Vol. XXI, No. 226 [ Business World Online ]
Wednesday, June 18, 2008 | MANILA, PHILIPPINES
THE TAX BUREAU will focus its attention on high-profile taxpayers with an estimated deficiency of at least P1 million in pursuing the Run After Tax Evaders (RATE) program, but priority
will be given to cases where the aggregate due is P50 million or more.
Tax Commissioner Lilian B. Hefti last week issued Memorandum Order 24-2008 as guidelines for the development, investigation, and prosecution of RATE cases.
The RATE program mandates the Bureau of Internal Revenue (BIR) to investigate tax violations and assist in the prosecution of criminal cases that will "generate the maximum deterrent effect, enhance voluntary compliance, and promote public confidence in the tax system."
Ms. Hefti said "The bureau had recently realized that maintaining public confidence in the fairness of the tax system is vital to effective tax administration. By investigating potential violations of the Tax Code and prosecuting tax offenders, the taxpaying public would recognize and be aware that the BIR is committed to ensure that everyone is paying their fair share of taxes."
"Consequently, this would lead to a change in the ’risk equation’ since potential tax offenders would now think twice before committing any infraction of our tax laws."
Another criteria set by the BIR is that the case should represent violations such as attempting to evade or defeat tax, failure to file returns or supply correct information, unlawful pursuit of business; and making false entries, records or reports.
Benedicta Du-Baladad, head for tax advisory and compliance of Punongbayan and Araullo, told BusinessWorld the memorandum order was "welcome as it clarifies jurisdiction for development and prosecution of RATE cases."
"What I want to see next is for BIR to issue guidelines specific to audit of fraud cases which should be different from that used in regular cases. Also, RATE cases should not be publicized until after [the alleged tax evader is] convicted. It would be unjust to put a taxpayer to shame if eventually it would be found out that he is not guilty," she said.
Tammy Lipana, Isla Lipana & Co./PricewaterhouseCoopers chairman and senior partner, shared the sentiment.
"In the past, investigation was publicized right away ... due process should still be followed. I think BIR has a very good intention because they want to maintain confidence in the current tax system," she said in a separate interview.
Ms. Lipana also said it would be unfair to single out high profile taxpayers.
"If you are a high profile tax payer, you are not necessarily a tax evader. I don’t think it should be a sole criterion," she said.
"BIR should be cautious in publishing RATE cases especially within preliminary stage. I don’t want them to resort to trial by publicity. It is difficult to regain an image once it is tarnished."
Ms. Hefti has ordered deputy commissioner Gregorio Cabantac of the BIR’s legal and inspection group to step up implementation of the RATE program as a tax amnesty had expired last May 5.
His office had recommended 12 cases to the special task force for investigation as of last month. The BIR has previously said it was investigating four cases aside from 87 pending resolution at the Department of Justice. — Ruby Anne M. Rubio
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