Prescribes the BIR Strategic Plan for CY 2011-2016

June 27, 2011 REVENUE MEMORANDUM ORDER NO. 030-11 SUBJECT : Prescribes the BIR Strategic Plan for CY 2011-2016 TO : All Internal Revenue Officials and Employees I. Background The BIR Strategic Plan for CY 2011-2016 was formulated after a series of brainstorming sessions and workshops by representatives from all functional areas (core and support) on their vision of the BIR's future state. It outlines the strategies and programs of the BIR in the next six (6) years. II. Objectives This Order is issued to: 1. Align the Bureau's Strategic Plan for CY 2011-2016 with the Mission and Vision Statements and the Strategy Roadmap as prescribed in Revenue Memorandum Order No. 23-2011; and 2. Provide the strategic plan on programs and priority measures in achieving its future state, including directions for its reform initiatives. III. Policies and Guidelines The following policies shall be observed: 1. The high-level BIR Strategic Plan for CY 2011-2016, contains the strategies and programs that the Bureau shall undertake, considering the need to collect revenue in the short-term, as well as to sustain revenues. This includes significant reforms in processes, systems and organization in the medium to long-term as defined in Annex A . 2. Initiatives to be undertaken by each office on an operational level shall have to be aligned with the high-level BIR Strategic Plan. 3. The Strategic Plan shall be revisited annually and updated, if needed. AIaSTE IV. Repealing Clause All revenue issuances or portions thereof inconsistent herewith are hereby repealed or amended accordingly. V. Effectivity This Order takes effect immediately and hereby directs all Revenue Officials and Employees to refer to this Revenue Issuance as guide in their operational planning. (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A BIR High-Level Strategic Plan: 2011-2016 A. Introduction BIR management and staff have worked extensively since 2010 to revise the BIR's mission and vision statements and to prepare the BIR Strategy Roadmap, High-Level Strategic Plan, Detailed Strategic Plan and Agency Key Performance Indicators (KPIs). Collectively, these documents referred to as the BIR strategic planning documents outline the main strategic initiatives and programs that will support and guide the BIR's activities over the next six years. The process involved several brainstorming sessions and workshops with selected BIR officials in order to identify strategies and programs to be undertaken in the short-, medium-, and long-term. The development of the Strategy Roadmap, High-Level Strategic Plan, Detailed Strategic Plan and Agency KPIs was supported by the Bureau's top management, as well as key knowledgeable people from Deputy Commissioners, Assistant Commissioners and Regional Directors to Division Chiefs and other officials from the national office, regional offices and district offices. Thus, crafting the BIR's strategic plan was achieved through a consultative process across different levels of the organization. B. Summary It should be emphasized that the strategic planning documents identify measures that will address improvements in revenue collections, improve taxpayer satisfaction, and significantly alter business processes and systems. In reforming the BIR's business processes and systems, it will be essential in the next six years to address issues such as organizational reform, human resource (HR) reform and legislative/regulatory reforms. In the end, the strategic plan strikes a balance between achieving revenue collection targets and strengthening the effectiveness of tax administration. The strategic plan will also be a document by which the overall progress of the reforms will be monitored. HTDAac Understanding the BIR Strategic Planning Documents BIR Strategy Roadmap The Strategy Roadmap ("Map") is a picture which allows BIR management and staff, as well as external stakeholders, to visualize the strategies and goals of the Bureau for the period 2011-2016. In other words, the Map highlights the BIR's "road to reform". To facilitate understanding of the relationship between the Strategy Roadmap, High-Level Strategic Plan and Detailed Strategic Plan, each strategic objective on the Map is numbered. In turn, the High-Level Strategic Plan and the Detailed Strategic Plan are organized according to the numbered strategic objectives in the Map. BIR High-Level Strategic Plan The purpose of the High Level Strategic Plan is to offer a glimpse of what the BIR will look like after it successfully executes all the programs in its Detailed Strategic Plan. While there is a risk that the Detailed Strategic Plan may be seen as a disconnected itemization of priority programs over the next six (6) years, these should be appreciated as a holistic approach towards modernizing tax administration in the Philippines. The High-Level Strategic Plan hopes to present a "picture" of the BIR's future state. The first three (3) strategic objectives (SO's) (1-Attained collection targets and sustained collection growth; 2-Improved taxpayer satisfaction and compliance; and 3-Strengthen good governance) are presented as simple statements. This is because they are overarching objectives whose attainment is dependent on achieving a combination of strategic objectives from SO #4 through SO #8. For instance, achieving good governance is conditioned on promoting transparency in a number of business processes found in SO #s 4 and 5. Hence, programs that strengthen good governance are repeated in other strategic objectives. The same can be said of the first and second strategic objectives. BIR Detailed Strategic Plan * The Detailed Strategic Plan expands upon the high-level plan as it presents more detailed information. In particular, the detailed plan provides specifics regarding the programs and priority measures supporting the high-level plan. In addition, the plan allocates timelines for each program, as well as inputs needed to accomplish tasks, expected outputs/outcomes, offices within the BIR accountable for the program and a column indicating any donor that is supporting the BIR. The detailed plan will be used by BIR management to monitor progress of the implementation of the programs. It is important to note that each program in the plan will be expanded further by the relevant entities in the BIR that are responsible for the program and they will develop additional action plans. acTDCI C. Defining the BIR's Future State 1. Attained collection targets and sustained collection growth The matrices found in SO #s 4, 5, 6, and 7 identify a number of strategic objectives and programs that will focus on modernization of BIR business processes, systems and HR policies/procedures. The impact of these reforms will progressively lead to improved compliance which in turn will translate over time into increased revenues. While these reforms are important, the BIR will continue to focus on short- and medium-term measures that will ensure that the BIR attains its collection targets. The following is a summary of measures to be taken to maximize revenue collections: Continue to detect taxpayers who do not comply with reporting requirements ( e.g., failure to maintain books and records, failure to issue receipts) and follow up with measures such as OPLAN KANDADO Assign necessary resources to expand our registration base by detecting unregistered taxpayers through tax mapping and Tax Compliance Verification Drive (TCVD), matching and use of third party data, and other like activities Continue implementation of BIR Taxpayer Account Management Program (TAMP) and increase number of taxpayers covered Continue computer matching of information with third party data to detect unreported income (Reconciliation of Listings for Enforcement (RELIEF), e-Sales, etc.) Continue to expand the BIR audit program to detect unreported income (includes full implementation of Computer-Assisted Audit Tools and Techniques (CAATTs), improved use of benchmarking information and increased audit coverage through targeted audit programs) Increase efforts to collect fresh tax arrears and to collect outstanding arrears that are classified as potentially recoverable (includes steps to sell previously seized assets) Continue and further strengthen Run After Tax Evaders (RATE) Program to detect tax fraud cases and take necessary steps to prosecute offenders STcaDI Develop and implement compliance strategies based on the assessment risks of different taxpayer segments 2. Improved taxpayer satisfaction and compliance The matrices found in SO #s 4, 5, 6, and 7 identify a number of strategic objectives and programs that will lead to improved taxpayer satisfaction and compliance. However, the following is a summary of how the BIR will strive to improve taxpayer satisfaction and compliance over the next six years: Taxpayer satisfaction The BIR will: Continue to reduce time required to register taxpayers (primary and secondary registration) Continue to redesign tax forms to make it easier for taxpayers to comply with reporting requirements Reduce time required to audit a taxpayer's refund claim Continue to expand its e-Services which allow more and more taxpayers to register, file, pay and view their taxpayer ledger, which includes accounts and other transactions with the BIR online Develop additional tax guides and pamphlets that target specific concerns of different types of taxpayers ( e.g., medium or small taxpayers, information for specific sectors) Make it easier for taxpayers to ask questions over the phone by expanding its call center operations and will shift its customer service strategy to one that is focused on "reaching out" to taxpayers versus waiting for the taxpayer to come to a tax office Allow taxpayers to deal with any tax office with regard to registration and to seek clarifications for any questions, if needed Continue to address tax rulings concerns on a timely basis and to disclose this information to the public Continue to expand and institutionalize partnerships with external stakeholders ( e.g., review existing Memoranda of Agreement (MOAs) and strengthen their enforcement) to ensure their involvement in the reform process Ensure that all designated banks accept tax payments during core operating hours (no taxpayer will have his payment refused) and strictly comply with BIR guidelines on the acceptance of tax returns, including without payment or with partial payment, if required. In addition, the BIR will continue to find easier ways for taxpayers to make their payments ( e.g., introduce use of credit card payments) IDAESH Ensure taxpayers are treated in a uniform and consistent manner (all offices across the country operate in a consistent manner) and that non-compliance with tax laws/regulations will be detected and necessary actions taken Compliance Compliance can only be achieved if the BIR continues to expand its taxpayer services as described above and balances this with improvements in its enforcement programs. Enforcement programs will focus on: Improved detection of unregistered taxpayers Improved detection of stop-filers Improved detection of under-reported income Prompt collection of tax arrears 3. Strengthen Good Governance Strengthening good governance is a key objective of the BIR during the next six years, but the BIR recognizes that achieving good governance requires changes and improvements in a number of areas. The matrices in SO #s 4, 5, 6, and 7 contain a number of strategic initiatives and programs that will address good governance issues. However, the following is a summary of actions to be taken by the BIR over the next six years to strengthen good governance: Re-engineering of BIR business processes will in itself help contribute to improved good governance as procedures will have more transparency built in ( e.g., changes to audit procedures will remove manual involvement/interference in the audit process) Continued expansion of the BIR information technology (IT) capabilities and more effective use of third party data. Electronic Tax Information System (eTIS) will become our main corporate system and will be rolled out to all offices and to the extent possible other existing sub-systems will be integrated Effective monitoring of operations through implementation of a broader set of Key Performance Indicators (KPIs). These indicators will allow us to monitor how well we are doing when it comes to reaching our revenue collection targets. However, they will also allow the BIR to measure the effectiveness and efficiency of each tax administration functional area. The BIR will have a "performance dashboard" which will allow the district offices and regional offices to measure their respective KPIs and for headquarters to monitor the agency KPIs. Finally, the Department of Finance (DOF) will be able to view and monitor the overall BIR KPIs. DAESTI Implementation of more transparent procurement and financial management procedures Strategic planning that continues to drive improvements in BIR operations 4. Improve assistance, compliance and enforcement process Strategic Objective Description of the Future State Programs What we want to achieve How to get us there Improved assistance process Improved assistance Pro-active taxpayer service strategy with Enhancement of BIR taxpayer service to taxpayers increasing focus on an outreach program. strategy We reach out to taxpayers without o Explore how to expand outreach having to wait for them to come to us". program and services All taxpayers are fully aware of and capable o Study possibility of targeting of accomplishing the following: assistance such as by market segments (large, medium, small, registration with the BIR; etc.) filing tax returns on time; and o Expansion of function and capacity of contact center and/or e-lounges making correct payments. Periodic feedback through Taxpayer Time required to register a taxpayer is Satisfaction Survey reduced (primary and secondary registration). One look, one feel for services Refunds are processed on a timely basis provided at destination using risk assessment. Public Awareness Campaign, including Taxpayers are also aware of the early education enforcement actions (consequences) that will be taken by the BIR should taxpayers Taxpayer (TP) Electronic Folder which fail to comply. includes TP Ledger and record of all other transactions with the BIR BIR has an effective and continuous public (taxpayers will have retrieval access to awareness campaign that constantly a limited amount of data) educates existing and future taxpayers. Review registration process, re- engineer process, if necessary, and institutionalize changes Improved tax rulings BIR has a transparent process for tax rulings Process review and streamlining of process and which are prepared within a reasonable time. business processes management Rulings are readily available to taxpayers, Tax Rulings Case Management System while application is fair and transparent (TRCMS) that is capable of tracking and tagging changes including workload management Improved compliance process Improved Efficient and streamlined registration process Registration clean-up to include: registration process with sufficient capture of accurate taxpayer duplicate Taxpayer Identification information (e.g., industry code, schedule of Numbers (TINs); active/inactive expected tax dues, etc.) taxpayers; and up-to-date information. Enhanced IT automating registration process Review registration process, re- which makes full use of Third Party engineer process, if necessary, and Information (TPI). institutionalize changes. Accountability of developing a national Review of manpower and skills strategy on registration is clearly assigned requirements of dedicated registration to a sufficiently staffed office at the National staff at the NO, regions and districts. Office (NO): Dedicated staff for registration at Simplified electronic form (in check-list the regions and districts are format) filled up by registration staff. capable of doing simple compliance checks (pre-registration audit). Use of TPI to aide compliance checks. Also, detection of unregistered entities is quick & complete. Monitoring of compliance to procedures (primary & secondary registration requirements) Monitoring of accuracy and completeness of registration information. Registration process and information is aligned with the requirements of the National Government, such as a National ID for individuals and the Philippine Business Registry. Improved filing and Simplified filing and payment procedures Re-engineering of filing and payment payment process including redesigned tax returns that are process. Optical Character Reader (OCR) friendly. Taxpayers have options to do any of the Redesign/Simplification of tax returns to following: reduce burden on taxpayers, without sacrificing necessary information that a) e-filing and e-payment need to be provided upfront. b) e-filing and over the counter Piloting and setting up of data payment thru Authorized Agent processing centers for off-site manual Banks (AABs) encoding of information from tax returns. Scanning technology will eventually c) manual filing and over the counter replace manual encoding. payment or thru Revenue Collection Officers (RCOs) Identify options for eliminating the need for RCOs to collect money. Taxpayers who are required to file electronically are strategically expanded, until such time that budget and systems will allow all taxpayers to do so. Process and system that ensures all tax returns and payment information are recorded off-site in the BIR, on a timely basis, and reconciled with the Bureau of Treasury. Reconciliation method is capable of detecting tax returns with no payment. All stop-filers are detected automatically, by comparing information at registration with filing deadlines, and subsequently dealt with in a timely manner. Improved enforcement process Improved audit Streamlined and effective audit process that Review our current audit policies and program increases our effectiveness & efficiency in procedures with a view to streamlining detecting under-reported income. the audit process (e.g., shift away from mandatory audit of each refund claim, Risk assessment criteria in place for the increase audit coverage, develop a risk selection of all types of audits. (including assessment policy and integrate into Industry benchmarks) ETIS) Sufficient audit staff is placed where they Institutionalize and integrate risk are needed (greatest risk) to conduct quality assessment in audit process audits. CAATTs laboratories are in place Enhanced IT system to aide in audit selection and for case monitoring and Identify changes in legislation that are management; also to make full use of TPI. necessary to support efficient audits eTIS supports all audit functions and provides necessary performance reports. Improved Streamlined and effective collection process Review policies and process for management of which ensures the accurate and complete collecting arrears, including arrears identification of arrears and collection identification of any changes required thereof on a timely basis to legislation and regulations. Sufficient staff are in place to maximize the Design an effective collection efficient management and collection enforcement/arrears strategy, of arrears considering implications to organization, staffing, training of collection personnel Enhanced IT system which supports all and IT systems. collection enforcement functions Improved ability to BIR is able to detect more cases of tax Enhance BIR strategy for dealing with detect, investigate, fraud and is able to improve its ability to tax fraud and for strengthening litigate and investigate, litigate and prosecute fraud litigation and prosecution prosecute fraud cases (includes use of business intelligence) (e.g., identifying organizational changes; cases skills and capacity building, including CAATTs and the like and analytical skills to detect fraud; further streamlining of processes; identifying IT requirements including business intelligence that may be available in the eTIS) Public information campaign 5. Improve integrity and accuracy of taxpayer database Strategic Objective Description of the Future State Programs What we want to achieve How to get us there Improved integrity BIR has an up-to-date, clean and reliable Develop and implement a strategy for and accuracy of taxpayer database cleaning up registration database taxpayer database BIR has a complete "taxpayer ledger" which Eliminate all backlog of encoding of tax includes all actions taken by the taxpayer returns filing, payments and (e.g., filing of returns, payments, refund registrations claims) and actions taken by the BIR (e.g., assessment notices, temporarily closure of Enhance eTIS to ensure taxpayer business) ledger is available 6. Improve integrity, competence, professionalism and satisfaction of human resources Strategic Objective Description of the Future State Programs What we want to achieve How to get us there Improved integrity Ethical norms of conduct clearly exist across Develop a strategy for improving internal of personnel the entire organization, with a transparent audit and internal security functions in monitoring system in place the BIR (e.g., process, workflow system and identification of resources required) Internal audit and internal security (internal affairs) functions are strengthened and effective at detecting cases of non- compliance and misconduct, with speedy resolution of cases. Improved A comprehensive training program for each Review of organizational structure at competence, core tax administration function is actively NO, regions and districts, including professionalism and used to ensure adequate knowledge and skills manpower complement and staffing satisfaction of for all personnel; IT skills of staff are pattern. human resources constantly updated. HR management, including hiring, Review of HR management policies and competency examination, career processes and enhancement and/or development program, promotions, etc., is in development of the HRIS place and responsive to the needs of personnel in the BIR. Development of a Performance Management System (PMS) (office and BIR has manpower planning capability. individual level) A Human Resource Information System Periodic feedback to management (HRIS) is fully functioning and includes, through an employee satisfaction among others, an employee self-service survey. (ESS) capability Remove BIR from the salary A performance management system for both standardization scheme office and individual is in place and is used to assess efficiency. Employee feedback mechanism is in place. The salary scale system of BIR employees is improved 7. Improve knowledge management Strategic Objective Description of the Future State Programs What we want to achieve How to get us there Improved knowledge BIR will have developed comprehensive Develop national policy for designing management industry benchmarks for critical industries and implementation of benchmarks BIR will be in a position to make more Identify critical sectors requiring industry effective and efficient use of a larger benchmarks and develop benchmarks amount of third party data Identify sources of third party data and secure memorandum of understanding for allowing use of this data (includes integrating use of this data in the BIR) Footnotes * The BIR Detailed Strategic Plan will be the subject of a separate issuance. However, once issued, users must consider all documents as one, with each having a role as described above.