BIR to withdraw regulation on SALN for private taxpayers

Published by rudy Date posted on March 16, 2011

MANILA, Philippines –  The Bureau of Internal Revenue (BIR) would withdraw its controversial regulation requiring private taxpayers to file the equivalent of a statement of assets, liabilities and net worth (SALN) mandatory for government officials.

“Yes, your honors, I will recommend (to Finance Secretary Cesar Purisima) the withdrawal of Regulation 2-2011,” BIR Commissioner Kim Henares told angry members of the House ways and means committee.

Cagayan de Oro City Rep. Rufus Rodriguez, whose Resolution 1069 prompted the ways and means committee’s hearing, told Henares that the new rule “violates the right of private citizens to privacy.”

“It also violates the law on the secrecy of bank deposits since it would require citizens to disclose their interest income. With the disclosure of such income, the BIR could estimate the amount of deposits a taxpayer has in the bank,” he said.

He said the regulation runs counter to the National Internal Revenue Code (NIRC), under which only income earners not required to file an annual income tax return (ITR) could be compelled to file an annual information return (AIR).

BIR Regulation 2-2011, issued last March 1, requires taxpayers with annual income exceeding P500,000 to submit an AIR stating their earnings and income sources, including interest income, royalties, dividends, and gains from the sale of real properties.

They are to comply with the requirement starting next month. However, apparently due to strong opposition to the rule, the BIR made the submission of the document optional for this year and mandatory beginning next year.

Valenzuela Rep. Magtanggol Gunigundo told Henares that the new regulation targets the wrong group of taxpayers.

“It is your tax withholding or collecting agents, such as employers like the House of Representatives and banks, that are required by the NIRC to file an annual AIR, not the taxpayers from whom taxes are withheld,” he said.

He echoed Rodriguez’s assertion that the AIR requirement would violate the Bank Secrecy Law.

“Under the NIRC, banks, which withhold a 20-percent final tax on interest income, are prohibited from identifying depositors and revealing their deposits in reporting the taxes withheld. You cannot now require those same depositors to expose themselves and their deposits by reporting their interest income,” Gunigundo said.

Mindoro Oriental Rep. Reynaldo Umali said the BIR should interpret tax laws like the NIRC “in favor of the taxpayer, not against him.”

“I join my colleagues for the immediate withdrawal of this regulation,” he said.

Sensing the collective opposition of his colleagues to the AIR requirement, Batangas Rep. Hermilando Mandanas, ways and means committee chairman, pleaded with Henares to withdraw the regulation.

“We have a common objective here, which is to boost government revenues. I do not want that we appear to be fighting,” he said.

Rodriguez later thanked Henares for being “sensitive to the complaints of the people and their elected representatives.”

He said he has no reason to doubt that Purisima would listen to the BIR chief’s recommendation for the withdrawal of the AIR rule.

He also thanked Mandanas for immediately scheduling the hearing.

“We’re happy that the BIR commissioner listened to reason,” said Rep. Teddy Casiño of the party-list group Bayan Muna. –Jess Diaz (The Philippine Star)

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