BIR includes large taxpayers in benchmarking scheme

The Bureau of Internal Revenue (BIR) will include large taxpayers in its benchmarking performance scheme to effectively monitor their payments.

Large Taxpayers Service (LTS) head and BIR Assistant Commissioner Nestor Valeroso said the inclusion of the large taxpayers sector in the benchmarking system will also level the playing field.

The BIR used to monitor only small taxpayers under this system.

Valeroso said the large taxpayers have welcomed the move of the BIR to include them in the benchmarking system.

The BIR met yesterday with representative of the country’s large taxpayers from the automobile (manufacturer/assembler) and mining sectors. It will also meet with chemical manufacturing industry and other groups.

Valeroso informed the participants of the BIR’s intention to use the benchmarking method to determine large taxpayers within industry groups who are paying below the minimum amount for tax compliance purposes. The system was conceptualized by Valeroso himself and was effectively tested at Revenue Region No.7 Quezon City.

According to Valeroso, the system, which allows the BIR to enhance taxpayers; voluntary compliance by setting up a standard in measuring taxpayers’ compliance with regard to income tax due and net value-added tax (VAT) due of taxpayers in the same line of industry, will help the BIR national office to effectively monitor the taxpaying activities of large taxpayers in the country.

"The benchmark will serve as a guidepost in the implementation of tax laws. It is a tool, a brain for the BIR in choosing priority target (taxpayer) for audit and investigation," he said.

Valeroso said the cycle of benchmarking starts from data gathering using the financial statements attached to the returns filed by taxpayers under penalty of perjury.

The BIR then will conduct benchmarking, establish benchmark, notify the taxpayers covered, consider their reactions and prepare recommendation for surveillance and inventory stocktaking.

"Benchmarking is actually the process of determining and comparing the performance level of taxpayers in a given line of industry as far as net VAT due and income tax due are concerned in relation to gross sales/receipts vis-à-vis profit margin rate for the purpose of setting an industry standard of taxpayers‚ performance compliance," the BIR official said.

The LTS is tasked to collect at least 53 percent of the BIR’s total revenue of P675.35 billion for 2006.