Tax Numeric Codes of Revenue Sources

November 4, 1968 REVENUE MEMORANDUM ORDER NO. 50-68 SUBJECT : Tax Numeric Codes of Revenue Sources I. SCOPE & PURPOSE : The attached handbook of "Tax Numeric Codes of Revenue Sources" contains coded classification details for revenues collected by the Bureau of Internal Revenue. Its salient feature is a standard numeric coding system which identifies every tax source and rate with a particular code number. The handbook is issued as part of this Order. The structure of the coding system and the procedures for the use of the codes are outlined in this Order for better understanding and compliance. In effect the "Tax Numeric Codes of Revenue Sources" has been prepared to supplant for Bureau of Internal Revenue purposes the "Administrative Schedules & Paragraphs" which have been in use with subsequent revisions since the creation of the Bureau of Internal Revenue. The classification scheme and the nature of the coding system of the "Administrative Schedules & Paragraphs" are inadequate and somewhat incompatible with modern trends of high speed data processing. The new coding system aims to simplify and accelerate the processing of collection data. It also proposes to facilitate the preparation of statistical and other management reports and to accelerate improvement of revenue accounting and master filing systems. The classification scheme intends to produce detailed tax data required for management planning and decision-making. The resulting information will be vital for selective statistical analysis and will serve as a realistic base for tax research programs. II. STRUCTURAL PRESENTATION : A. The table sheet The tabulated presentation of tax sources is divided into three essential parts: A the reference area (columns 1-3), B the source-code area (columns 4-6), C the remarks (column 7), and D footnotes. 1. The reference area defines: (1) the specific section or the NIRC, or other laws involved; (2) the implementing orders (memoranda or regulations); and (3) the corresponding schedules and paragraphs under the old system. 2. The source-code area defines: (4) the source and description of the tax; (5) the rate of tax; and (6) the tax numeric code. 3. Under the remarks column are additional information or instructions for guidance. The column serves as reference space for future updating and/or supplying significant observations not included at present. 4. Footnotes are inserted giving additional information, such as distribution of Special Funds, etc. B. Classification Coding Scheme Every tax source and/or rate is assigned a code number. It consists of six (6) digits. It is divided into three (3) two-digit parts. The first two digits represent the division ; the next two digits stand for the group and the last two digits, the item . Thus, 01-0302, the code number of specific tax under the group of fermented liquor on beer of P0.25 per gauge liter (now P0.275 effective September 25, 1968), is broken down as follows: 01 is the division code for Specific Tax 03 is the group code for fermented liquor 02 is the item code for beer. In case the item codes covering a group of tax rates go beyond 2 digits, the group code is reduced to only one digit (the third digit from the left) thereby giving a spread of three (3) digits for the item code. For example: 03-7108 stands for the percentage tax on miscellaneous general construction and-repair services; the last three digits (108) stands for the item code. Compared with the "Administrative Schedules & Paragraphs", the "Tax Numeric Codes of Revenue Sources" contains detailed up-dated duly coded tax rates. Unlike the irregular alphanumeric codes of the "Administrative Schedules & Paragraphs", the new coding system is simple and maintains a consistent 6-digit form throughout. Because of its flexibility further detailed classification of any item, when necessary, is not a problem. A comparison of the two systems when applied on "percentage tax on sales of non-integrated locally manufactured air-conditioning units" would be: Old System New System Schedule C 03 division Paragraph 14 30 group Sub-paragraph (b)(13)(b) 88 item Complete Code C-14(b)13(b) 03-3088 Complete Code III. PROCEDURES : The new official receipt which shall be in use January 1, 1968 has been so designed to include the tax numeric code of the tax payment. In issuing this Official Receipt, the complete six (6) digit tax numeric code should be legibly indicated on the box for the purpose. The tax code number and the official receipt have also been designed in conformity with Section 52 of the National Internal Revenue Code. Therefore, for every kind of tax payment received, a separate receipt shall be issued. This procedure simplifies the identification of taxes and corresponding surcharges and penalties, if any, derived from each source of revenue. It also hastens the processing of tax data. Tax numeric codes for documentary stamps are included in this handbook. These codes shall be used as guideline for determining the amount of documentary stamp on specific documents. The usual reporting system for accountable forms of which the documentary stamps are included, is not modified but all reports relating there to shall be prepared and submitted in this usual manner. Tax numeric codes for income taxes denote only the kind of paying entity and not the new individual income tax rates or brackets. The latter data shall be generated and reflected in our statistics of income when processed. The tax numeric code for specific taxes on domestic articles is 01-0000. This code shall be converted to 02-0000 to denote specific taxes on the same articles when imported. The latter codes is not included in the handbook to avoid confusion. Usually the 02-0000 series is used to identify internal revenue collections thru customs. The new tax coding shall be for BIR purposes only. Reports required by other agencies of the government may be submitted under the old system. The handbook is in a loose-leaf pamphlet, thus facilitating improvements when occasioned by suggestions and/or new tax laws or rates. IV. EFFECTIVITY : The new coding scheme and procedures related thereto shall take effect January 1, 1969. cdta MISAEL P. VERA Commissioner of Internal Revenue APPROVED: EDUARDO Z. ROMUALDEZ Secretary of Finance