type of tax (Table 4) Determine the total monthly goal for each major type of tax by applying ratio and proportion technique to the CY 1999 estimated monthly collection (January-August 1999 plus September to December 1998). See Annex A6. Table 4 presents the CY 2000 total goal for each month by major type of tax. b. Determine the monthly goal for each implementing group by major type of tax using Tables 3 and 4. Example: January 2000 Income = January 2000 Income Goal X CY 2000 Income Goal of LTS CY 2000 Income Goal Goal of LTS (from Table 4) (from Table 3) January 2000 Income = January 2000 Income Goal X CY 2000 Income Goal of Goal of ETS CY 2000 Income Goal ETS (from Table 3) (from Table 4) January 2000 VAT = January 2000 VAT Goal X CY 2000 VAT Goal of Region 1 CY 2000 VAT Goal Goal of Region 1 (from Table 5C) (from Table 3) For Revenue Regions 06 and 07, this procedure is also followed without the special taxes in section 4 (C) (2). Monthly allocation of special taxes shall be furnished to the regions concerned and shall be added accordingly to come up with the total monthly goal. Tables 6 - 10 show the monthly regional goal distribution for each type of tax. V. CY 2000 Goal Allocation Following the methodology herein presented, the regional goals are allocated as shown in Tables 5-9. VI. Revenue District Goal Allocation A. Refine district collections by major tax type as follows: 1. Collections of taxpayers which have transferred to another district. 2. Collections from identified large taxpayers in the district to be transferred to the Large Taxpayer Service 3. Collections from identified excise taxpayers in the district to be transferred to the Excise Taxpayer Service. 4. Deduct special tax collections, if any. 5. Determine percent share of refined district collection to total adjusted regional collection for each district by major tax type. B. Allocate district goals as follows: 1. Allocate district goal for each major tax type by applying percentage share to total adjusted regional collection, by major tax type. 2. Allocate monthly the RDO goals by type of tax. 3. Add the goals for special taxes to the district concerned. 4. Add the estimated goals for the four (4) major tax types for each district to arrive at the total district goal. Example: January 2000 VAT = January 2000 VAT Goal of RR1 X CY 2000 VAT Goal of RDO 1 CY 2000 VAT Goal of RR1 Goal of RDO 1 (from Table 8) Following the RDO goal allocation methodology, the Regional Directors are hereby required to submit to the Statistics Division on or before January 7, 2000 the Distribution of Regional Goals by RDO, by month and by type of taxes following Tables 6-10. VII. List of Tables and Annexes Table 1 BIR Over-All Collection Goal, CY 2000 Table 2 BIR Collection Goal by Implementing Group, CY 2000 Table 3 BIR Goal Allocation by Major Source, CY 2000 Table 4 Total Monthly Collection Goal by Major Source, CY 2000 Table 5A - 5C Monthly Collection Goal by Implementing Group, CY 2000 Table 6 Regional Monthly Tax Goal Allocation, CY 2000 Table 7 Regional Monthly Income Tax Goal Allocation, CY 2000 Table 8 Regional Monthly Value-Added Tax Goal Allocation, CY 2000 Table 9 Regional Monthly Other Percentage Tax Goal Allocation, CY 2000 Table 10 Regional Monthly Other Taxes Goal Allocation, CY 2000 Annexes A1 - A5 Summaries of Collection from BIR Form 12.09, LTS, ETS VIII. Effectivity This Revenue Memorandum Order shall take effect immediately. cdll (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue TABLE 1 BIR COLLECTION GOAL BY TYPE OF TAX, CY 2000 (In Million Pesos) TAX CLASSIFICATION GOAL 2000 GRAND TOTAL: P 397,227 I EXISTING SYSTEM P 390,789 A. Net Income & Profits 238,923 B Excise Taxes 40,927 C Value Added Taxes 64,037 D Other Percentage Taxes 26,183 E Other Domestic Taxes 20,719 II. COMPREHENSIVE TAX REFORM PACKAGE P 5,438 A. INCOME TAXES P(15,894) a. Rationalization of the basic personal exemption for taxpayers regardless of tax status and restructuring of tax rate schedule (13,964) b. Exclusion of GSIS and SSS contributions form income tax base (4,952) c Use of a flat rate of 30% on modified gross income of business earners 0 d Re-imposition of the tax on dividend income (6% in 1998) 1,008 e Restructuring of the corporate income tax and reduction of the corporate tax rate (4,687) f. Imposition of the regular corporate income tax on domestic and foreign mutual life insurance companies 0 g. Adoption of a minimum corporate income tax 715 h. Adoption of a Fringe Benefit Tax 1,587 i. Taxation of non-residents on Phil. Income (98) j. Increase in capital gains tax on real property from 5% to 6% (for individuals) 694 k. Controls on deduction 581 l. Reduction of capital gains tax from unlisted shares of stocks (402) m 7.5% tax on FCDU deposits 708 n Deduction of P2,400 health insurance premiums (754) o NOLCO (637) p Income tax on GOCCs 1,886 q Tax on REPOs (T-Bills) 1,053 r Disallowance of tax arbitrage 1,368 B. EXCISE TAX P 21,379 a Shift to a 3-tiered specific tax rate for cigarettes plus indexation 2,607 b Shift to a 2-tiered specific tax rate on fermented liquor plus indexation 990 c Increase in specific tax rates of distilled spirits and wines by an average of 25% 1,004 d Restructuring of the excise tax on petroleum products through consolidation of the levy and part of the duty into specific tax (RA 8184) 16,778 C OTHER DOMESTIC TAXES P (47) a Reduction of estate tax (6) b Reduction in donor's tax (41) III 1999 MEASURES P 1,000 A REDEFINITION OF AUTOMOBILES P 1,000 ASSUMPTIONS USED: 1. GDP Nominal P 3,287,055 GDP Growth, Nominal 11.81% GDP Real P 952,005 GDP Growth, Real 4.00% GNP Nominal P 3,474,710 GNP Growth, Nominal 12.33% GNP Real P 1,007,772 GNP Growth, Real 4.50% 2. Inflation Rate 7.00% 3. Exchange Rate (P/US$1) P 41.0000 4. Depreciation Rate 2.50% 5. T-Bill Rate (91-day) 9.40% 6. T-Bill Rate (Weighted Average) 10.50% Source: National Government Revenue Program as of December 7, 1999. Table 2 - Bureau of Internal Revenue Collection Goal by Implementing Group, CY 2000 Table 3 - Bureau of Internal Revenue Goal Allocation by Major Source, CY 2000 Table 4 - Total Monthly Collection Goal by Major Source, CY 2000 Table 5A - Large Taxpapers Service Monthly Collection Goal by Major Source, CY 2000 Table 5B - Excise Taxpayers Service Monthly Collection Goal by Major Source, CY 2000 Table 5C - Regional Monthly Internal Revenue Collection Goal by Major Source, CY 2000 Table 6 - Total Monthly Tax Goal Allocation by Region, CY 2000 Table 7 - Regional Monthly Income Tax Goal Allocation by Region, CY 2000 Table 8 - Regional Monthly Value-Added Tax Goal Allocation by Region, CY 2000 Table 9 - Regional Monthly Other Percentage Tax Goal Allocation by Region, CY 2000 Table 10 - Regional Monthly Other Taxes Goal Allocation by Region, CY 2000 ANNEX A1 CY 1999 Collection by Region by Major Type of Tax from BIR Form No. 1209 ANNEX A2 Large Taxpayers Collection by Region by Major Type of Tax ANNEX A3 Excise Taxpayers Collection by Region by Major Type of Tax ANNEX A4 Refined CY 1999 Collection by Region by Major Type of Tax ANNEX A5 Total Monthly Collection by Major Source, CY 1999