What is the tax administration?

Tax administrations implement tax law. Their main task is to deal with taxpayers and collect
the right amount of tax. The most significant taxes governed by national and/or EU tax law
are Value Added Tax (VAT), Corporate Income Tax and Personal Income Tax.

Impact of Tax Administration on Revenue Generation

Inefficient tax administration can result in lower tax revenues, reduced economic growth, and
increased social inequality. A poorly administered tax system can lead to non-compliance
and tax evasion, resulting in reduced revenues for the government.

What is the function of tax in the Philippines?

The Philippines uses taxes to redistribute income and wealth in society. Progressive taxation
systems, for instance, tax higher incomes at higher rates to reduce inequality. Similarly,
taxes on luxury goods or "sin" products like tobacco and alcohol help raise revenue while
also discouraging their consumption.

Administrative Agencies

The Department of Finance (DOF) is principally responsible for the fiscal policies and
general management of the government’s financial resources. It has the executive
supervision and control of the following agencies:
● Bureau of Internal Revenue - primarily responsible to assess and collect all national
taxes and charges imposed by the NIRC, other tax laws and regulations.
● Bureau of Customs and Tariff Commission - tasked to enforce the Tariff and
Customs Code (TCC). The BC also collects the taxes on imports embodied in the
NIRC. (responsible in the enforcement of national tax such as income tax, estate tax,
and more)
● Land Transportation Office (LTO) - responsible to collect registration fees and
motor vehicle tax.
● Duly and Lawfully Authorized Collectors - persons, agencies, or duly accredited
banks authorized by the BIR, BC, TC and LTC to collect. (only for collecting and not
assessing)
● Local Offices in Charge to Enforce Local Taxation - the Provincial Treasurers,
CIty and Municipal Treasurers, Provincial and City Assessors, Provincial and City
Board of Assessment Appeals, and Central Board of Assessment Appeals.

The Bureau of Internal Revenue:

Organization and Composition

● The Bureau of Internal Revenue shall be under the supervision and control of the
Department of Finance.
● Its powers and duties shall comprehend:
a. The assessment of all national internal revenue taxes.
b. The collection of all national internal revenue taxes.
c. The enforcement of all forfeitures, penalties, and fines connected.
d. The execution of judgements in all cases decided in its favor by the Court of
Tax Appeals and the ordinary courts.
 ● The Bureau of Internal Revenue is divided into:
a. National Office - general direction, guidance and control of the entire
operations.
b. Field Offices (Regional Offices) - execute and implement the national
policies and programs prescribed by the National Office.

BIR NATIONAL OFFICE

It consists of:
1. The Commissioner
2. The six (6) Deputy Commissioners (4 Deputy under Section 3 of the NIRC and 2
under the Executive Order 430 by the former President Arroyo).
3. The fourteen (14) assistant commissioners (who assist the deputy commissioners)

Commissioner of Internal Revenue

PBBM names tax lawyer Romeo Lumagui Jr. as BIR Commissioner – Presidential
Communications Office.
● The chief executive of the Bureau (NIRC Sec. 3)
● Appointed by the President of the Philippines upon recommendation of the Secretary
of Finance.
● Formulates the policies and administers the activities of the Bureau. (not responsible
for creating tax law, only the legislative body of the government, he only has the
power and authority to interpret this laws and create policies for it)
● Given full authority in matters of discipline and appointment of internal revenue
personnel.
● May make necessary rules and regulations needed to delineate the authority and
responsibility of the various groups and services of the Bureau.
Deputy and Assistant Commissioners
● They assist the Commissioner in supervising the administrative and operational
activities of the Bureau.
● They are appointed by the President of the Philippines upon the recommendation of
the Commissioner and with the approval of the Secretary of Finance.
The Bureau shall be composed of the following groups and offices:
● Office of the Commissioner
● Resource Management Group
● Legal and Inspection Group
● Operations Group
● Information System Group

FIELD OFFICES
● The Philippines has been divided into Regional Offices (ROs) which directly execute
and implement the national policies and programs prescribed by the National Office
for the enforcement of the internal revenue taxes.
● A regional office covers several provinces (including cities). Each regional office is
responsible for directing and coordinating the operation of the following divisions:
a. Assessment
b. Human Resource
c. Collection
d. Finance
 e. Monitoring
f. Administrative Divisions
g. Legal
● Each regional office is headed by a Regional Director (RD).
● He administers and enforces internal revenue laws and regulations within his
assigned regional area, in conformity with the delegation of authority from the
Commissioner.
● Under the regional offices are the Revenue District Offices (DOs) headed by the
Revenue District Officers who are under the direct control and supervision of the
Regional Director.
● The revenue district offices implement programs, methods and procedures necessary
for the efficient, effective and economical assessment and collection of internal
revenue taxes in the revenue district in accordance with the policies, standards and
guidelines prescribed by the National Office and Revenue Regional Offices.
● Each of the revenue district office is composed of field men and examiners
performing assessment work and collection agents and clerks performing collection
work.
● They are the personnel having direct contact in dealing with the taxpayers.

AUTHORITY AND POWERS OF THE COMMISSIONER

● To interpret tax laws and to decide tax cases (NIRC Sec. 4)
● To obtain information, and to summon, examine, and take testimony of persons
(NIRC Sec. 5)
● To make assessments and prescribe additional requirements for tax administration
and enforcement (NIRC Sec. 6)
● To delegate power (NIC Sec. 7)
● To ensure the provision and distribution of forms, receipts, certificates, and
appliances, and the acknowledgment of payment of taxes (NIRC Sec. 8)
TAX ADMINISTRATION
● Refers to the manner or procedures of assessing and collecting or enforcing tax
liabilities.
● Thus, tax administration is composed of:
a. Assessment, and
b. Collection.

ASSESSMENT
● The official action of an officer authorized by law in ascertaining the amount of tax
due under the law from a taxpayer.
● This action necessarily involves:
○ The computation of the tax due
○ Giving of notice to the taxpayer (Preliminary Assessment
○ Notice or Final Assessment Notice)
○ The making of demand upon him for the payment of tax o deficiency (Formal
Letter of Demand)
● Assessments are always presumed to be done pursuant with the law, making it
legally valid and enforceable against the taxpayer, unless the taxpayer protests.
● The burden of proving the illegality of any assessment, as the case may be, shall rest
upon the taxpayer.
● Failure to file a return on the part of the taxpayer shall not prevent the Commissioner
from authorizing the examination of the taxpayer.
● The tax or any deficiency tax so assessed shall be paid upon notice and demand
from the Commissioner or his duly authorized representative.
● Any return, statement or declaration filed in any office authorized to receive the same
shall not be withdrawn.
● Within three (3) years from the date of such filing, the same may be modified,
changed or amended provided no notice for audit or investigation of such return,
statement, or declaration has been actually served upon the taxpayer (Sec. 6[a]).
● RR 12 - 99, as amended by RR 18 - 2013, provides that the Commissioner or his
duly authorized representative shall issue the Preliminary Assessment Notice
(PAN),Final Assessment Notice/Formal Letter of Demand (FAN/FLD), and Final
Decision on Disputed Assessment (FDDA).
● Taxpayers shall submit their responses to the PAN and protests to the FAN/FLD with
the duly authorized representative of the Commissioner who signed the PAN and
FAN/FLD.
● Prior to the issuance of the PAN, the taxpayer may be allowed to make voluntary
payments of probable deficiency taxes and penalties (RMC No. 11 - 2014).
● When the Commissioner or his duly authorized representative finds that proper taxes
should be assessed, he shall first notify the taxpayer of his findings thru the issuance
of Preliminary Assessment Notice (PAN).
● However, in some cases, PAN is no longer necessary under the following
circumstances:
○ When the deficiency tax is a result of mathematical errors in the computations
appearing on the face of the return;
○ When a discrepancy has been determined between the tax withheld and the
amount actually remitted by the withholding agent;
 ○ When a taxpayer who opted to claim tax refund or credit of excess creditable
withholding tax for a taxable period was determined to have carried over and
automatically applied the same amount against the estimated tax liabilities for
the taxable quarter or quarters of the succeeding taxable years;
○ When the excise tax due on excisable articles has not been paid; and
○ When an article locally purchased or imported by an exempt person has been
sold, traded or transferred to non-exempt persons.
● The Commissioner may terminate the taxable period any time by sending such
decision to the taxpayer and demand immediate payment of the tax due thereon
when:
○ The taxpayer is retiring from business subject to tax;
○ The taxpayer is intending to:
○ Leave the Philippines; or
○ Remove his property therefrom; or
○ Hide or conceal his property.
○ The taxpayer is performing any act tending to obstruct the proceedings for the
collection of the tax for the past or current quarter or year.
● Deficiency Assessment
○ Deficiency means the amount by which the tax imposed by the law exceeds
the amount as computed and shown in the return filed by the taxpayer.
○ Made by the Commissioner or any authorized subordinate officer after an
examination and inspection of the taxpayer's return or records or after an
independent investigation, in which a deficiency is found.
● If no amount is shown as the tax due of the taxpayer on his return, or if no return was
made by the taxpayer, then the amount as computed in pursuant of the law is the
deficiency tax.