Prudence dictates tax policies–BIR
Bureau of Internal Revenue building. AFP FILE PHOTO
The Aquino administration on Monday defended its handling of controversial tax issues, especially the refund of value-added taxes (VAT) for some foreign companies with local investments and the long-running PEACe bonds.
In a statement e-mailed to the Inquirer, Presidential Communications Secretary Herminio Coloma Jr. quoted Bureau of Internal Revenue Commissioner Kim Henares who pointed out that “the rules, law and jurisprudence are clear: all VAT refunds are processed within 120 days. Taxpayers will know within this 120-day period what they have to do: either they will be granted or denied a refund. If they do not get a response, the refund is deemed denied. When denied, they have 30 days within which to appeal to the court. Refunds are like exemptions: taxpayers will have to prove they are entitled to the refund.”
“The processing of the refund is not ministerial on the part of the BIR,” Henares said in her comments responding to allegations that the Aquino administration had been dragging its feet and refusing to honor VAT refunds to foreign firms.
“Refunds are similar to government expenditures. These will have to be based on a justifiable basis; otherwise, responsible officials can be charged with malversation or plunder, depending on the amount involved,” Henares said. “We are well aware that in the past, there had been several scams involving refunds.”
Henares also responded to criticism that it reversed itself when it withheld some P4.9 billion worth of taxes from the Poverty Eradication and Alleviation Certificate (PEACe) bonds that it had earlier ruled to be exempt from the 20-percent final withholding tax.
“We honestly believe the ruling of the BIR sometime in early 2000 (was) wrong. Why should there be a special class of government securities? All government securities should be taxed in the same way,” she said.
“What these [bonds] will fund and who will receive the benefit should not have any bearing on its tax consequences,” she said. “After all, issuances of government securities are made to fund public goods. Furthermore, doubt is not purely cast upon the government side. There are other people who are also questioning the exemption.”
She said that the amount involved was of such a magnitude as to open the authorities to possible plunder complaints should they eventually found to be erroneous in granting the exemption.
“It is OK to defend something if you believe it is right. But I would not risk myself for something I believe is not right,” Henares said. “Prudence dictates that there should be a final declaration from the judiciary as to what is right and what is wrong.”
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