BIR to review rules on tax compromise

The Bureau of Internal Revenue (BIR) will review its rules on compromise agreements with taxpayers.

The review comes on the heels of the conviction by the Sandiganbayan of former BIR Commissioner Bienvenido Tan for allowing San Miguel Corp. to pay a much lower tax than originally assessed in 1986.

"We have to review the rules on compromise, whether we can make it more liberal or stiffer," incumbent BIR Comm. Rene Bañez told The STAR in an exclusive interview.

Bañez said the Tan-San Miguel case will be reviewed "to avoid a similar situation for the BIR personnel who could get into trouble in the exercise of approving applications for compromise."

The Sandiganbayan early this month sentenced Tan to jail for entering into a compromise agreement with San Miguel Corp. in 1986. The food and beverage company was assessed a tax deficiency of P302.9 million.

However, Tan and San Miguel entered into a compromise wherein the latter was allowed to pay a mere P10 million. San Miguel’s original tax liability was set at P342.6 billion consisting of P33.8 million in specific tax and P308.7 million in ad valorem tax.

The anti-graft court declared the compromise agreement as illegal, and ordered the BIR to collect P292,951,048.93 from San Miguel as part of the uncollected tax deficiencies.

The present BIR administration is reviewing all tax evasion cases and amnesty applications dating back almost 10 years. The bureau is under pressure to implement institutional reforms in a bid to improve and increase revenue collections.

The country is projected to experience a budget deficit of P225 billion this year, with the Arroyo administration hoping to reduce this to P145 billion. Critical to the government’s bid is increased tax revenue collections.

Unofficial estimates indicate that actual collections represent only half the potential tax revenues. The non-collections are due to tax amnesty, tax evasion, and mis-declarations.