BIR to probe 20 large taxpayers

CEBU CITY -- The Bureau of Internal Revenue (BIR) will investigate at least 20 large taxpayers found to have "exceptionally" high input value-added tax (VAT) claims for the period 1998 to 1999.

"I have issued LAs (letters of authority) to audit 20 big companies under the Large Taxpayers category," Internal Revenue Commissioner Dakila B. Fonacier said in a press conference here.

He said they have unearthed "some emerging pattern of unsatisfactorily tax compliance" that is why he ordered the immediate audit of these firms.

Fonacier declined to identify the companies involved in the BIR probe but hinted these firms come from various sectors.

According to BIR associate commissioner for Operations Melchor Ramos, the audit was an offshoot of the concern raised by Congress that some companies were able to skirt paying taxes by reporting high input VAT.

"This issue was raised in Congress. We verified it. When we opened the books of these companies, we found a pattern of high input taxes. If they will report high input tax, then, they will not pay taxes anymore. They claim too much input tax," Ramos said. He added that based on their initial audit results, these firms were able to report input tax ranging from P2 million to P3-million input VAT claim per month. "Practically, if they have high input tax than output tax, they will not pay tax anymore," Ramos said.

Ramos said that since the Large Taxpayers Service of the BIR was only formed last year, they have yet to identify these "possible fraudulent" activities of the companies under it. There are about 680 identified large taxpayers under the LTS. The BIR intends to increase the number LT to 1,500 by yearend or early next year.

Fonacier suspended the issuance of LAs when he assumed office early this year. Before the suspension, the BIR regional directors had the power to issue LAs.

The BIR chief is authorized to issue LAs. For instance, Fonacier ordered the issuance of LAs against at least 21 stockbrokerage firms that might have been involved in the BW Resources Corp. stock scandal.

Fonacier said about three percent of the BIR's tax collection comes from its investigation/assessment efforts, while the remaining 97 percent is accounted by voluntary tax compliance.