Jack wong has been helping businessmen pay less taxes for more than two decades. He tells China Business why he does it, and why it’s legal
It’s been said that nothing is certain but death and taxes, but nobody said anything about how much you have to pay. For some businessmen, hiring a tax consultant stings less than paying the government money that you might not actually owe. We go one on one with tax consultant and businessman Jack Wong on how the tax system creates a need for people like him.
What exactly is a tax consultant?
A tax consultant is a person who advises what are the right amount of taxes to be paid. Do you want to pay your taxes properly, ethically, and morally? Correct. Now, it doesn’t necessarily mean you have to pay a big amount of tax when it is correct. We have to assess what is the accurate amount that you should be paying the government. My love in doing the tax services is accepting the cases where there are problems. Just like when [the Bureau of Internal Revenue] sends you a letter saying that you owe how much and how much to this tax agency. I know I can have it recomputed and show the BIR that the taxes might be inaccurate.
What got you into this business?
When I finished my studies, I wanted to work for the government. I contemplated joining the BIR based on my godfather’s recommendation, the late [BIR Commissioner] Beethoven Rualo.
So, he advised me to join him as part of the technical group for the BIR or as a consultant. It was a challenging job offer. I wanted to simplify the procedures, to give businessmen the easiest time in getting themselves registered.
I studied the taxation system in Hong Kong during the Handover, in Canada, and in America. Incidentally, our tax system is based on the American tax system IRS. But the difference there is when you want to register, in a day’s time, you can get your certificate of registration. Actually, it’s only three hours.
Unlike here in the Philippines—Oh, boy, you need to have a lot of patience. That’s why I have white hair already.
What are the common errors made on your clients’ taxes?
The common errors are simple mathematical and arithmetic functions. Addition, subtraction.
But the biggest reason there are a lot of BIR assessments and liabilities is wrong classification of transactions. For example, you go out with your client and you spend for the food. A simple businessman will say ‘this is an expense,’ but when you just record it in your book of accounts, the BIR might disallow it. Simple transactions like that that businessmen are unsure of.
Our procedure is we check and we verify. We have an audit team to verify all accounting records or computations before we file or have it forwarded to any government agencies, or even to our clients.
How has tax collection changed since you started?
I started doing this in 1986. Before that it was the time of my dad, who was a CPA. How have things changed since 1986? Frankly speaking, the tax agency—I do not know why—has been coming up with so many procedures that are very hard to comply with.
In some other countries, they simplify the taxation system. Here in the Philippines, the BIR is so complicated. If you’re a simple businessman and you weren’t given the proper guidance, definitely you will be encountering problems. That’s one of the main reasons that up to now you can see a lot of businessmen saying that the BIR is a very big organization that has a lot of moral and ethical issues.
But I have seen the changes. It’s been improving. The top management of BIR really wants to come up with a better government agency. There are improvements. No doubt about it.
Has tax collection become more efficient?
In terms of filing taxes, I would say it’s more efficient. But in terms of applying for the necessary permits, the simple application of a [Tax Identification Number], it takes a lot of patience in doing that. The policy of the BIR would say this or that, but if you go to the corresponding revenue district office, usually it will give conflicting advice.
There goes the confusion for the taxpayer. And you cannot blame the taxpayer. Simple application for a TIN it takes them days, sometimes weeks. So there are situations where taxpayers themselves say ‘Why go to the hassle of having yourself registered?’
Instead of encouraging people to go into the mainstream, because of the confusion, because of the delays, some would rather just go underground.
How has the economic downturn affected your business, and businesses in general?
With the present situation right now, you can see a lot of small and medium enterprises (SME) unable to cope with the big businessmen. That’s a reality that big businesses are eating up small businesses. Just like we have in the banks. Big banks buying smaller banks, to make it more viable, to make it stronger.
In terms of our accounting services, we also cater to the SMEs. A lot of them cannot handle the operating expenses. On top of that, you have the high cost of taxes. We have national taxes, we have local taxes. And we have the other kinds of taxes that you can’t see on paper but at the end of the year, when investigation time comes—That’s another kind of tax.
About 20–30% of our clients in that market already have closed. Because during challenging times, difficult times, the taxes are still the same.
Print ed: 04/10