DOF orders BIR to settle tax cases with GOCCs

MANILA, Philippines — The Department of Finance (DOF) has ordered the Bureau of Internal Revenue (BIR) to look into the possibility of settling its pending and future tax disputes with state corporations.

During a recent executive committee meeting at the DOF, Finance Secretary Carlos Dominguez told deputy commissioner Celia King to explore this option as it would avoid costly and protracted legal battles.

“Can we avoid going to court for wholly-owned (state) companies? I want that as a rule. If there is a government-to-government problem, don’t go to court, just settle it among yourselves,” Dominguez told King.

Dominguez said it would be “pointless” for both the BIR and government-owned and controlled corporations (GOCCs) to argue before the courts and spend taxpayers’ money on legal fees, given that their common goal is to save or collect funds to fill the state coffers.

The finance chief added resorting to legal action would benefit neither the BIR nor the state firm.

He said even if the BIR succeeds in collecting taxes from a GOCC, the latter may end up borrowing more money and in the process, only burden the government, which would have to pay for the loan and the interest rate.

According to Dominguez, settling tax matters with GOCCs out of court would save the BIR’s Litigation Division, the Office of the Solicitor General and the Office of the Government Corporate Counsel (OGCC), which are all paid with taxpayers’ money, from additional work and legal fees.

Meanwhile, King, who heads the BIR’s Resource Management Group, had identified some possible settlements with private firms and GOCCs as big-ticket items that would help the bureau achieve its collection goal in the last quarter.

She cited one case involving a GOCC, which filed a complaint against the BIR before the Court of Tax Appeals despite the bureau’s preference to talk to the state firm for a possible compromise settlement or abatement of penalties.

The BIR is the biggest tax collecting arm of the government, traditionally contributing about 80 percent of the government’s total revenue. The BIR is targeting to collect P1.83 trillion in revenue for 2017.

So far, the bureau has collected P1.44 trillion from January to October, 11 percent up from P1.29 trillion last year. This leaves the BIR with P390 billion more to collect in order to reach its goal.

Earlier, BIR Commissioner Caesar Dulay expressed confidence the agency would be able to meet its target.

He said the BIR would continue to implement administrative measures that would help the bureau improve its collection.