What I understand.
On November 11, 2016, I received a letter dated October 17, 2016 from the Office of the BIR Chief (attached).
His letter stated that the computation of the Minimum Corporate Income Tax should follow the International Accounting Standards instead of following the language of the law, that is the Tax Code. Furthermore, if I will follow the language of the law, the collection of the MCIT will be lower as it is compared to the use of IAS.
I am not persuaded.
The law creates the obligations that we must extinguish without mental reservation and purpose of evasion. It extends fairness and justice to all. In fact, the Philippine Constitution guarantees that the rule of taxation shall always be UNIFORM, EQUITABLE AND PROGRESSIVE.
IAS is not and will never be a law of this Republic. Why follow it when it really contradicted the law and the Constitution or even if it is in accordance with the law? We have to follow the law and nothing else.
Furthermore, under Section 269, Tax Code and in relation to Article 213, Revised Penal Code, it is a crime to collect an amount of taxes more than what the law requires. Have you forgotten the legal doctrine ‘solutio indebiti’? Thus, to require a corporation to pay more MCIT amount than the law mandates because there is an IAS principle that must be obeyed and is allegedly superior to the rule of taxation is a act that is contrary to the law and the Constitution.
Finally, in implementing and monitoring the law, a revenue officer should always be law-abiding and not IAS-abiding. To do the former is divine while to do the latter is a criminal act punishable by law.
What must be done.
Since the presentation shown in BIR Form Nos. 1702-RT, 1702-MX and 1702-EX are contrary to the law of this Republic because it either promote the underpayment or overpayment of MCIT, it is imperative and under the obligation created by law that the BIR should revised them so the users thereof will not violate the rule of taxation but more importantly, they will compute and pay the true and correct tax due to this Republic.
Conclusion.
The BIR is required to prepare the forms to be used by all taxpayers and according to the Tax Code, these forms should contain the form and substance that it requires. Therefore, please do not include an information and data that came from the outsider which may be corrupted and tainted with mistakes.
Please help the taxpayers exercise their legal rights and extinguish their legal obligations pursuant to the language of the law and not to any other form of languages.
Prayers.
I encourage the BIR including its authorised revenue officers and other concerned government officials to pray with me and ask the Almighty God that (a) this shall be accepted and acknowledged upon presentment; (b) all the available and legal reliefs and remedies that favour me shall knowingly and willingly be dispensed without mental reservation and purpose of evasion; and (c) all the correct, admissible and relevant actions to be accomplished in reply to the legal issues and simple requests herein presented should consciously be made in writing and delivered to me, within five (5) days from receipt hereof.
Signature and date hereof.
To attest my personal belief and conviction, I affix my signature below.
Oath of the governmental receiving person.
I affix my signature and/or had stamped my office’s official receiving emblem hereof to attest that I actually received/read/understood this, its attachments are clear, correct and complete and I am honourably committed to obey the implementing rules of Republic Act No. 6713.
Pages and Counterparts.
This privileged communication has four (4) pages and seven (7) counterparts.
Office of the Ombudsman.
Pursuant to RAs 6770 and 6713, your help and assistance on this matter will be highly appreciated.
Civil Service Commission.
Pursuant to the Civil Service Law, your help and assistance on this matter will be highly appreciated.
YOU ALONE
ONE CAN STOP THE BIR HARASSMENT
All taxpayers who are not only preparing their financial statements in conformity with either the Generally Accepted Accounting Principles (GAAP) or Philippine Financial Reporting Standards (PFRS) but also permitting their chosen external auditors to prepare and issue an Auditors' Report using the Generally Accepted Auditing Standards (GAAS) or Philippine Standards on Auditing (PSA) find themselves in a challenging and stressful tax audit examination.
The reason behind this abnormality can be traced to what the BIR's officials and employees think about the PFRS, GAAP, GAAS and PSA. Revenue officers and employees see and believe that this taxpayers' popular preference is an advertisement of being IGNORANT OF THE TAX LAW and its rules and regulations.
Although the Philippine Supreme Court and the tax-law-obedient BIR's officials and employees already voiced out publicly the SUPREMACY OF THE TAX ACCOUNTING RULES OVER AND ABOVE THE FINANCIAL ACCOUNTING STANDARDS AND MANAGERIAL ACCOUNTING POLICY DIRECTIONS, the current Certified Public Accountants (CPA), including their clients and staff, are still knowingly embracing the awful side effects of choosing and using such standards, principles and policy directions. Some of them resulted to a big and unbearable deficiency tax assessment, stressful tax harassment, closure and cessation of business, loss of employment to many employees, etc.
The difference between the Tax Accounting, on one hand and the financial accounting and managerial accounting, on the other hand, dwell solely on the purposes in which each of them pursues.
The financial accounting standards insist in protecting your investors and creditors' interests. Although, such purpose is so valid and acceptable in certain degree, it cannot be taken for granted the purpose of the tax accounting. Your consistent violation and disregard thereof have a greater impact on your public image and character. Your livelihood and liberty may also be at risk for your failure or refusal to follow it diligently. Finally, your freedom and legal rights will suffer seriously and may be damaged forever.
In fact, if you will be jail-staying for six (6) years because you disobeyed the tax accounting rules, your investors and creditors' money and interests surely will go to a trash bin.
However, the benefits of using the tax accounting rules in keeping the prescribed documentations, making the correct entries in the books of accounts and preparing the correct returns and reports consistently and consciously are freedom from surcharges, interest and civil liabilities. Moreover, you deprive the BIR to publicly humiliate and brand you and the members of your family as tax evaders, deprive the uniformed policemen to knock on your doors, escort you to the waiting police car and bring you to their police station for questioning, and finally, deprive the Department of Justice's prosecutors to file a criminal case against you in the Court of Tax Appeals.
By making your returns and reports to be user-friendly to all BIR's officials and employees, you help the Philippine Government save money. It will definitely know that to examine your books of accounts and other accounting records will not result in a deficiency assessment. Thus, it will become costly on its part to visit you and meddle with your business affairs and operations.
Having extensively said so, the compliance with the tax accounting rules needs your personal engagement and involvement. Clearly, its delegation to an inexperienced bookkeepers, undereducated CPAs and untrained lawyers may not bring favourable results or admissible excuses.
The Philippine Government requires you to extinguish your legal obligations that the tax accounting rules created. Else, it will not entertain a second thought of imposing a severe sanction for your continuous failure and refusal to comply with its rules and regulations. Its penalty may include closure of your business (livelihood), criminal prosecution (liberty) and publication of your name as a tax evader in social media (life). Would you ruin your kids' name, treasure and livelihood? EmelinoTMaestro.com thinks otherwise.
For this purpose, below are some of the ideas, subjects and concepts that may be discussed in our TAX ACCOUNTING BOOKKEEPING PROGRESSION*:
1. Accounting
a. Types
b. Bases
c. Levels
2. Documents
a. Official Receipt
b. Invoices
c. Other Adequate Records
3. Books of Accounts
a. General Requirements
b. Optional Requirements
4. Chart of Accounts
a. Uniform Guidelines: When to Debit and Credit
b. Types of Book Entries
5. Working Papers
a. SAWT
b. MAP
c. VSL-P
d. VSL-I
e. VSL-S
f. Inventory List
6. Reports
a. Statement of Management's Responsibility for AITR and FS
b. CPA Report
c. Statement of Assets, Liabilities and Network
d. Revenue and Expenses Statement
e. Earnings Statement (for Corporation)
f. Notes to Annual Income Tax Return (AITR)
7. Returns
a. BIR Form No. 1601C
b. BIR Form No. 1601E
c. BIR Form No. 1601F
d. BIR Form No. 1603
e. BIR Form No. 1701Q (for Individual)
f. BIR Form No. 1701 (for Individual)
g. BIR Form No. 1702Q (for Corporation)
h. BIR Form No. 1702 (for Corporation)
i. BIR Form No. 1901
j. BIR Form No. 1902
k. BIR Form No. 1903
l. BIR Form No. 1905
m.BIR Form No. 2305
n. BIR Form No. 2304
o. BIR Form No. 2307
p. BIR Form No. 2316
q. BIR Form No. 2551
r. BIR Form No. 2550M
s. BIR Form No. 2550Q
t. BIR Form No. 1604CF and Alphalist
u. BIR Form No. 1604E and Alphalist
v. BIR Form No. 2000
*subject to change without notice and obligation
**please be guided accordingly.
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