BIR to enforce Oplan Kandado nationwide

THE Bureau of Internal Revenue (BIR) has ordered all of its revenue district offices (RDOs) to close down as many tax-evading firms as possible every quarter starting in April as part of the agency’s Oplan Kandado program to spur collections.

Commissioner Sixto Esquivias IV, at the agency’s annual operation planning in Subic Bay last week, told his officials that closing down establishments not paying the proper taxes will now be part of the performance indicators that will be used during the BIR evaluation for the next reshuffle scheduled in October.

According to the BIR guidelines that was approved by all management level employees, all RDOs belonging to the Class A and B are expected to padlock at least two tax-evading business establishments per quarter. Class-C RDOs are required to close down a firm every quarter, while Class-D RDOs are expected to shut down one every four months.

Class A and B RDOs are those key areas in Metro Manila and other main cities around the country like Cebu and Davao.

A BIR official explained that establishments that will be closed down are those that have deficiencies of at least 30 percent in their tax declaration to the government. This deficiency will cover tax period as far as 2007 to present, the official said.

Those that will be closed down will be first notified within five days to 48 hours before the BIR personnel shut down their operations.

“We want them to feel that the BIR is here and they should do their duties right,” the official said.

To date, the BIR had closed down a total of 10 business establishments nationwide found violating tax laws, especially the value-added tax.

Among those pad-locked in the past few months include La Suerte Grocery and Bakery in Magalang, Pampanga, for failure to declare more than P50 million in income in 2008; Charmy Food Phils. Inc., a manufacturer of soybean products in Pasig City, for not declaring P40 million of its sales for 2005-08; and Arra’s Fine Dining, a Korean Restaurant in Makati for understatement of its taxable sales in 2008 by more than P20 million.

Oplan Kandado is the flagship project of Esquivias which was launched shortly after he assumed the country’s top tax-man post late last year. The program is envisioned to plug the revenue loopholes as the economy is
slowing down due to the financial crisis.

The BIR has a target collection of P865.6 billion for 2009, P100 billion less than what was earlier projected by the interagency Development Budget Coordination Committee.

Last year the BIR failed to meet its P845-billion collection target by P67 billion, the biggest shortfall in years, owing to the slackening economy.

As provided for in the National Internal Revenue Code of 1997 as amended, or the Tax Code, and Revenue Memorandum Order 3-2009, business operations can be suspended or temporarily closed for failure to issue receipts or invoices by a VAT-registered taxpayer; failure to file VAT return; understatement of taxable sales or receipts by 30 percent or more of the correct amount in the case of a VAT-registered or registrable taxpayer; or failure to register.

Closure shall be enforced for a period of not less than five days until the taxpayer rectifies his violations by filing/amending his returns and paying the taxes and penalties due thereon.

“If the violations persist and the evidence so warrants, appropriate charges may be filed under the Bureau’s Run After Tax Evaders program,” the BIR said in a statement.