KIM Henares, the chief tax collector as head of the Bureau of Internal Revenue, along with other top BIR officials, has committed a very serious sin of omission in releasing the names of top Filipino tax payers. Her list posted at the BIR website is incomplete because it shows the owners of Mercury Drug Inc. as the biggest tax payer when she and her family landed on that spot because they are being honest in their filings.
If only Henares and company would closely scrutinize all tax payments of the Philippines’s very rich and famous, then they would not mislead the public into believing that so and so families known to be the controlling stockholders of conglomerates have not been paying the correct taxes. They should have explained in the BIR website that such and such tax payments by so and so individual tax payers were computed based only on their personal income.
With their sin of omission, BIR officials, again led by Henares, have unnecessarily exposed to ridicule those that did not make it to the top of their list. Have they, for example, told the public that the families, who control companies listed on the Philippine Stock Exchange, also receive dividends, either in stock or in cash, but which are not reported as part of their basic salaries? How about the capital gains taxes paid by individuals or families who sold their real estate property? Why are they not in the list?
Besides, if the public who may be curious to know the true compensation of the family members who are chairmen and presidents of their own businesses, they would find “salary” is only part of their income. The others are allowances and bonuses, and those that would not qualify under these two classifications are usually categorized under “others.”
With all these classifications, BIR officials should explain to the public which of these items are taxable that individual tax payers should pay every year and which are not. Unless they have some other definitions, definitely, the “pays and perks and others” are not part of one’s personal income.
Perhaps, it would be easier to understand why the very rich Filipinos may not be among the biggest individual tax payers.
Due Diligencer is going back to a recent piece on “insiders’ worth” which appeared last week in this space. Hopefully, businessman Enrique K. Razon, chairman of the board and president of International Container Terminal Services Inc., would not mind if the worth of his ICTSI holdings is used here as an illustration.
Anyway, as the numbers show, Razon’s holdings in ICTSI had market value of P101.457 billion. Does this worth mean he could be a big tax payer? The answer, of course, is no or not necessarily because, in the first place, he is not selling and even if he were to unload – which would mean he is leaving ICTSI – the gross proceeds would be taxed accordingly but would not be credited as part of his personal income.
Yes, he is worth over a hundred billion as far as his ICTSI ownership is concerned, but taxes are paid not based on one’s worth but on personal income, which to a layman, would mean salary.
As a rule, listed companies are required to disclose the compensation of “their five highest paid executives” who are identified in their filings and of “other executives and directors as a group unnamed.”
To illuastrate: Ayala Land Inc. (ALI) simplified its compensation filing by dividing its executives’ compensation into “salary” and “other variable.” Last year, the company reported that its five top executives as a group received salary of P101.20 million and “other variable pay” of P90 million for a total of P191.20 million.
Since the Zobels have always been identified as the owners of the Ayala group, the public would expect Augusto Zobel de Ayala and his brother Fernando would be in the list when they are not. Instead, ALI’s five highest paid executives are Antonino T. Aquino, president and chief executive officer; Vincent Y. Tan, executive vice president; Arturo G. Corpuz, Raul M. Irlandfa and Enilio Lolito J. Tumbokon, senior vice presidents.
The absence of the Zobel brothers among ALI’s highest paid executives would partly explain their low ranking in BIR’s list of top individual tax payers. But if Henares and company had looked at the taxes they collected from them and other members of the family for the dividends they receive every year, they would have had a complete report on the Philippines’s biggest individual tax payers.
As the saying goes. “better lack next time” but what would be true today is “better late than later” which, translated, would mean it’s not yet late for Henares to update BIR’s posting on the country’s top tax payers.
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