May 20th, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) is seeking the explanation of the Bureau of Internal Revenue (BIR) on the cancelled service of a supposed cancellation order of Megaworld Corporation, after reports came out on May 17 of a media advisory from the South NCR Revenue Region of the Bureau indicating the issuance of a closure order of the company on May 18.
“That was a bizarre series of events that leaves us with more questions than answers. Why was the order issued? Why was it cancelled if the order had already been issued? On what grounds can the BIR just do that to one of the largest firms in the country, that is listed publicly besides?” Salceda asked.
Salceda adds that “I’ve also talked to my former colleagues in the investment management industry, and they tell me that they have been assured by some sources that it is ‘fake news.’ What’s fake news? The closure order issuance? The fact that it was planned? And if it was ‘fake news,’ why is Megaworld now saying that there was some disagreement with the BIR over audit?”
“The exercise was so arbitrary, with a very strange scheduled press conference. And that does nothing for business confidence – that you can close a publicly listed corporation over an audit disagreement so drastically,” Salceda added.
Salceda says that “tax authorities need to be more transparent, more professional, and more by-the-book about the tax system and our instruments of enforcement. One can’t avoid but think that it was a “settle this or else” exercise on the part of BIR.”
“We need revenues, for sure, and we need to punish businesses that refuse to pay taxes correctly. But a closure order on the basis of a protest over jurisdiction seems overboard. So, as the Congressional committee chair overseeing tax enforcement, I just want answers.”
“I also want to know from the Department of Finance, especially the Revenue Operations Group, whether they knew this was going to happen, and to what extent,” Salceda added.
“Because it creates the impression that the BIR will twist your hand if you don’t agree with it – and businesses that are smaller than Megaworld will get the wrong signal. If they can do that to a big elephant, what can they do to smaller businesses?”
Better rules for audit, tax transparency needed
Salceda also emphasized the need for better tax rules for audit and tax transparency to avoid conflict between tax authorities and taxpayers.
“We really need to fully implement the tax transparency mandates that are already in the law. I am particularly referring to electronic invoicing, which should speed up VAT refunds, minimize disputes between taxpayers and the BIR over sales-related issues, and reduce the burden of compliance for taxpayers.”
“We also need a fully electronic system of filing, and a more transparent and more rules-based dispute resolution mechanism between the BIR and the taxpayer. The Ease of Paying Taxes Bill sought to do that, and I hope President-elect BBM will take it on as a priority of the next administration,” Salceda added.
“When the tax system is more rules-based and transparent, you avoid bizarre incidents like this.”