The Bureau of Internal Revenue (BIR) will start investigating next week some of the country’s private inter-related companies suspected of applying the transfer pricing policy to substantially cut down on their tax payments.
BIR Commissioner Joel Tan-Torres said he has formed special teams to conduct simultaneous and coordinated examinations of the accounting books of these conglomerates.
BIR said transfer pricing scheme has not been the only major concern of the BIR but other revenue services worldwide.
The BIR issued the decision after the government reported the other day that the budget deficit overshot its target to P134.2 billion against a limit of P110.9 billion in the first three months.
Transfer pricing involves the sale of goods and services by the mother company to its affiliates at exorbitant prices which additional expenses are later deducted by these subsidiaries in their taxable earnings or profits in their income and business tax returns.
Tan-Torres said the audit teams will be composed of examiners from the Large Taxpayers Service which handles the investigation of the more than 1,000 top corporations and district offices where the branches of these conglomerates are based. –Daily Tribune