Allocation of the BIR Collection Goal for CY 2002

May 8, 2002 REVENUE MEMORANDUM ORDER NO. 11-02 SUBJECT : Allocation of the BIR Collection Goal for CY 2002 TO : All Assistant Commissioners, Regional Directors and Other Officers Concerned I. CY 2002 Overall Collection Goal The revenue target of the Bureau for CY 2002 as set by the Department of Finance is P447,556M (as of November 27, 2001) with existing measures amounting to P431,556M and administrative measures amounting to P16,000M (realigned by BIR as of May 6, 2002). The breakdown by type of tax is as follows: Tax Type Total Goal Existing Administrative Measure Measures Income Taxes P244,966M 238,816M 6,150M Excise Taxes 66,638 66,138 500 Value Added Taxes 75,929 69,229 6,700 Percentage Taxes 35,918 34,718 1,200 Other Taxes 24,105 22,655 1,450 TOTAL P447,556M 431,556M 16,000M II. Data Used The goal allocation used the following data: 1. Collection data for CY 2001 used actual January-December, 2001 collections from the Revenue Accounting Division as of March 4, 2002. 2. The 2001 collections were refined taking into account the following adjustments: a. Closures of business establishments; b. Transfers of taxpayers were tracked to the new region; c. Non-recurring collections which does not include collection of estate tax, donors tax, capital gains tax, etc. other than a one-time collection that accounts for at least twenty percent (20%) of the district collection for the month; d. VAT collections affected by RA 9136 (The Electrical Power Industry Reform Act of 2001); e. Collections from the Voluntary Assessment Program (VAP); and f. Collections from National Government Agencies (NGAs) and Local Government Units (LGUs) per reports of the Collection Service. III. Allocation by Implementing Group The implementing groups were clustered into three groups. Each cluster was assigned a regional growth rate and the same growth factor of 1.4 for all groups. These clusters are the following: CLUSTER Implementing Group Regional Growth Growth Rate Factor A LTS Large Taxpayers Service 10% 1.4 RR 4 San Fernando, Pampanga 10% 1.4 RR 5 Valenzuela, Metro Manila 10% 1.4 RR 6 Manila 10% 1.4 RR 7 Quezon City 10% 1.4 RR 8 Makati 10% 1.4 RR 9 San Pablo City 10% 1.4 RR 13 Cebu City 10% 1.4 B RR 1 Calasiao, Pangasinan 9% 1.4 RR 2 Cordillera Administrative Region 9% 1.4 RR 11 Iloilo City 9% 1.4 RR 12 Bacolod City 9% 1.4 RR 16 Cagayan de Oro City 9% 1.4 RR 19 Davao City 9% 1.4 C RR 3 Tuguegarao, Cagayan 8% 1.4 RR 10 Legazpi City 8% 1.4 RR 14 Tacloban City 8% 1.4 RR 15 Zamboanga City 8% 1.4 RR 17 Butuan City 8% 1.4 RR 18 Cotabato City 8% 1.4 IV. Methodology for Goal Allocation by Implementing Group 1. Allocation of the Total CY 2002 Goal for Revenue Regions (RRs) and Large Taxpayers Service (LTS), Table 2 To compute for the total CY 2002 goal for Existing Measures of the various RRs and LTS the following formula was used: Goal 2002 = Coll. 2001 + (Coll. 2001 x Clustered Regional growth rate x growth factor) + Special Types + e where: Special Types are: i. Excise Taxes for Large Taxpayers Service (LTS), Treasury Bills for Revenue Region No. 6 and Stock Transactions for Revenue Region No. 7 and ii. Collections from National Government Agencies (NGAs) and Local Government Units (LGUs) were increased by ten percent (10%) since the budget of agencies concerned increased by at least said percentage. e = balancing amount to maintain the total goal on existing measures set by the Department of Finance of P431,556M. 2. The administrative measures of P16B were assigned as to the specific implementing group tasked to collect from the measure, if any. The balance was then distributed to the various implementing groups using ratio and proportion technique by major type of tax (if applicable). 3. Allocation of Monthly Goal by Implementing Group, by Major Source (Table 3) To compute for the CY 2002 goal by major source, the following is the methodology: a. Refine the CY 2001 tentative monthly internal revenue collections. The CY 2001 collections have been refined by deducting the following: i. T-Bills collection from Revenue Region No. 6 Manila ii. Non-recurring taxes from each Revenue Region iii. Voluntary Assessment Program (VAP) collections The CY 2001 monthly internal revenue collections were also adjusted to reflect the changes in payment period from quarterly to monthly of certain types of taxes in accordance to Revenue Regulations (RR) No. 6-2001 dated July 31, 2001 b. Compute the monthly goal by Implementing Group, by Major Source (Table 4). i. Using the refined collection figures, allocate the goal for RRs for each major type, applying the ratio and proportion technique to CY 2001 collection. ii. Add the goal for the special taxes to the respective RRs collecting these sources. iii. Allocate the monthly goal, by type of tax, using ratio and proportion technique to CY 2001 refined collections. 4. Treatment of Goal on Special Taxes a) Excise Taxes The goal on Excise Tax of P66,638M is solely allocated to the Large Taxpayers Service in consonance with Executive Order No. 306. b) Treasury Bills The goal on tax on collections from T-Bills of P19,812M is allocated to RR 6 Manila, since it has jurisdiction over Bangko Sentral ng Pilipinas (BSP) which collects such tax for the BIR. c) Stock Transaction Tax The goal on Stock Transaction Tax under the "Percentage Tax" type in the amount of P1,232M is allocated to RR 7 Quezon City since the Philippine Stock Exchange (PSE) is located in RDO No. 43 Pasig City. V. Revenue District Goal Allocation The recommended procedure and methodology for the district goal allocation should follow that of the Revenue Regions namely: 1. Refine the CY 2001 collection data of the revenue districts as to closures, transfers, National Government Agencies and Local Government Units and non-recurring collections. Likewise, exclude VAT collections affected by RA 9136 and collections under the Voluntary Assessment Program (VAP). The term "non-recurring collection" does not include collection of estate tax, donors tax, capital gains tax, etc. other than a one-time collection that accounts for at least twenty percent (20%) of the district collection for the month. 2. Using the refined collection figure of each revenue district office apply the following formula: Goal 2002 = Coll. 2001 + (Coll. 2001 x Clustered Regional growth rate x growth factor) + Special Types + e where: Special Type(s) are: i. collections from NGAs and LGUs which were increased by 10% ii. taxes specific to a particular RDO, such as Treasury Bills and stock transactions e = balancing amount to maintain the total existing goal of each Revenue Region. 3. Identify the goal on Administrative Measures which can be assigned to specific RDOs and allocate the remaining through ratio and proportion technique to each Revenue District Office. 4. Compute the monthly goal allocation, by major type of tax for each Revenue District Office. Comments on the goal allocation of concerned Revenue District Offices should be addressed to the Deputy Commissioner, Operations Group. VI. List of Tables Table 1 BIR Collection Goal by Type of Tax, CY 2002 Table 2 Total BIR Collection Goal, CY 2002 Table 3 Monthly Collection Goal by Major Source, CY 2002 Table 3A Monthly Collection Goal by Major Source for Large Taxpayers Service, CY 2002 Table 3B Monthly Collection Goal by Major Source for Revenue Regions, CY 2002 Table 4 BIR Collection Goal by Major Source by Implementing Group, CY 2002 Table 4A BIR Collection Goal for Existing Measures by Major Source by Implementing Group, CY 2002 Table 4B BIR Collection Goal for Administrative Measures by Major Source by Implementing Group, CY 2002 Table 5 Total Monthly Goal Allocation by Implementing Group/Regions, CY 2002 Table 6 Total Monthly Goal Allocation by Implementing Group/Regions for Income Taxes, CY 2002 Table 7 Total Monthly Goal Allocation by Implementing Group/Regions for Value Added Taxes, CY 2002 Table 8 Total Monthly Goal Allocation by Implementing Group/Regions for Percentage Taxes, CY 2002 Table 9 Total Monthly Goal Allocation by Implementing Group/Regions for Other Taxes, CY 2002 VII. Compliance All Regional Directors and Assistant Commissioners concerned are hereby required to submit through e-mail ([emailprotected]) to the Chief, Statistics Division within five (5) working days the Distribution of Regional Goals by RDO, by month and by type of taxes. (SGD.) REN G. BAEZ Commissioner of Internal Revenue Table 1 BIR COLLECTION GOAL BY TYPE OF TAX, CY 2002 (In Million Pesos) TAX CLASSIFICATION GOAL TOTAL REVENUE P447,556 A. Net Income & Profits 244,966 B. Excise Taxes 66,638 C. Value Added Taxes 75,929 D. Percentage Taxes 35,918 E. Other Domestic Taxes 24,105 ASSUMPTIONS USED: 1. GDP Nominal P3,946,712 GDP Growth, Nominal 9.16% GDP Real P1,025,349 GDP Growth, Real 4.00% GNP Nominal P4,181,833 GNP Growth, Nominal 9.29% GNP Real P1,089,805 GNP Growth, Real 4.10% 2. Inflation Rate 5.00% 3. Exchange Rate (P/US$1) P52.00 4. Depreciation Rate 4.00% 5. T-Bill Rate (91-day) 10.00% 6. T-Bill Rate (Weighted Average) 11.10% Table 2 Total BIR Collection Goal, CY 2002 Table 3 Monthly Collection Goal by Major Source, CY 2002 Table 3A Monthly Collection Goal by Major Source, CY 2002 Table 3B Monthly Collection Goal by Major Source, CY 2002 Table 4 BIR Collection Goal by Major Source by Implementing Group, CY 2002 Table 4A BIR Collection Goal by Major Source by Implementing Group, CY 2002 Existing Measures Table 4B BIR Collection Goal by Major Source by Implementing Group, CY 2002 Administrative Measures Table 5 Total Monthly Internal Revenue Collection Goal by Implementing Group/Regions, CY 2002 Table 6 Total Monthly Internal Revenue Collection Goal by Implementing Group/Regions, CY 2002 Table 7 Total Monthly Internal Revenue Collection Goal by Implementing Group/Regions, CY 2002 Value Added Taxes Table 8 Total Monthly Internal Revenue Collection Goal by Implementing Group/Regions, CY 2002 Percentage Taxes Table 9 Total Monthly Internal Revenue Collection Goal by Implementing Group/Regions, CY 2002 Other Taxes