BIR to examine books of conglomerates

MANILA, Philippines - The Bureau of Internal Revenue (BIR) is examining the books of conglomerates for possible tax evasion, a ranking BIR official said over the weekend.

Claro Ortiz, BIR’s overall coordinator of the Run After Tax Evaders Program said the tax agency is continuing a program started during the time of BIR Commissioner Joel Tan-Torres.

Last year, Tan-Torres put in place tax measures for conglomerates by assigning a group from the large taxpayers group of the BIR to focus on these corporations.

Conglomerates are groups of related corporations with diversified business activities in different industries that are controlled and operated by a parent corporate entity.

Ortiz said the audit of the books of conglomerates would help the BIR determine if there is under-declaration committed by these huge entities. An under-declaration of more than 30 percent may be slapped with criminal charges, Ortiz said.

The BIR will particularly look into the practices of inter-company charges and transactions among related parties.

Through the audit program for conglomerates, the BIR will conduct a special tax investigation of over 20 conglomerates by a group of tax examiners familiar with the practices of transfer pricing, inter-company charges and other transactions between related parties.

Furthermore, under the rules, the revenue officers under the special audit teams shall undertake simultaneous, joint and coordinated examinations of the books of accounts of these identified taxpayers, covering all internal revenue taxes.

The investigation teams shall also prescribe issuances and guidelines that will govern the tax treatment of transactions of conglomerates.

The BIR has a goal to collect P940 billion this year.

Ortiz believes that an audit among the country’s conglomerates could yield hefty revenues for the BIR especially if there is under-declaration committed by these companies.

The BIR is stepping up efforts to raise revenues, going after different sectors which may have avoided paying the right amount of taxes in the past.