Biz groups oppose mandatory reporting of passive income
Louella Desiderio (The Philippine Star) - March 30, 2015 - 10:00am

MANILA, Philippines - Business groups are calling on the Bureau of Internal Revenue (BIR) to make the submission of information on taxpayers’ extra income in the filing of the annual income tax return optional again for calendar year 2014.

In a joint position paper submitted to the Department of Finance and BIR on March 27, business groups Philippine Chamber of Commerce and Industry, Employers Confederation of the Philippines, Financial Executives Institute of the Philippines, Management Association of the Philippines, Philippine Exporters Confederation Inc., Philippine Institute of Certified Public Accountants and the Tax Management Association of the Philippines expressed concern over the mandatory submission of the Supplemental Information Return (SIR) or information on passive income as part of the annual income tax returns as prescribed in Revenue Regulations No. 2-2014 and reiterated in Revenue Memorandum Circular No. 9-2014.

The submission of the SIR would mean providing information on passive income that are tax exempt or have been subjected to final withholding taxes.

The additional information includes proceeds of life insurance policy, return of premium retirement benefits, pensions and gratuities,  personal or real properties received thru gifts, bequests and devises as well as gains for the sale or exchange of properties.

“We respectfully request that compliance with the SIR requirement be made optional again on the part of the taxpayer for income tax returns starting calendar year 2014,” the groups said.

This, as the groups noted that the reporting requirement was made optional for calendar year 2013 due for filing on or before April 2014.

The BIR decided to make the reporting requirement optional last year amid opposition by business groups and legislators citing violation of right to privacy and bank secrecy laws.

The business groups said the SIR reporting is also seen as a redundant requirement since the needed information is already available to the BIR from the reports submitted by the taxpayers.

Such requirement, they said, would just impose additional burden to taxpayers and would not necessarily increase collections of the BIR.

The reporting requirement is likewise difficult to implement, considering the nature and details of information required to be reported.

The groups said gathering all the required details on the passive income items is a tedious process.

“It is to be noted that one of the attractions for choosing investments with tax free or net of tax yields is the exemption from the hassle of accounting for and reporting of income received from said investments in the case of individual taxpayers. The requirement to account for and report such income negates that advantage,” the groups added.

 

 

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE EMPLOYERS CONFEDERATION OF THE PHILIPPINES FINANCIAL EXECUTIVES INSTITUTE OF THE PHILIPPINES GROUPS INCOME INFORMATION MANAGEMENT ASSOCIATION OF THE PHILIPPINES PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY PHILIPPINE EXPORTERS CONFEDERATION INC PHILIPPINE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND THE TAX MANAGEMENT ASSOCIATION OF THE PHILIPPINES
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