Individual, corporate taxpayers to go through random audits

MANILA, Philippines - The Bureau of Internal Revenue (BIR) said all individual or corporate taxpayers must go through the dreaded BIR random audits at least once in their lives as the agency steps up efforts against tax evaders.

“Each person or business should at least be audited once during their lifetime. There will be a time that there will be random audits just to find out if everything is okay,” BIR Commissioner Kim Henares said in an interview.

Henares said that being the subject of a BIR audit does not necessarily mean one is a tax evader. “Being audited does not mean your books are problematic. We just want to check what you’re doing and if you’re paying the right taxes,” she said.

The BIR’s Large Taxpayers Service (LTS), which collects roughly 65 percent of total BIR revenues, is maximizing the use of audit by beefing up the auditing among large taxpayers.

She said that the LTS is keeping a close watch on the country’s large taxpayers. Those that have tax deficiencies would be asked to explain. Those who do not respond may face tax evasion.

“If they cannot explain or if it takes a long time for them to explain, they might be audited,” Henares said.

The BIR earlier announced that it is set to examine the value added tax (VAT) returns of large taxpayers and those in the National Capital Region (NCR).

The newly launched VAT tax audit program is part of efforts to meet the agency’s goal of exceeding the VAT collection goal of P226.18 billion for the year and the BIR’s total revenue target of P1.06 trillion.

Henares said the VAT has been underperforming.

Henares has issued Revenue Memorandum Order 19 and 20-2012 detailing the pilot areas of the VAT tax audit program for its large taxpayers and Metro Manila Revenue Regions such as Caloocan, Manila, Quezon City and Makati.

“The RMOs aim to implement a quality short VAT audit to correct taxpayer errors and violations in the most recent VAT returns filed with the end in view of improving VAT compliance in the subsequent VAT returns filing and payment,” Henares said.

Under the  two BIR orders, a VAT audit team composed of a VAT audit manager and revenue officers will audit and investigate the first and second quarter VAT returns of 2012 of Large Taxpayers and NCR taxpayers and every quarter thereafter.