There is something terribly wrong with the way Bureau of Internal Revenue (BIR) Commissioner Kim Henares does her job. Her combative stance in raising revenues from business has earned the ire of the business sector already reeling from the harassment of ‘vultures’ within her turf.
It’s no secret that business has long been the victim of unscrupulous BIR collectors who force taxpayers just to ‘come across’ instead of paying the right amount of taxes. One horror story that comes to mind is the complaint of one businessman that of the P2.5 million in taxes his company paid, only P500, 000 is officially receipted. There are many more similar stories of this type and if only Henares had done an honest to goodness house cleaning as soon as she was sworn into office, the BIR would have met its target since day one of this present dispensation.
Henares trusts these ‘vultures’ even more than the business sector from which the country gets the wherewithal to keep the economy running. She humiliated the medical profession by profiling doctors as tax cheats and more recently locked horns with the securities and banking industry over its revenue regulation requiring them to divulge the alphabetical list (alphalist) of their clients. Such regulation has the effect of forcing companies and the banking sector to divulge stock payments, dividends and other personal information about investors and their trading accounts.
The industry was forced to present its case before the Supreme Court arguing that complying with the BIR regulation could open it up to lawsuits from their clients for breaching the Data Privacy Act. The SC promptly stopped the BIR, Finance Department and the Securities and Exchange Commission from enforcing such regulation.
Did it stop Henares from her recalcitrant posture? Despite her setback at the hands of the judiciary, it didn’t take that long for her to issue another revenue regulation which will now compel financial institutions to identify which of their clients they are withholding taxes from.
The new scheme has done away with the practice of BIR accepting at face value the declaration of financial institutions (like stockbrokers and banks) that the investment income of clients has already been subjected to final withholding tax unless the company can identify specifically who paid what.
Before, financial institutions levied withholding taxes on clients’ investment income and remitted these to the BIR in lump sum form – specifically for investments lodged under the generically named “nominee accounts” of the Philippine Central Depository.
As I see it, Henares is attempting to shift the nature of the fight from one between the BIR and the financial institutions to one between the financial institution and their clients, a very wicked maneuvering.
Now, Henares has practically placed the BIR on a warpath against these institutions instead of being its partners in progress. She is hoping that these institutions will face a probable revolt from clients whose investment incomes may end up being taxed twice. It’s plain and simple blackmail, if you will. With this new regulation, Henares hopes that financial institutions will be coerced to finally give the ‘alphalist’ of their clients.
This move has a chilling effect on general business. Financial institutions are being pressured to reveal the identities of their clients at the risk of lawsuits for violating the data privacy act. The result will be total chaos in the business sector which could erode investors’ confidence and cause capital flight. Is this what Henares has been after?
To be affected are small equities investors and bank depositors. Henares cannot hope to catch a big fish here. Big companies are of course presumed to be following to the letter the disclosure ethics, ever cognizant of their corporate responsibilities.
Also, it is believed that disclosing the identities of investors and depositors can be used as a tool by the government to spy on its citizens. Assuming, for the sake of argument, the revenue regulation is prompted by ‘good faith’ (here goes that phrase again), no one can tell whether the next BIR chief would be goaded by the same ‘good faith’ spirit.
Not so hidden agenda
IABC AWARDEE: MVP Group of Companies media bureau head and Philex Mining senior vice president for corporate communications Atty. Mike Toledo has recently been named this year’s Communication Excellence in Organization (CEO Excel) awardee by the International Association of Business Communicators (IABC) Philippines.
Mike honed his skills as a lawyer during his stint with the ACCRA Law Offices. He in an alumnus of the London School of Economics and the UP College of Law. Before joining the MVP Group, he was president and CEO of Weber Shandwick Worldwide, was senior vice-president of the Fil-Estate Group of Companies, and served as presidential spokesperson. And by the way, he has a great singing voice.
CLIO AWARDS: Our friend Gil Chua just relayed the good news that ad agency par excellence DDB DM9 won the first Grand Clio award for the Philippines.
The 55th annual Clio Awards recently announced its 2014 Grand Clio Award winners with the Direct Grand Clio in Direct going to DDB DM9JaymeSyfu Manila for their Smart Communications “TXTBKS” campaign. The Grand Clio Award is the jury’s highest honors and is awarded to exceptional projects that push the boundaries of creativity in a given medium.
“This year’s Clio Awards introduced a new level of innovation and competition for the industry,” says Clio Executive Vice President Nicole Purcell. “With winners coming from all over the world, creating memorable work for major brands, we are happy to honor them and look forward to the ceremony.” The ceremony takes place on Oct. 1 at Cipriani Wall Street in New York City.
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