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The Taxman Talks

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Joel Tan-TorresTax chief Joel Tan-Torres has the unenviable job of collecting the nation’s taxes. He talks to China Business about innovating in one of the most hated and distrusted agencies of government

Bureau of Internal Revenue (BIR) commissioner Joel Tan-Torres knows taxes inside and out, having worked for both accounting powerhouse SyCip Gorres Velayo & Co. and the government. He’s applying corporate solutions to government problems, and if last December’s higher-than-target collections are any indication, that may actually pay off.

We were tagged as a tax haven by the Organisation for Economic Co-operation and Development (OECD) last year. How are we in terms of getting off their gray list?
Well, not really a tax haven. But essentially, we’re part of the gray list of countries whose exchange of information system is not according to OECD standards.

So, what we did is we pushed for a law that will essentially allow the furnishing of bank deposit information, which was not allowed before, whenever there is a request for such by a foreign tax monitoring partner. So that was provided for in a law that is now in the completion or finalization stage.

So once that law is passed—and I think this will be passed by February—then we will be taken out of the gray list. [Congress has gone into recess without passing this into law—JdS]

The BIR exceeded revenue targets in December. How did the bureau achieve this, and how are we doing in plugging revenue leakages?
I’ve come up with what I call a strategy map which consists of 3 priority areas, 16 programs, 180 activities and projects, and our strategies for the year.

It’s a complete package, a complete solution, to take into account all aspects of tax administration. Examination, collection, taxpayer service, and providing short-term solutions and longer-term solutions.

Before, our concentration was on meeting the annual collection target. So that’s short term. But I felt that concentrating just on the short term of, say, collecting what is the target for the year. Sometimes, there’s a tendency to forget what I call the institution building or capability building of the organization.

In the process, because no improvements are made in terms of the capability, in terms of the institution, the longer-term improvements, BIR is hard-pressed in meeting its short-term goal.

So, now it’s simultaneous.

What are these long-term plans?
Examples of the long-term capability building we are doing is we’re pushing for a tax academy.

I hope to get it passed by today, or within the next two days. This will be like the Philippine Military Academy. So, it develops good people for tax purposes. [Unfortunately, Congress also failed to pass this—JdS]

Also part of institution building is developing leaders, so I have this junior executive development program, which is a management training program similar to the corporate model. I hire 45 people—CPAs, lawyers—to undergo a comprehensive sixmonth training program.

The lecturers are the cream, the best trainers in tax. My senior people in the BIR. I also invited as resource persons prominent practitioners. I invited a justice of the Court of Tax Appeals (CTA), a congressman. So we have this group of individuals being trained to be future leaders of the BIR.

We’re doing a lot of things. Putting in place programs that will improve the capability of BIR as an organization.

How is the Run Against Tax Evaders (Rate) program doing?
26 It started with a big bang, it was in the news the first one or two years. But, admittedly, it slid down in terms of the number of cases developed, filed in court, actually prosecuted. And in terms of the mileage that it’s being given in the media.

We will reinvigorate the Rate soon, maybe early March, if not late February. We will essentially match—if not surpass—what has already been done. So there will be a lot of innovations including tying up with two law enforcement agencies. These police agencies can help us in surveillance, background investigation, seizures, confiscation of property, and the arrest of tax evaders. We’ll tie up with the DOJ and the Supreme Court. Again, that’s the problem of Rate. Tax evasion cases go very slowly when it’s filed in court. So we will see what we can do by discussing things with CTA, Supreme Court, and DOJ.

Is the delay, then, in the courts, and not with the BIR?
The problem is with the judicial process. That’s typical of our judicial process. It’s a long and lengthy process.

A tax consultant told us that BIR inefficiency and complicated regulations are forcing some businessmen to just go underground. Is the bureau doing anything to change this?
We’re employing a lot of e-services. I don’t have an actual survey, but I think BIR is the Number 1 among government agencies in providing e-services.

So, practically all major transactions with the BIR can be done through the Internet. Getting Taxpayer Identification Numbers, filing tax returns, payment of taxes, getting information. So that’s in place. That allows for a practically 24-hour service to taxpayers.

Admittedly, there may be some regulations that probably are complicated. So we’re also looking into that. Not only simplifying rules and guidelines, but also simplifying the tax returns.

Maybe at the start of March, we will be sending tax columns to newspapers. Articles providing information on how to comply. Articles on tax information, what are the projects of BIR. So that’s available for newspapers. This will be regular. Maybe even twice a week.

I also read that working with the Land Transportation Office (LTO) to root out fake insurance policies?
Not only with LTO. This is one of my strategies: linkages with institutions, entering into agreements with organizations to improve the tax system.

The latest arrangement that we have with the LTO is regarding the system for the Comprehensive ThirdParty Liability (CPTL) insurance. There will be a tie-up between the Insurance Commission, BIR, and LTO to have a computerized CPTL insurance process. There are taxes due on insurance policies, the documentary stamp tax and VAT. So collection of that would be enhanced by the agreement.

We also have a memorandum of agreement with with Philippine National Police where we hope to improve the manner they do their withholding tax for their employees. I think the withholding comes up to 1 billion pesos, so hopefully we can increase that.

Print ed: 03/10

 

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