BIR, BSP reach accord on gross receipts tax

The Bureau of Internal Revenue (BIR) and the Bangko Sentral ng Pilipinas (BSP) have reached a compromise regarding the central bank’s alleged unpaid gross receipts tax obligations to the tax agency.

BIR Deputy Commissioner for legal and enforcement Gregorio Cabantac said monetary authorities have offered to pay the BIR P3.6 billion or 40 percent of the alleged total gross receipts tax obligations of the central bank. The amount covers the period 2005 to 2006 for debt and other financial instruments issued by the central bank.

“Last week, they offered P3.6 billion through a letter addressed to BIR Commissioner Lilian Hefti,” Cabantac told reporters yesterday. He said the compromise offer is aceptable.

He said the BIR conducted audits of BSP operations from 2004 to 2007 and that the audits showed that the central bank did not pay gross receipt taxes and final withholding tax on the financial instruments they were selling.

The central bank has filed a case with the Court of Tax Appeals to dispute the BIR claims, saying the move to sell financial instruments allows it to fulfill its mandate of easing inflation.

The CTA, for its part, has ruled that the BIR and the BSP should resolve the matter between themselves.

As such, the central bank offered a compromise of settlement worth P3.6 billion. This is 40 percent of BSP’s total alleged unpaid taxes from 2004 to 2007.

According to BIR rules, gross receipts tax is slapped on banks and non-bank financial intermediaries performing quasi-banking functions. The BIR charges gross receipts tax on the issuance of financial instruments.