BIR clears BSP of tax liability

The Bureau of Internal Revenue (BIR) has cleared the Bangko Sentral ng Pilipinas (BSP) of alleged unpaid gross receipts tax obligations.

BIR Revenue Region 6 chief Alfredo Misajon said the tax agency has already accepted the explanation of monetary officials on the alleged tax liability of the central bank amounting to P9 billion.

Monetary authorities said banks that bought the debt instruments from the central bank already remitted the corresponding taxes from the income earned from their investments.

Earlier, BIR deputy commissioner for legal and enforcement Gregorio Cabantac said monetary authorities have offered to pay the BIR P3.6 billion or 40 percent of the alleged total gross receipts tax obligations of the BSP. The amount covers the period 2005 to 2006 for debt and other financial instruments issued by the central bank.

The BIR conducted audits of BSP operations from 2004 to 2007 and the audits showed that the central bank did not pay gross receipt taxes and final withholding tax on the financial instruments they were selling.

The BSP has filed a case with the Court of Tax Appeals (CTA) to dispute the BIR claims, saying the move to sell financial instruments allows it to fulfill its mandate of easing inflation.

The CTA, for its part, has ruled that the BIR and the BSP should just resolve the matter between themselves.

According to BIR rules, gross receipts tax are slapped on banks and non-bank financial intermediaries performing quasi-banking functions. The BIR charges gross receipts tax on the issuance of financial instruments.

The BIR, the government’s main revenue earner, has a collection target of P845 billion this year or 10.3 percent higher than last year’s target of P765 billion.