1 BLUEPRINT for BIR Development Towards 2010

Where We Want to Be Tax Effort Ratio Must Rise from the Fall: Country must regain No. 2 spot in the Region if not better Quality of Governance: World Class Taxpayer Consciousness: Well-Informed and Self Motivated to be Tax Compliant

… our Strategy Work Program for 2003 and Beyond I. Effective Taxpayer Compliance Systems  Expansion of E-Services  BIR-COA Leadership in Computerization and Government Procurement  Reforms in Business Tax Compliance Processes  Resolution of Industry Issues  Better Taxpayer Education, Information and Assistance Strategic Directions: From Where We Are to Where We Want to Be

Internet BIR eFPS Banks Taxpayer in his office /home/eCafe Payment Confirmation The First Genuine ePayment System The First Genuine ePayment System in our Government Electronic submission of tax return Electronic Debit Instruction by the Taxpayer from his terminal Automatic debit of tax payment from taxpayer account Automatic credit of collections to Bureau of Treasury account Automatic reporting of collections to BIR Available 24 x 7

Awarding to AyalaPort April 23, 2003 Deployment of the New Expanded EFPS by Oct 31, 2003 Migration to the Internet Data Center by Aug 1, 2003 Review and Design of new eFPS June 30, 2003 eFiling and ePayment for Top 1000 of 43 Computerized RDOs by Dec 31, 2003 eFiling and ePayment of Top 1000 Taxpayers of All RDOs by Dec 31, 2004 eFiling and ePayment of all Taxpayers by 2005 Total Outsourcing of eFPS to an IDC Enhancement & Expansion + Capacity on Demand + More BIR Forms + All taxpayers

Long Range Vision Taxpayer Has Many Choices Taxpayer Has Many Choices Anytime - Anywhere Anytime - Anywhere

Business Processes Needing Reform: The Tax Compliance Process Registration of CRM/POS &/or Securing of ATP Issuance of Receipts/ Invoices Recording and Reporting of Sales Declaration of Business Taxes

Encouraging the issuance of proper ORs 3) Text raffle promo 4) Business Education “Infomercials/posters/etc” 5) Modified TCVD On-Going Projects to Improve Tax Compliance in Business: A Holistic Approach Controlling Registration 1)Amending RR “Accrediting a model of machine” 2)Electronic Registration Making sure businesses properly report sales 6) Reporting of Machine Readings thru Mobile Platforms 7) Reform on Summary List Submission Audit/selection method 8) Tax Compliance Report Card 9) Intensified Audit of “Off-Benchmark” Companies 10) No Contact Audit Registration of CRM/POS &/or Securing of ATP Issuance of Receipts/ Invoices Recording and Reporting of Sales Declaration of Business Taxes

TAX COMPLIANCE REPORT CARD (TCRC)

TCRC Message This Tax Compliance Report Card is a tool to ascertain a firm’s level of tax compliance for the period covered. It contains important management information for comparing a company’s tax performance vis-à-vis others in the industry. It will also provide the Bureau with a basis for the selection of companies for audit considering that it is the Bureau’s policy to focus its audit effort on less compliant taxpayers. We would therefore appreciate receiving feedback from you on the accuracy of the data reflected herein. Early detection and verification of unusual deviations particularly from the benchmarks will be to the mutual benefit of your organization and the Bureau. Very truly yours, Commissioner of Internal Revenue Commissioner of Internal Revenue

Fax On Demand Web Interface Knowledge DB BIR Contact Center: Taxpayer Information & Education TP Contacts BIR Contact Center Agent responds to questions Telephone

II. Effective Detection & Elimination of Revenue Leakages  Third Party Information - Computer Linkages & Data Matching –Expansion and Better Utilization of Existing TPI Databases: Quarterly Schedule of Sales Purchases, Imports DB, Government Purchases, Interest Payments to Foreign Creditors, Mortgaged Foreclosed Properties, etc. –Expansion of Taxpayers Database: Joint Projects with LGUs, BLGF; LRA and RPTA DB, LLDA, PDIC, BSP, SEC –Use of Government and Other Databases: SEC, BOI, LRA, LTO, PSE, BSP, SRA, Mines & Geo-Sciences Bureau, DOE, National Tobacco Administration Our Strategy

TPI-RELIEF: A FIRST NO CONTACT AUDIT SYSTEM Firm A’s Summary List of Purchases Supplier n RELIEF Undeclared VAT Due Letter Notices ITS Report on Non-VAT Suppliers (disqualified input VAT) Supplier’s particulars are matched with registration database to trap unqualified input VATSupplier’s particulars are matched with registration database to trap unqualified input VAT

Firm B’s Summary List of Sales RELIEF Undeclared VAT Due Letter Notices ITS Report on Sales-Purchase Discrepancy of “B” - TPI - Purchases of GA’s DPWHDBMDECSDNDothers Government and Large Taxpayers purchase database matched with supplier’s declared sales to trap undeclared sales and unpaid taxesGovernment and Large Taxpayers purchase database matched with supplier’s declared sales to trap undeclared sales and unpaid taxes TPI-RELIEF: A FIRST NO CONTACT AUDIT SYSTEM

II. Effective Detection & Elimination of Revenue Leakages  Strengthening of Withholding Tax Remittance, TCC/TDM and Revenue Accounting Systems  Repair or Enhancement of Existing Detection Systems –Stop Filers Task Force Detect Diverted Payments and Take Action on Non-Filers –Delinquent Accounts System –Case Management System Our Strategy

III. Intensified Enforcement III. Intensified Enforcement  Focused, Specialized and Short Duration Audits  Revalida Our Strategy  Special Operations on High Profile Evaders  Closure of Companies and Filing of Criminal Cases  Separation of Enforcement Group from Legal Group

IV. BIR-Private Sector Good and Honest Governance Program  Tax Campaign and Information Dissemination  Completion of Process Re-engineering Projects  Web-based TIN application and processing  BIR-Private Sector Project Monitoring and Implementation Unit (i.e. PRA, Huwag Tax-sil, Action for Economic Reforms, MBC, PCCI, FCCC, BAP, MAP, FOCIG, Rotary Club, etc.)  Simplification of Tax Administration: Manual of Bank Products; Manual of Tax Liabilities for Large Taxpayers  Codification of Regulations and Rulings Our Strategy

V. Organizational Adjustments  Strengthening of the Large Taxpayer Service  Regular Performance Review of RDs and RDOs  Collaboration with RIPS, Ombudsman and PCAGC on lifestyle check  COA, BOI and other regulatory agencies’ support on tax compliance of government projects  Outsourcing of certain operations : eFPS; Computer Facilities Management  Technical Assistance from Donor Agencies: WB; CIDA; IMF Our Strategy

VI. Active Support to Legislative Revenue Measures  Excise Tax Indexation  Transparency Bill  VAT on Sugar  Mandatory recognition of role of BIR taxes in government projects Our Strategy