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The Mountain Goes to Muhammad

(Article published in the Feb 17,2003 issue of TODAY, Business Section)

Just as necessity is the mother of invention, it seems that a yawning budget deficit is the mother of bold tax collection initiatives. Apparently spurred by widespread criticism of its revenue collection performance, that mountain of a bureaucracy called the Bureau of Internal Revenue is in labor, and, if we can take what have recently come forth as indication of things to come, more than a mouse is running down its slopes.

One month after the expiration of Republic Act 9010 that effectively cast the VAT net over persons not subject to the tax, such as, among others, lawyers, accountants, actors, actresses, talents, singers, and other professionals, it seems not too many have come forth to heed the call of Revenue Regulations 1-2003, as amended by Revenue Regulations No. 3-2003, to sign up and be recognized.

Sluggish taxpayer’s response, of course, is not surprising. Show biz people took to the streets, some of whom, unfortunately, despite being good copy were not in the best position to articulate and win sympathy for not a few just grievances of the industry; others besieged talk shows with arguments that ranged from "why VAT us" to "abolish the VAT"; and the greater majority simply kept quiet, preferring to think up, in silence, of ways of rolling with the punch. In the context of such welcome, those who registered in order to be taxed were as numerous as those who would willingly go to their dentists before feeling pain in their teeth and gums.

So, since the taxpayers did not like to go to the BIR, then the BIR has decided to go to the taxpayers. Taking as his model the concept of BIR on wheels which was just about the only thing his boss, Commissioner Guillermo Parayno, conceded to the noisy protesters from the movie world, Antonio Ortega, Regional Director of Revenue Region 8, Makati City, last week sent out his troops, armed with working laptops, printers, cell phones, and, surprisingly, adequate supplies of forms and paper, to the offices of professionals within his jurisdiction. Their mission: to make it, (with well modulated voice like your dentist’s "this won’t hurt a bit"), as painless as possible for those who do not have tax evasion already in their hearts, to comply with the requirements of their newfound status of being subject to the VAT.

The general idea is bring to the offices of the professionals the services that are usually available only from the Revenue District Offices. Specifically, Ortega’s teams will assist the professionals with (a) their registration as VAT/Non-VAT persons, (b) payment of the registration fee; (c) issuance of the Registration Certificate; (d) issuance of their Tax Identification Number (TIN) if they still do not have any; (e) registration of their books of account; and (f) getting acquainted with this new thing in their lives, i.e. paying the correct amount of taxes.

The operation started on February 11 and will end on the last day of this month, that’s the day when everyone who became subject to the value-added tax (VAT) on account of the expiration of RA 9010 are supposed to register to be taxed. During this period, Ortega’s teams will go to the designated venues on the dates arranged with the targeted group of taxpayers, and will be ready to provide the registering taxpayer with forms that need to be filled up, and, upon his compliance with registration requirements and payment of the fees, right then and there issue him , among other things, his Registration Certificate, register his books of accounts, and otherwise get him ready to start paying his VAT properly. This simple maneuver saves the taxpayer, at the very least, a trip to the Revenue District Office as well as the tedium of waiting in line, along with the messengers and neophyte accountants whose lot it is to file for their employers and the clients of their bosses.

Should taxpayers take advantage of this momentary gentleness of the BIR? The answer is obviously "yes". Not only because this type of coddling from the bureau, tasked as it is with the unpleasant job of collecting taxes we do not want to pay, is few and far between and therefore something to relay, together with other fairy tales, to our grandchildren. But also because, this mountain is likewise capable of spewing, in addition to this surprising goodness, hot lava and molten rock. Take for instance the case of a doctor, practicing his profession in one of the hospitals in Makati.

Sometime in the middle of last year, the Bureau, under the authority of Section 6(C) of the Tax Code, monitored the practice of the profession and conduct of operations of a certain doctor who was reported as not issuing official receipts for the payments received for his professional services. After just a day of surveillance, it became apparent to the operatives that the doctor was in fact issuing receipts. However, the receipts were merely "provisional" receipts and they were not registered with the Bureau. Taking the position that a "provisional" receipt is a "sales or commercial invoice" which is required to be registered under the Bookkeeping Regulations, the BIR decided to swoop down on the surprised doctor.

The Bureau agents apprehended more than one booklet of provisional receipts of the erring doctor and issued him the appropriate apprehension slip. The doctor is now a respondent in a preliminary investigation being conducted by the City Prosecutor of Makati. If charged in court and convicted, the hapless doctor would be facing, for each act of issuing a provisional receipt that is not registered, a fine of not more than P1,000 or imprisonment of not more than six (6) months, or both (Sec. 275, Tax Code).

So, the target taxpayers of Ortega’s VAT registration operation should be happy to welcome his team. They have to swallow the bitter VAT pill, anyway, like it or not. It will not harm them to taste of Ortega’s sugar coating. More important, it will spare them of the doctor’s travails.