THE Department of Finance (DoF) blamed the Board of Accountancy (BoA) for undermining its anti-red tape campaign, claiming the BoA disregarded amended rules on Income Tax Returns (ITRs) filed by taxpayers.
In a statement on Thursday, the DoF explained that BoA insisted on requiring the submission of compilation reports as part of the attachments to the ITRs filed by taxpayers, notwithstanding the decision by the Bureau of Internal Revenue (BIR) to do away with this requirement.
Last year, the BIR issued Revenue Memorandum Circular 21-2016 informing all revenue officials and employees of the BoA resolution requiring the submission of the certified compilation reports, along with the audited financial statements, in filing ITRs beginning December 31, 2016.
But circular has already been amended by the BIR with its issuance of RMC 16-2017 on February 22, which states that only existing documentary requirements in the filing of ITRs will now be required by the Bureau “in line with the government’s thrust on improving ease of doing business and streamlining bureaucratic requirements.”
These “existing documentary requirements” pertain only to the submission of audited financial statements and, in certain cases, an attached audit certificate along with the ITR, and does not include the compilation certificate, Finance Undersecretary Antonette Tionko said.
Because of the submission of these compilation reports as insisted upon by the BoA, private companies are
compelled to hire certified public accountants (CPAs) accredited by the BoA to issue compilation certificates on top of the independent auditor’s certificate already required by the BIR and the Securities and Exchange Commission (SEC), the DoF explained.
This is because the issuer of the compilation report should not be the independent auditor, the DoF said.
Tionko said submitting these ITR compilation reports have proven to be tedious and costly for small- and medium-size enterprises (SMEs) and could hamper the BIR’s tax collection drive.
It is “additional red tape and could impede the BIR’s ability to collect taxes,” said Tionko, who heads the DOF’s Revenue Operations Group.
Tionko noted that the compilation reports cannot be prepared by just any CPA but should be done by those accredited by the BoA, which requires them to undergo 120 hours of paid seminars per year.
Tionko noted that despite the BIR circular, the BoA, in a resolution, pointed out that this requirement is legally allowed under the Philippine Accountancy Act of 2004 and has even warned CPAs to comply with the BoA requirement to avoid facing sanctions.
She said the DOF has already relayed its concerns regarding BoA’s refusal to cooperate with the anti-red tape campaign to the Professional Regulation Commission, which has supervision over the BoA.
Meanwhile, Finance Assistant Secretary Mark Joven said the Philippine Chamber of Commerce and Industry (PCCI) has also complained before the SEC about the BoA’s requirement of submitting the compilation reports as this was not only “unnecessary and redundant” since businesses were already required to submit a duly signed Statement of Management Responsibility together with the financial statement, but also adds to the cost of doing business, especially for SMEs
Besides the PCCI, small accountancy practitioners and the Philippine Institute of Certified Public Accountants (PICPA) have also sought a temporary restraining order against the other requirements on CPAs imposed by the BoA, he said.