Regional Allocation of the BIR Collection Goal for CY 1999

December 16, 1998 REVENUE MEMORANDUM ORDER NO. 95-98 SUBJECT : 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 revenue target of the Bureau for CY 1999 as of August 21, 1998 is P408,094 M broken down into: P364,473 M for existing measures, P36,621 M for Comprehensive Tax Reform Program and P7,000 M for Other Measures Tax Amnesty. (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. III. Allocation of Certain Taxes 1. Excise Tax The regional goal allocation for Excise Taxes is based on the place of production. 2. Treasury Bills The goal on tax on interest from Treasury Bills of P17,364 M 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 P1,829 M 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 P239 M is given to RR 6 - Manila since the Philippine Tourism Authority which collects the said tax for the BIR is located in Manila. 5. Tax Amnesty The goal on Tax Amnesty is integrated in the Income Tax Goal. IV. CY 1999 Regional Goals Following the methodology in Annex A that was presented during the special Regional Directors conference on December 14, 1998, the regional goals are presented in Tables 2-8. llcd V. List of Tables and Annexes Table 1 - BIR Over-All Collection Goal, CY 1999 Table 2 - Regional Goal Allocation by Major Source, CY 1999 Table 3 - Total Monthly Tax Goal Allocation by Region, CY 1999 Table 4 - Monthly Income Tax Goal Allocation by Region, CY 1999 Table 5 - Monthly Excise Tax Goal Allocation by Region, CY 1999 Table 6 - Monthly Value-Added Tax Goal Allocation by Region, CY 1999 Table 7 - Monthly Other Percentage Tax Goal Allocation by Region, CY 1999 Table 8 - Monthly Other Taxes Goal Allocation by Region, CY 1999 Table 9 - Monthly Tax Amnesty Goal Allocation by Region, CY 1999 Annex A - Methodology Used in Goal Allocation Annex B - Estimated CY 1998 Collection by Region Annex C - 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 January 15, 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 BIR COLLECTION GOAL BY TYPE OF TAX, CY 1999 (In Million Pesos) TAX CLASSIFICATION 1999 GOAL GRAND TOTAL P408,094 I. EXISTING SYSTEM P364,473 A. Net Income & Profits 223,779 B. Excise Taxes 40,964 C. Value Added Taxes 52,477 D. Other Percentage Taxes 23,459 E. Other Domestic Taxes 23,794 II. COMPREHENSIVE TAX REFORM PACKAGE 36,621 A. INCOME TAXES 1,799 1. Individual Income Tax (12,849) a. Rationalization of the basic personal exemption for taxpayers regardless of tax status (9,671) 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) 1,794 e. Exemption of non-resident citizens (87) 2. Corporate income Tax 11,476 a. Restructuring of the corporate income tax and reduction of the corporate tax rate (3,005) b. Adoption of a minimum corporate income tax 1,239 c. Adoption of a Fringe Benefit Tax 3,460 d. Control on deductions 2,016 e. Reduction of capital gains from unlisted shares of stocks (387) f. Income tax on GOCCs 2,505 g. NOLCO (552) h. Disallowance of tax arbitrage 6,200 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) 1,691 B. EXCISE TAX P34,867 1. Shift to a 3-tiered specific tax rate for cigarettes plus indexation 10,887 2. Shift to a 2-tiered specific tax rate on fermented liquor plus indexation 2,609 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 20,290 C. OTHER DOMESTIC TAXES (45) 1. Reduction of estate tax (6) 2. Reduction in donor's tax (39) III. OTHER MEASURES 7,000 A. Tax Census (Amnesty Tax) 7,000 ASSUMPTIONS USED: 1. GDP Nominal P3,024,916 GDP Growth, Nominal 12.32% GDP Real 938,137 GDP Growth, Real 3.50% GNP Nominal 3,185,942 GNP Growth, Nominal 12.89% GNP Real 987,730 GNP Growth, Real 4.00% 2. Inflation Rate 8.50% 3. Exchange Rate (P/USSI) 43.00 4. Depreciation Rate 4.88% 5. T-Bill Rate (91-day) 4.88% 6. T-Bill Rate (Weighted Average) 17.10% Table 2 BIR REGIONAL COLLECTION GOAL BY MAJOR SOURCE, CY 1999 (In Thousand Pesos) Table 3 TOTAL MONTHLY TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 4 MONTHLY INCOME TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 5 MONTHLY EXCISE TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 6 MONTHLY VALUE ADDED-TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 7 MONTHLY OTHER PERCENTAGE TAX GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 8 MONTHLY OTHER TAXES GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) Table 9 MONTHLY TAX AMNESTY GOAL ALLOCATION BY REGION, CY 1999 (In Thousand Pesos) ANNEX A Methodology A. To determine the estimated CY 1998 collection for each major type of tax Jan to Oct '98 collection + Nov to Dec '97 collection (conservative estimate) - 1997 VAP collection CY 1998 Estimated Collection Annex B shows the estimated CY 1998 collection of each region by major type of tax excluding collection from T-bills, Stock Transaction Tax and Travel Tax. B. To compute for the total CY 1999 goal of each region 1. Compute for the National Growth Rate excluding goals from T-bills. Stock Transaction Tax and Travel Tax. Total Goal CY 1998 Estimated Coll. National (w/o special taxes) (w/o special taxes) Growth Rate = CY 1998 Estimated Coll. (w/o special taxes) P388,662,000,000 P322,704,722,936.96 = P322,704,722,936.96 = 20.44% 2. Using Annex B, multiply the CY 1999 estimated collection of each region by 20.44 % (National growth rate). 3. Add the goals for the special taxes to the respective RRs collecting from these sources. Annex C shows the CY 1999 goal by region. C. 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. llcd 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. D. To compute for the monthly allocation of the regional goals 1. Compute the total goal for each month by major type of tax a. Determine the monthly goal for each major type of tax by applying ratio and proportion technique to the CY 1998 actual monthly collection. b. Adjust collection goals such that the total goal for the first semester is 60% of the CY 1999 goal. 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 = January 1999 VAT Goal x CY 1999 VAT Goal Goal of Region 1 CY 1999 VAT Goal of Region 1 (from Table 3) (from Table 2) Revenue Regions 06 and 07 do not conform with this procedure since the goals for taxes mentioned in III follow different trends. prcd Tables 4-8 show the monthly regional goal distribution for each type of tax. ANNEX B Estimated CY 1998 Total Collection ANNEX C TOTAL GOAL BY REGION, CY 1999