Revised Regional Allocation of the BIR Collection Goal for CY 1999

March 18, 1999 REVENUE MEMORANDUM ORDER NO. 25-99 SUBJECT : Revised Regional Allocation of the BIR Collection Goal for CY 1999 TO : All Regional Directors and Other Officers Concerned I. CY 1999 Overall Collection Goal The revised revenue target of the Bureau for CY 1999 as of January 28, 1999 is P380,076M broken down into: P353,290M for existing measures, P25,786M for Comprehensive Tax Reform Program and P1,000M for Other Measures Redefinition of Automobiles. (Table 1) II. Data Used Collection data on Income Taxes (except the tax on T-bills which are directly sourced from the Bureau of Treasury), VAT, Other Percentage Taxes and Other Taxes were gathered from BIR Form 12.09 furnished by the Revenue Accounting Division. Collection data on Excise Taxes were gathered from the Regulatory Operations Monitoring Division instead of using data in BIR form 12.09. III. Allocation of Certain Taxes 1. Excise Tax The regional goal allocation for Excise Taxes is based on the place of production. 2. Direct Crediting The goal on tax on collections from Direct Crediting of P25,948M is given only to RR6-Manila, since it has jurisdiction over Bangko Sentral ng Pilipinas (BSP) which collects the tax for the BIR. 3. Stock Transaction Tax The goal on Stock Transaction Tax under the "Other Percentage Tax" type in the amount of P2,301M is allocated to RR7 - Quezon City since the Philippine Stock Exchange is located in RDO No. 43 - Pasig City. 4. Travel Tax The goal on Travel Tax in the amount of P305M is given to RR6 - Manila since the Philippine Tourism Authority which collects the said tax for the BIR is located in Manila. IV. Revised CY 1999 Regional Goals Following the methodology in Annex A, the regional goals are presented in Tables 2-8. V. List of Tables and Annexes Table 1 - Revised BIR Over-All Collection Goal, CY 1999 Table 2 - Revised Regional Goal Allocation by Major Source, CY 1999 Table 3 - Revised Total Monthly Tax Goal Allocation by Region, CY 1999 Table 4 - Revised Monthly Income Tax Goal Allocation by Region, CY 1999 Table 5 - Revised Monthly Excise Tax Goal Allocation by Region, CY 1999 Table 6 - Revised Monthly Value-Added Tax Goal Allocation by Region, CY 1999 Table 7 - Revised Monthly Other Percentage Tax Goal Allocation by Region, CY 1999 Table 8 - Revised Monthly Other Taxes Goal Allocation by Region, CY 1999 Annex A - Methodology Used in Goal Allocation Annex B - CY 1998 Collection by Region Annex C - Revised Total Goal by Region, CY 1999 VI. Requirement from Revenue Regions The Regional Directors are hereby required to submit to the Statistics Division on or before March 30, 1999 the Distribution of Regional Goals by RDO, by month and by type of taxes following Tables 3-8. VII. Effectivity This Revenue Memorandum Order shall take effect immediately. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue Table 1 REVISED BIR COLLECTION GOAL BY TYPE OF TAX, CY 1999 (In Million Pesos) TAX CLASSIFICATION 1999 GOAL GRAND TOTAL P380,076 I. EXISTING SYSTEM P353,290 A. Net Income & Profits 213,921 B. Excise Taxes 40,743 C. Value Added Taxes 51,565 D. Other Percentage Taxes 23,344 E. Other Domestic Taxes 23,717 II. COMPREHENSIVE TAX REFORM PACKAGE P25,786 A. INCOME TAXES 650 1. Individual Income Tax (11,991) a. Rationalization of the basic personal exemption for taxpayers regardless of tax status (8,275) b. Deduction of P2,400 health insurance premiums (581) c. Exclusion of GSIS and SSS contributions from income tax base (4,304) d. Re-imposition of the tax on dividend income (6% in 1998) 1,256 e. Exemption of non-resident citizens (87) 2. Corporate Income Tax 9,638 a. Restructuring of the corporate income tax and reduction of the corporate tax rate (3,005) b. Adoption of a minimum corporate income tax 867 c. Adoption of a Fringe Benefit Tax 2,965 d. Control on deductions 1,915 e. Reduction of capital gains from unlisted shares of stocks (387) f. Income tax on GOCCs 2,255 g. NOLCO (552) h. Disallowance of tax arbitrage 5,580 3. Increase in capital gains tax on real property from 5% to 6% (for individuals) 617 4. 7.5% tax on FCDU deposits 864 5. Tax on REPOs (T-Bills) 1,522 B. EXCISE TAX P25,180 1. Shift to a 3-tiered specific tax rate for cigarettes plus indexation 2,159 2. Shift to a 2-tiered specific tax rate on fermented liquor plus indexation 2,608 3. Increase in specific tax rates of distilled spirits and wines by an average of 25% 1,081 4. Restructuring of the excise tax on petroleum products through consolidation of the levy and part of the duty into one specific tax 19,332 C. OTHER DOMESTIC TAXES P(44) 1. Reduction of estate tax (6) 2. Reduction in donor's tax (38) III. OTHER MEASURES P1,000 Redefinition of Automobiles 1,000 ASSUMPTIONS USED: 1. GDP Nominal P2,942,757 GDP Growth, Nominal 10.83% GDP Real P916,871 GDP Growth, Real 2.60% GNP Nominal P3,093,418 GNP Growth, Nominal 11.29% GNP Real P963,871 GNP Growth, Real 3.00% 2. Inflation Rate 8.50% 3. Exchange Rate (P/US$I) P40.00 4. Depreciation Rate -2.18% 5. T-Bill Rate (91-day) 14.50% 6. T-Bill Rate (Weighted Average) 15.60% Source: DOF-National Government Revenue Program as of 01/28/99 Table 2 REVISED REGIONAL GOAL ALLOCATION BY MAJOR SOURCE, CY 1999 (In Thousand Pesos) Table 3 REVISED TOTAL MONTHLY TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 4 REVISED MONTHLY INCOME TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 5 REVISED MONTHLY EXCISE TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 6 REVISED MONTHLY VALUE ADDED-TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 7 REVISED MONTHLY OTHER PERCENTAGE TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 8 REVISED MONTHLY OTHER TAXES GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) ANNEX A Methodology A. To compute for the total CY 1999 goal of each region 1. Compute for the National Growth Rate excluding goals from Direct Crediting, Stock Transaction Tax and Travel Tax. National Total Goal CY 1998 Collection Growth Rate = (w/o special taxes) (w/o special taxes) CY 1998 Collection (w/o special taxes) P350,521,532,000.00 P308,044,975,913.79 = P308,044,975,913.79 = 13.79% 2. Using Annex B, multiply the CY 1998 collection of each region by 13.79% (National growth rate). 3. Add the goals for the special taxes to the respective RRs collecting from these sources. 4. The monthly goal for the Direct Crediting (DC) was computed using the following formula: Example: January Coll. from DC January DC Goal = x Total January Goal Total January Collection P635,219,857.07 = x P37,550,400,000.00 P35,111,307,960.72 = P679,346,960.72 The total of the 12 monthly DC goals is the CY 1999 DC goal amounting to P25,948 M representing a 15.69% increase over previous year. Annex C shows the CY 1999 goal by region. B. To compute for the regional goals for each major type of taxes 1. Using Annex B, allocate the regional goal for each major type, applying the ratio and proportion technique. 2. Add the goals for the special taxes to the respective RRs collecting from these sources. 3. Add up the goals for the five major types for each region, and make Income Taxes absorb any adjustment to maintain the result in Annex C. Table 2 shows the CY 1999 goal for each major type of tax. C. To compute for the monthly allocation of the regional goals 1. Compute the total goal for each month by major type of tax Determine the monthly goal for each major type of tax by applying ratio and proportion technique to the average of CY 1998 and 1997 actual monthly collection less non-recurring collections. Table 3 presents the CY 1999 total goal for each month by major type of tax. 2. Determine the monthly goal for each region by major type of tax using Tables 2 and 3. Example: January 1999 VAT Goal CY 1999 VAT Goal January 1999 VAT = x of Region 1 Goal of Region 1 CY 1999 VAT Goal ( from Table 3) ( from Table 2) For Revenue Regions 06, and 07, this procedure is also followed wherein the taxes in III are added after this process. Tables 4 - 8 show the monthly regional goal distribution for each type of tax. ANNEX B CY 1998 COLLECTION BY REGION BY MAJOR TYPE OF TAX ANNEX C REVISED TOTAL GOAL BY REGION, CY 1999