DoF to expedite tax refunds after SC wage ruling

by E.J.C. Tubayan, Businessworld, Feb 17, 2017

THE FINANCE department will issue tax refunds to minimum wage earners as soon as possible, following the high court’s decision to nullify the regulation that taxes their supposed exemptions.

Finance Undersecretary Antonette C. Tionko said that the Department of Finance (DoF) will comply with the Supreme Court (SC) decision, but has yet to review it.

“As soon as we get a copy, we’re going to read it and study it and find a way to best implement the decision,” said Ms. Tionko in an interview on Wednesday. “If that’s what the decision says, then we’ll comply with the decision,” she added.

On Jan. 24, the SC released a 56-page unanimous decision that found revenue regulation 10-2008, approved by the DoF and the Bureau of Internal Revenue (BIR), to be void as the regulation disqualifies minimum wage earners from availing of tax exemptions granted by law under Republic Act (RA) 9504.

Petitioners said that the BIR regulation is an “unauthorized departure from the legislative intent of RA 9504.”

The SC directed the two agencies to grant a refund through withholding tax adjustments or tax credits for affected individual taxpayers.

Ms. Tionko said that the DoF will have to coordinate with the BIR to identify how to track those who overpaid, and what form the refund will take.

“We will look all options to make it easy to taxpayers,” she said.

Asked for when the DoF will target to implement the decision, Ms. Tionko said that they hope to issue necessary guidelines within the year.

“As soon as possible, as soon as we can,” said Ms. Tionko.

Meanwhile, the Tax Management of the Philippines (TMAP) — which was one of the petitioners against the regulation — said it was “pleased” with the court’s decision.

In a statement, the TMAP said that under the decision, the DoF and the BIR are enjoined to: “allow the withholding agents to (i) refund the overpaid tax to the affected employees or their heirs and (ii) automatically deduct any amount refunded from the current withholding tax due, and to act with dispatch in processing claims for refund of self-employed individuals.”

However, TMAP Vice-President for external affairs, lawyer Eleanor L. Roque, said that the BIR will face difficulties if the taxpayers who overpaid in 2008 are no longer with the same employer.

“We are thinking that for employees who have the same employer still, the BIR should issue a regulation allowing the employers to refund. However, for employees who no longer with the same employer, they would need to file their own claim with the BIR,” said Ms. Roque.

“But without an implementing issuance with the BIR, employers can not just refund on their own because this situation is not covered by existing rules,” she added.

Ms. Roque said, the BIR would also have a hard time accessing the records in 2008 to prove refundable amounts due.

“TMAP hopes that the present [g]overnment will not raise technicalities to thwart anew the benefits granted to taxpayers by law in 2008,” the organization added.

“Revenue issuances that are contrary to law aimed solely at increasing tax collections have no place in a democracy,” said TMAP. —