Conversation among BIR commissioners

ON January 25, 2023, i had the opportunity to have a close conversation with the new Bureau of internal revenue (Bir) commissioner romeo “Jun” lumagui. We were all seated at one table in the Makati diamond residences, with the court of Tax Appeals Presiding Justice roman del rosario and several Tax Management of the Philippines incoming officers and former presidents, for the induction of the 2023 TMAP officers and directors.

Commissioner Jun is showing great courage in running after these nefarious tax evaders and criminals. He also has shown his strong political will in running after the sellers of fake receipts and invoices that involved billions of pesos of lost taxes. I salute Commissioner Jun for these major enforcement actions.

This was the second event that Commissioner Jun had with the TMAP. Last January 12, a group of about 20 TMAP officers and members trooped to the BIR national office to have our courtesy call to the Commissioner. We engaged Commissioner Jun for over two hours of his valuable time, where there was a lively exchange of ideas and suggestions. Commissioner Jun also enlightened us about his major priorities. These included providing excellent service to taxpayers, pursuing digital transformation of the BIR, implementing the electronic invoicing system, and enforcement against erring taxpayers. He further confirmed his attendance in the TMAP induction of incoming officers, led by President Suzette Celicous-sy.

During the induction event, I was in the table of our invited guests, BIR Commissioner Lumagui and CTA Roman Del Rosario. I suppose that I was given this privileged seating since I was a former TMAP President and BIR Commissioner. In his early 40s, Commissioner Jun probably is the youngest head of the BIR ever appointed. Being a seasoned tax practitioner and tax administrator involving over 40 years in the field of tax, I took it upon myself to exchange ideas on various tax issues with Commissioner Jun during the time that we were seated together during the induction event.

I inquired about the status of the tax fraud investigation of the Pharmally case, which was the subject of a Senate Blue Ribbon investigation from 2010 to 2022. He apparently has not been updated on the status of his BIR officers. I understood then his position of not making any comment on how the Pharmally tax case will proceed. However, Commissioner Jun was more deliberate in responding that the BIR will still be pursuing tax evasion cases when I asked if the Run After Tax evaders program of the past administrations will continue. In fact, he disclosed that the BIR will be timing the release of information on tax fraud cases during the tax filing season. He emphasized that it is important to communicate to the public that the BIR is on the alert for mis-declarations of income tax returns that will be filed by April 2023. He also advised me that the launch of the traditional tax campaign activities will be on February 7 at the Philippine International Convention Center. He added that President Ferdinand Marcos Jr. may grace this event.

I congratulated him on the recent accomplishments of the BIR teams that raided several establishments and caught the perpetrators engaged in the manufacturing and trading of fake or illegal cigarettes. Commissioner Jun himself led the BIR raiding teams. He also mentioned that he instigated the enforcement activities against taxpayers involved in the unregistered vape (electronic cigarettes) and smuggled fuel that has not undergone fuel marking. Commissioner Jun is showing great courage in running after these nefarious tax evaders and criminals. He also has shown his strong political will in running after the sellers of fake receipts and invoices that involved billions of pesos of lost taxes. I salute Commissioner Jun for these major enforcement actions. I speculate that the BIR, under his leadership and the full support of President Marcos, will be making inroads in these tax evasion and fraud cases. In fact, in a recent Senate hearing, the BIR was commended by Senator Raffy Tulfo for its initiative in the fuel marking scheme, while at the same time castigating the Bureau of Customs for their lapses. earlier, Senator Tulfo mandated the BIR to run after the tax liabilities of the current and former high officials of the Procurement Service of the Department of Budget and Management and the Department of education involved in the irregular purchase of overpriced laptops for teachers.

I also discussed with him the direction of the BIR in its transfer pricing activities. In late 2020, the BIR issued Revenue Regulations 34-20201 providing guidelines and procedures for the submission of a new and simplified BIR Form 1709 (the Related Party Transactions Form), the mechanics of TP documentation, and other TP matters. If the mass of data coming from these reports is effectively automated and processed by the BIR, much information can be derived to assist in the TP audits and monitoring. I mentioned to Commissioner Jun that it is high time that the BIR is able to implement an effective TP program that can ferret tax reduction practices by and among related taxpayers. I recall that when I was the Chief of the International Tax Affairs Division way back in the 1990s, I initiated several TP initiatives. But unfortunately, the BIR has not been able to develop an effective TP program over all these years, and even the vietnam tax office has apparently surpassed the BIR in this aspect.

Commissioner Jun Lumagui indicated that he wants to hire more enforcement officers and information technology staff. The BIR surely is lacking in the numbers and talent of these much-needed resources to be able to cope with its ever-increasing tax collection targets. Commissioner Jun was realistic enough to describe these targets as “aspirational.”

As a former BIR Commissioner, I wish the best for Commissioner Jun Lumagui.

Joel L. Tan-torres was the former Dean of the University of the Philippines Virata School of Business. Previously, he was the Commissioner of the Bureau of Internal Revenue, the chairman of the Professional Regulatory Board of Accountancy, and partner of Reyes Tacandong & Co. and the Sycip Gorres and Velayo & Co. He is a Certified Public Accountant who garnered No. 1 in the CPA Board Examination of May 1979. He is now back to his tax practice with his firm JL2T Consulting. He can be contacted at joeltantorress@yahoo.