Presentation in Bangkok

8/11/2019 Presentation in Bangkok

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The Philippines:

Tax Assessment, Appeal and

Dispute Resolution

Presentation made for

The ASEAN Tax System SeminarSeptember 15 to 17, 2010

Bangkok, Thailand

Philippine Presentation for The ASEAN Tax System Seminar [Sept 15 to 17, 2010 Bangkok, Thailand]


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The Philippine Tax Office: BIR

DEPARTMENTOF FINANCE

Bureau ofInternal

Revenue

Bureau ofCustoms

Bureau ofTreasury

Bureau ofLocal

GovernmentFinance

2Philippine Presentation for The ASEAN Tax System Seminar [Sept 15 to 17, 2010 Bangkok, Thailand]


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Chiefs Officials of the BIR

CommissionerofInternal Revenue

Deputy Commissioner Operations Group

Deputy Commissioner Legal &

Inspection Group

Deputy Commissioner Resource

Management Group

Deputy Commissioner Information

Systems Group



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Large Taxpayers Offices

LT Audit Offices

Group (AssistantCommissioners

Regular & Excise)

CIR 1

2

8



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Regional & District Offices

DistrictOffices

Regions

DCIR -OG 1

19

119



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Powers & Duties of the BIR

!Assess and collect of all internal revenue

taxes, fees, and charges, and

!

Enforce all forfeitures, penalties, and finesconnected with the assessment & collection

function

! Execute favorable judgments the Court of

Tax Appeals and the ordinary courts.



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Powers of the Commissioner of BIR

! Interpret:" exclusive and original jurisdiction to interpret the

provisions tax laws (subject to review by the Secretary

of Finance)! Decide:

"

To decide on, (subject to the exclusive appellatejurisdiction of the Court of Tax Appeals)

"

disputed assessments

" refunds of internal revenue taxes, fees or othercharges, penalties imposed in relation thereto,



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Power of Commissioner of the BIR

! Examination"

Notice of Audit, Letters of Authority, Tax VerificationNotice, Letter Notice

! Obtain information"

Request for Third Party Information, Data-Linkage

! Summon any person"

Subpoena Duces Tecum

! Take testimony"

Subpoena Ad Testificandum

! To order canvass [survey or surveillance]" Mission Orders



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Audit Notice

! Issuance of Audit Notice

" Letter of Authority

" Letter Notice of Discrepancy

! Burden of proof is upon the taxpayer to showclearly that the assessment is wrong and

without basis or is erroneous.

! Failure to do so on the part of the taxpayer

justify the judicial affirmation of the

assessment



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Informal Conference

! Notice of Informal Conference

" A Notice of Informal Conference is an invitation by

the Revenue District Office (RDO) to a taxpayer

under audit to visit the tax office to hear all thediscrepancies noted by the Revenue Officer who

audited their books of accounts with a

computation of possible tax deficiency

assessment



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Informal Conference

! Notice of Informal Conference

" An Informal Conference affords the taxpayer with

an opportunity to present his side of the case

" After service of a Notice of Informal Conference,

taxpayer is given fifteen (15) days from date of

receipt to appear before the tax agency, otherwise

he shall be considered in default.



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Preliminary Assessment Notice (PAN)

! Preliminary Assessment Notice (PAN)

" After an Informal Conference, taxpayer is given

reasonable time to present documentary evidence

or explanation on the discrepancies noted and torebut the deficiency tax assessment against them

" If still there exist a sufficient basis to assess or

after the taxpayer has been declared in default in

an informal conference a PAN shall be issuedagainst a taxpayer



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Preliminary Assessment Notice (PAN)

! Preliminary Assessment Notice (PAN)

" A PAN is issued and served either personally or

by registered mail to the taxpayer

" It contains a explanation of the deficiency tax

assessment, showing in details the facts and the

laws and rules and regulations or jurisprudence on

which the proposed assessment is based

" Taxpayer is given fifteen (15) days to respond tosaid PAN otherwise they are considered in default



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Final Assessment Notice (FAN) and

Formal Letter of Demand! Final Assessment Notice (FAN) and Formal

Letter of Demand

" After giving opportunity to the taxpayer to rebut

the PAN and still there are basis to assess

deficiency taxes or there are still unexplained

issues or after they have been in default, a Final

Assessment Notice shall be issued against them

with a Formal Letter of Demand calling for thepayment of the computed deficiency tax

assessment



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Exceptions to Prior Notice of Assessment

! When the finding for any deficiency tax is the

result of mathematical error in the

computation of the tax appearing on the face

of the tax return by the taxpayer; or

! When a discrepancy has been determined

between the tax withheld and the amount

actually remitted by the withholding agent; or



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! When a taxpayer who opted to claim a refund

or tax credit of excess creditable withholding

tax for a taxable period was determined to

have carried over and automatically applied

the same amount claimed against the

estimated tax liabilities for the taxable

quarter/s of the succeeding taxable year; or



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! When the excise tax due on excisable articles

has not been paid; or

!

When an article locally purchased orimported by an exempt person, such asm but

not limited to vehicles, capital equipment,

machineries, and spare parts, has been sold,

traded or transferred to non-exempt persons



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Final Assessment Notice (FAN) and

Formal Letter of Demand! Final Assessment Notice (FAN) and Formal

Letter of Demand

" Issued by the Commissioner or his authorized

representative

" It must state the facts, the laws, rules and

regulations, or jurisprudence on which the

assessment is made, otherwise the letter of

demand and assessment notice shall be void" Sent to taxpayer by mail or by personal service



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Disputed Tax Assessment

! A taxpayer may protest administratively within thirty

(30) days from receipt of the formal letter of demand

and assessment notice

! If there are several issues involved in the formalletter of demand and assessment notice but the

taxpayer only disputes or protests validity of some

issues raised, the taxpayer shall be required to pay

the deficiency tax on undisputed tax assessments



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! Taxpayers failure to present facts, laws,

rules and jurisprudence to support his protest

on an issue will likewise make such issue

undisputed thus collectible

!A collection letter shall be issued to the

taxpayer calling for the payment of the said

deficiency tax, inclusive of the applicablepenalties on the undisputed assessment



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! Taxpayer who administratively protest an

assessment is required to submit required

documents within sixty (60) days from filing of

letter of protest, otherwise, the assessment

becomes final, executory and demandable

!Also, if the taxpayer fails to file a timely

protest, the assessment becomes final,executory and demandable



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Final Decision on Disputed Assessment

(FDDA)! Within 180 days, the protest may be denied

in whole or in part by the Commissioner of his

authorized representative through the

issuance of a Final Decision on Disputed

Assessment (FDDA), where taxpayer is given

thirty (30) days to administratively appeal or

judicially make an appeal



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Administrative Appeal

! Within thirty (30) days from receipt of FDDA

taxpayer may file an appeal before the

Commissioner on matters involving question

of law or before the assessing office on

matters involving question of facts, otherwise,

the assessment becames final, executory

and demandable



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Judicial Appeal

! In alternative, within thirty (30) days from

receipt of FDDA taxpayer may opt to file an

appeal before the Court of Tax Appeals

(CTA)



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Administrative Decision on Appeal

! The CIR is expected to render a decisionwhich shall state the facts, the applicable law,rules and regulations or jurisprudence on

which the decision is made, otherwise such adecision shall be considered void

! Likewise it should state that such is a finaldecision

! Thereafter, taxpayer may make a judicialappeal before the Court of Tax Appeals(CTA)



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Judicial Decision on Appeal

! Decision rendered by the Court of Tax

Appeals (CTA) may be appealed before CTA

on motion for reconsideration, then it can still

be further appealed before the CTA En Banc,

then finally before Supreme Court



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Court of Tax Appeals

! Composed of nine (9) justices

! Divided into three (3) branches

!

Makes a decision either" En Banc

" Branch (consisting of 3 justices each)

Philippine Presentation for The ASEAN Tax System Seminar [Sept 15 to 17, 2010 Bangkok, Thailand]28


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Appellate Jurisdiction of CTA

! By law has exclusive appellate jurisdiction toreview by appeal

" Decision of the CIR

" Inaction of the CIR

" Decisions of lower court on local tax cases

" Decision of Commissioner of Customs

" Decisions of real property taxes

"

Decisions of Finance on cases elevated to themby automatic review

" Decisions of Department of Trade & Agriculture

involving dumping and countervailing duties


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Presentation in Bangkok