Issuance of Revenue Regulations 4-2014

Revenue Regulations (RR) No. 4-2014 was issued by the Bureau of Internal Revenue (BIR) sometime in March 2014 to monitor the fees charged by professionals, aid the BIR personnel in conducting tax audit and boost revenue collections. 

This RR No. 4-2014 introduced the following new requirements in addition to the regular annual registration, registration of books of accounts and receipts/invoices:

1. Submission of affidavit of billing rates, manner of billing and factors considered in determining service fees upon registration and every year thereafter.

2. Registration of official appointment book (this will contain only names of clients and date/time of meeting.

3. When no fee is charge to client, a registered receipt shall be issue indicating 100% discount for substantiation.

Implication of the RR

Clearly, the BIR’s intention is really to gather additional evidence that will aid them in their audit. The intention is to promote transparency and to eradicate tax evasion. 

If we are to take a look at this measure, there is but less consideration on how to monitor compliance. For example, a professional may have registered his books of accounts, receipts, appointment books and submitted affidavit before the BIR.

Firstly, how sure are we that the rates indicated in the affidavit are the actual rates? A professional may use approximations, which are comparable to market but way lower with what is actually charged.

Secondly, how sure are we that every meeting with the clients are documented in the appointment book? The additional task to be perform it self may already be a discouragement on its performance, much more that the professional thinks that his records will be used against him upon tax investigation.

Thirdly, how sure we are that a professional issues official receipts to its clients/patients every time  a service is rendered or a fee is received? If the customer/client didn’t ask for it, the professional may forget or intentionally not issue. Or, as a consideration for friendship or any existing customer-service provider relationship, issuance of OR is considered acceptable. 

So how can we drive public to always ask for receipt? Their are various programs implemented by the BIR, such as “Premyo sa Resibo” which encourages customer to ask for receipts for a chance to win.  But, is that enough? There are also report a tax evader programs in exchange for rewards, but who will do it? Government cannot penalize people for not asking for receipts.  They can also not benefit from asking for it, unlike the corporate customers who may use them to so that their expenses maybe claimed as allowable deductions.

Therefore, we considered such effort as, somehow, futile, considering such loopholes. It will also create additional burden on the part of the tax payers, who are usually operating small scale.

Unless the BIR can prove later on that collections significantly increased due to the implementation of such regulations, then we see it ineffective and most of all, inefficient.

Extension of Submission of Appointment Book until May 5, 2014

In a news from DZMM, a division of ABS-CBN, an interview with the BIR Commissioner Kim Henares confirmed the extension of submission of appointment books for professionals.  Copy of the news is written below:

Pinalawig pa ng Bureau of Internal Revenue (BIR) ang deadline sa pagsusumite ng “appointment book” ng ilang self-employed professionals katulad ng mga doktor.

Sa panayam ng DZMM, sinabi ni BIR Commissioner Kim Henares na dapat sana’y ngayong Lunes, Mayo 5 ang itinakdang palugit para sa paghahain nito.

“In-extend ko po ‘yung deadline to May 31 kasi marami… ang may request po ‘yung mga different medical society,” ani Henares.

Bukod sa mga doktor, sinabi ni Henares na kailangan ding iprisinta ng mga dentista, abogado, accountant, engineer, architect at interior decorators ang kanilang “appointment book”.

Ipinaliwanag din ni Henares ang kahalagahan ng libro sa pag-audit ng BIR sa kita ng mga self-employed na propesyunal.

“Para makita namin kung ilan ‘yung kliyente nila. Bibilangin lang namin ‘yung resibo,” paliwanag ni Henares.

Sisilipin din anya ang affidavit of standard fee na siyang tutukoy kung magkano ang singil ng mga propesyunal kapalit ng kanilang serbisyo.

“Katulad po ng book of account, hindi ninyo naman sina-submit sa amin, itinatago ninyo. Kasi kapag in-audit namin kayo, titingnan namin ‘yung inyong book of account “

Babala ni Henares, mahaharap sa kaukulang parusa ang mga mabibigong sumunod sa kautusan.

“Usually, mga 1,000 to 50,000 [pesos] ho yan [ang multa]. Meron din ho ‘yang criminal provision, failure to keep book, meron din hong criminal liability pero hopefully hindi naman ho hahantong doon,” ani Henares.

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