The lack of manpower and industry expertise can be blamed for delays in the resolution of cases, including alleged tax violations by luxury car importer Auto Nations Group Inc. (formerly CATS Motors Inc.), at the Bureau of Internal Revenue, a tax expert said.
“Investigation on CATS Motors is just one of the many backlogs and ongoing investigations inherited by Commissioner Caesar Dulay,” Abrea Consulting Group chief strategy officer Raymond Abrea told The Manila Times.
“In fact if you will recall, he suspended all audits during his first three months to review and determine the status of all pending tax audits—some of which go beyond three years, exceeding the three-year prescription period to audit a taxable year,” he added.
Abrea said this was possibly due to the practice of examiners asking taxpayers to sign a “waiver of the statute of limitations” giving them unlimited time to complete their audits. In this case, both the examiner and taxpayers can be faulted for delays.
This is where the “negotiation” comes in, Abrea also noted, given the discretion given to examiners.
“There seems to be no accountability on the part of the examiners who can issue an assessment even more than the gross sales and net worth of the taxpayer being audited,” he explained.
“[O]n part of the taxpayers, either they delay complying with the documentary requirements per advice of their accountant or it’s really costly to reproduce everything when it is already accessible online or via soft copies submitted to BIR … the summary list of sales and purchases submitted monthly by large taxpayers or eFPS (electronic filing and payment system) users and quarterly by regular taxpayers,” Abrea added.
Given the lack of manpower and industry expertise, he said the bureau should continue automating its tax administration process.
He urged Dulay to ensure that the new Electronic Tax Information System (eTIS) should be fully implemented and all BIR examiners and officials compelled to use it.
The eTIS—a project funded by the Millennium Challenge Account Philippines—is a web-based application with eight functions: taxpayer registration; returns filing and processing; collection, remittance and reconciliation; audit; case management system (CMS); taxpayer accounts; batch architecture module; and system administration management.
“If fully and efficiently implemented, eTIS can make the audit of taxpayers easier especially getting information and audit findings by industry while examiners can be trained to further enhance their audit skills in a computerized environment,” Abrea said.
He stressed that implementation of the case management system would compel examiners to conduct their audits within the prescribed period.
“Through the CMS, status and findings in a specific audit case is accessible not only by the assigned examiner but also by the Commissioner specifically audit and investigation of large taxpayers like CATS Motors,” Abrea said.
A BIR official agreed with Abrea’s observation and said the solution would be to revenue personnel from salary standardization.
“Lack of professional manpower is a major factor for our woes. The salary grade of the BIR is dismal compared to other agencies exempted from the Salary Standardization Law. So we are not competitive,” said Deputy Commissioner Clint Aranas, who heads BIR’s Legal Division.
The tax bureau had been pushing for the exemption of its revenue personnel from the coverage of the law in a desire to attract more professionals via a more competitive pay scale. especially for entry-level positions.
The BIR workforce at present numbers just over 10,000, well below the 25,00 approved plantilla positions.
In the CATS case, Dulay has said that he would be looking into the matter, which was initially raised during the previous administration.
In 2013, the BIR’s Legal and Inspection Group noted possible tax violations by the luxury car importe given discrepancies between suggested retail prices and the company’s market prices
For instance, a Mercedes-Benz CLS 63 with a market price of P19.8 million was declared as sold for only P4.9 million.
Auto Nations has yet to issue a statement on supposed tax discrepancies.