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(i) The manner in which tax returns, information and reports

REVENUE REGULATIONS shall be prepared and reported and the tax collected and paid,
as well as the conditions under which evidence of payment
1. Authority of the Secretary of Finance to promulgate rules and shall be furnished the taxpayer, and the preparation and
regulations publication of tax statistics;
(j) The manner in which internal revenue taxes, such as
SEC 244, NIRC income tax, including withholding tax, estate and donor's
Authority of Secretary of Finance to Promulgate Rules and taxes, value-added tax, other percentage taxes, excise taxes
Regulations – The Secretary of Finance upon recommendation of the and documentary stamp taxes shall be paid through the
Commissioner, shall promulgate all needful rules and regulations for collection officers of the Bureau of Internal Revenue or
the effective enforcement of the provisions of this Code. through duly authorized agent banks which are hereby
deputized to receive payments of such taxes and the returns,
papers and statements that may be filed by the taxpayers in
2. Specific provisions to be contained in rules and regulations connection with the payment of the tax: Provided, however,
That notwithstanding the other provisions of this Code
SEC 245, NIRC prescribing the place of filing of returns and payment of taxes,
Specific Provisions to be Contained in Rules and Regulations - The the Commissioner may, by rules and regulations, require that
rules and regulations of the Bureau of Internal Revenue shall, among the tax returns, papers and statements that may be filed by
other things, contain provisions specifying, prescribing or defining: the taxpayers in connection with the payment of the tax.
(a) The time and manner in which Revenue Regional Directors Provided, however, That notwithstanding the other provisions
shall canvass their respective Revenue Regions for the of this Code prescribing the place of filing of returns and
purpose of discovering persons and property liable to national payment of taxes, the Commissioner may, by rules and
internal revenue taxes, and the manner in which their lists and regulations require that the tax returns, papers and
records of taxable persons and taxable objects shall be made statements and taxes of large taxpayers be filed and paid,
and kept; respectively, through collection officers or through duly
(b) The forms of labels, brands or marks to be required on authorized agent banks: Provided, further, That the
goods subject to an excise tax, and the manner in which the Commissioner can exercise this power within six (6) years
labelling, branding or marking shall be effected; from the approval of Republic Act No. 7646 or the completion
(c) The conditions under which and the manner in which of its comprehensive computerization program, whichever
goods intended for export, which if not exported would be comes earlier: Provided, finally, That separate venues for the
subject to an excise tax, shall be labelled, branded or marked; Luzon, Visayas and Mindanao areas may be designated for the
(d) The conditions to be observed by revenue officers filing of tax returns and payment of taxes by said large
respecting the institutions and conduct of legal actions and taxpayers.
proceedings; For the purpose of this Section, 'large taxpayer' means a taxpayer
(e) The conditions under which goods intended for storage in who satisfies any of the following criteria;
bonded warehouses shall be conveyed thither, their manner (1) Value-Added Tax (VAT) - Business establishment with VAT
of storage and the method of keeping the entries and records paid or payable of at least One hundred thousand pesos
in connection therewith, also the books to be kept by Revenue (P100, 000) for any quarter of the preceding taxable year;
Inspectors and the reports to be made by them in connection (2) Excise tax - Business establishment with excise tax paid or
with their supervision of such houses; payable of at least One million pesos (P1, 000,000) for the
(f) The conditions under which denatured alcohol may be preceding taxable year;
removed and dealt in, the character and quantity of the (3) Corporate Income Tax - Business establishment with
denaturing material to be used, the manner in which the annual income tax paid or payable of at least One million
process of denaturing shall be effected, so as to render the pesos (P1,000,000) for the preceding taxable year; and
alcohol suitably denatured and unfit for oral intake, the bonds (4) Withholding tax - Business establishment with withholding
to be given, the books and records to be kept, the entries to tax payment or remittance of at least One million pesos
be made therein, the reports to be made to the (P1,000,000) for the preceding taxable year.
Commissioner, and the signs to be displayed in the business Provided, however, That the Secretary of Finance, upon
ort by the person for whom such denaturing is done or by recommendation of the Commissioner, may modify or add to the
whom, such alcohol is dealt in; above criteria for determining a large taxpayer after considering
(g) The manner in which revenue shall be collected and paid, such factors as inflation, volume of business, wage and employment
the instrument, document or object to which revenue stamps levels, and similar economic factors.
shall be affixed, the mode of cancellation of the same, the The penalties prescribed under Section 248 of this Code shall be
manner in which the proper books, records, invoices and imposed on any violation of the rules and regulations issued by the
other papers shall be kept and entries therein made by the Secretary of Finance, upon recommendation of the Commissioner,
person subject to the tax, as well as the manner in which prescribing the place of filing of returns and payments of taxes by
licenses and stamps shall be gathered up and returned after large taxpayers.
serving their purposes;
(h) The conditions to be observed by revenue officers
respecting the enforcement of Title III imposing a tax on
estate of a decedent, and other transfers mortis causa, as well
as on gifts and such other rules and regulations which the
Commissioner may consider suitable for the enforcement of
the said Title III;
Exception to the exception: a tax law should not be given
BIR RULINGS AND ISSUANCES retroactive application when it would be so harsh and oppressive for
in such case, the constitutional limitation of due process would be
1. Power of the Commissioner to interpret tax laws
violated (Republic v. Fernandez, 99 Phil. 934 [1956]).

SEC 4, NIRC § RMC No. 53-11

Power of the Commissioner to Interpret Tax Laws and to Decide Tax “Therefore, contributions referred to in Section 32(B)(7)(f) of the
Cases – The power to interpret the provisions of this Code and other NIRC of 1997 cover only the mandatory/compulsory contributions of
tax laws shall be under the exclusive and original jurisdiction of the the concerned employees to SSS, GSIS, PHIC, and HDMF. Thus, this
Commissioner, subject to review by the Secretary of Finance. Office holds that voluntary contributions to these institutions in
excess of the amount considered compulsory are not excludible
The power to decide disputed assessments, refunds of internal from the gross income of the taxpayer and hence, not exempt from
revenue taxes, fees or other charges, penalties imposed in relation Income Tax and Withholding Tax. Consequently, the exemption
thereto, or other matters arising under this Code or other laws or from withholding tax on compensation referred to in Section
portions thereof administered by the Bureau of Internal Revenue is 2.78.1(B)(12) of Revenue Regulations (RR) No. 2-98 shall apply only
vested in the Commissioner, subject to the exclusive appellate to mandatory/compulsory GSIS, SSS, Medicare and Pag-ibig
jurisdiction of the Court of Tax Appeals. contributions”.

§ Revenue Administrative Order (RAO) No. 02-01 § RR No. 05-12

Revenue Administrative Orders (RAOs) are issuances that cover This establishes the policy on the binding effect of rulings issued
subject matters dealing strictly with the permanent administrative prior to the effectivity of the Tax Reform Act of 1997.All rulings
set-up of the Bureau, more specifically, the organizational structure, issued prior to January 1, 1998 shall no longer have any binding
statements of functions and/or responsibilities of BIR offices, effect. Consequently, these rulings cannot be invoked as basis for
definitions and delegations of authority, staffing and personnel any current business transaction/s. Neither can these rulings be
requirements and standards of performance. used as basis for securing legal tax opinions/rulings.

STATEMENT OF POLICY: It is the recognized policy under this Order § RMC No. 22-12
that the power to interpret the provisions of the Tax Code of 1997 This clarifies the implementation of Revenue Regulations No. 5-
(Tax Code) and other tax laws is under the exclusive and original 2012, to wit:
jurisdiction of the Commissioner of Internal Revenue, subject to (a) All BIR Rulings issued prior to Jan. 1, 1998 are not to be used as
review by the Secretary of Finance, as provided for in Section 4 of precedent by any taxpayer as a basis to secure rulings for
the Tax Code. The Bureau of Internal Revenue is under the themselves for current business transaction/s or in support of
supervision and control of the Department of Finance as provided their position against any assessment.
for in Section 2 of the Tax Code and Book IV, Title II, Chapter 4, (b) All BIR Rulings issued prior to Jan. 1, 1998 are not to be used
Section 18 of the Administrative Code of 1987. There is a need for by any BIR action lawyer in issuing new rulings for request for
uniformity of rulings and issuances in the interpretation and rulings involving current business transaction/s.
application of the provisions of the Tax Code and other tax laws. (c) However, BIR Rulings issued prior to Jan. 1, 1998 remains to be
valid but only: i.to the taxpayer who was issued the ruling; and
2. Non-retroactivity of rulings ii.Covering the specific transaction/s which is the subject of the
same ruling.
SEC 246, NIRC (d) BIR Rulings issued prior to Jan. 1, 1998 shall remain valid as
Non- Retroactivity of Rulings - Any revocation, modification or mentioned above, unless expressly notified of its revocation or
reversal of any of the rules and regulations promulgated in unless the legal basis in law for such issuance has already been
accordance with the preceding Sections or any of the rulings or repealed/amended in the current Tax Code.
circulars promulgated by the Commissioner shall not be given
retroactive application if the revocation, modification or reversal will
be prejudicial to the taxpayers, except in the following cases: VII. Construction and Interpretation of Tax Laws,
(a) Where the taxpayer deliberately misstates or omits Exemptions/Exclusions and Refunds
material facts from his return or any document required of
him by the Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of
Internal Revenue are materially different from the facts on
General Rule:
which the ruling is based; or
(c) Where the taxpayer acted in bad faith. In case of doubt, tax laws are to be construed strictly against the
government and liberally in favor of the taxpayer.

No person or property is subject to taxation unless within the terms

General rule: Tax laws are prospective in operation. The reason is
or plain import of a taxing statute.
that the nature and amount of the tax could not be foreseen and
understood by the taxpayer at the time the transaction which the
law seeks to tax was completed. Taxes, being burdens, they are not to be presumed beyond what the
statute expressly and clearly declares. Thus, a tax payable by
Exception: Tax laws may be applied retroactively provided it is “individuals” does not apply to “corporations.”
expressly declared or clearly the legislative intent. (Lorenzo v.
Posadas, 64 Phil. 353 [1937]). Tax statutes offering rewards are liberally construed in favor of
informers. (Penid v. Virata, 121 SCRA 166 [1983]).
Exceptions: VIII. Organization and Functions of the BIR
(1) The rule of strict construction as against the government is not
applicable where the language of the statute is plain and there is no
doubt as to the legislative intent. In such case, the words employed
are to be given their ordinary meaning. Ex. Word “individual” was THE BIR
changed by the law to “person”. This clearly indicates that the tax
applies to both natural and juridical persons, unless otherwise 1. Powers and duties of the BIR – Sec. 2, NIRC
expressly provided. The Bureau of Internal Revenue shall be under the supervision and
control of the Department of Finance and its powers and duties shall
(2) The rule does not apply where the taxpayer claims exemption comprehend the assessment and collection of all national internal
from the tax. revenue taxes, fees, and charges, and the enforcement of all
forfeitures, penalties, and fines connected therewith, including the
Tax statutes are to receive a reasonable construction or execution of judgments in all cases decided in its favor by the Court
interpretation in view of carrying out their purpose and intent. They of Tax Appeals and the ordinary courts. The Bureau shall give effect
should not be construed to permit the taxpayer to easily evade tax to and administer the supervisory and police powers conferred to it
payment. Thus, the good faith of the taxpayer is not sufficient by this Code or other laws.
justification for exemption from the payment of surcharges imposed
by the law for failing to pay tax within the period required by law.
2. Chief officials of the BIR – Sec. 3, NIRC
TAX EXEMPTIONS The Bureau of Internal Revenue shall have a chief to be known as
Commissioner of Internal Revenue, hereinafter referred to as the
General Rule: Commissioner, and four (4) assistant chiefs to be known as Deputy
In the construction of tax statutes, exemptions are not favoured; Commissioners.
construed strictissimi juris against the taxpayer.

(a) NPC v. Albay: Tax exemptions must be shown to exist clearly 3. Internal revenue districts – Sec. 9, NIRC
and categorically, and supported by clear legal provisions. With the approval of the Secretary of Finance, the Commissioner
shall divide the Philippines into such number of revenue districts as
(b) Floro Cement v. Gorospe: Claims for an exemption must be
may from time to time be required for administrative purposes. Each
able to point out some provision of law creating the right, of these districts shall be under the supervision of a Revenue District
and cannot be allowed to exist upon a mere vague
implication or inference.
(c) Comm. V. Kiener Co. Ltd. (65 SCRA 142 [1975]): Taxation is
the rule and exemption the exception, and therefore, he 4. Revenue regional director – Sec. 10, NIRC
who claims exemption must be able to justify his claim or Under rules and regulations, policies and standards formulated by
right thereto, by a grant expressed in terms “too plain to be the Commissioner, with the approval of the Secretary of Finance, the
mistaken and too categorical to be misinterpreted.” Revenue Regional director shall, within the region and district offices
under his jurisdiction, among others:
Exceptions: (a) Implement laws, policies, plans, programs, rules and
(1) When the law itself expressly provides for a liberal regulations of the department or agencies in the regional
construction, that is, in case of doubt, it shall be resolved in area;
favor of exemption; and (b) Administer and enforce internal revenue laws, and rules
and regulations, including the assessment and collection of all
(2) When the exemption is in favor of the government itself or
internal revenue taxes, charges and fees;
its agencies, or of religious, charitable, and educational
(c) Issue Letters of authority for the examination of taxpayers
institutions because the general rule is that they are exempt
within the region;
from tax.
(d) Provide economical, efficient and effective service to the
(3) When the exemption is granted under special circumstances people in the area;
to special classes of persons. (e) Coordinate with regional offices or other departments,
bureaus and agencies in the area;
(4) If there is an express mention or if the taxpayer falls within (f) Coordinate with local government units in the area;
the purview of the exemption by clear legislative intent, the (g) Exercise control and supervision over the officers and
rule on strict construction does not apply. employees within the region; and
(h) Perform such other functions as may be provided by law
TAX REFUNDS and as may be delegated by the Commissioner.
CIR v. CA: Refunds are in the nature of exemption, and must be
construed strictly against the grantee/taxpayer.
5. Duties of revenue district officers and other internal revenue
officers – Sec. 11, NIRC
It shall be the duty of every Revenue District Officer or other internal
revenue officers and employees to ensure that all laws, and rules
and regulations affecting national internal revenue are faithfully
executed and complied with, and to aid in the prevention, detection
and punishment of frauds of delinquencies in connection therewith.
It shall be the duty of every Revenue District Officer to examine the 9. Agents and deputies for collection of national internal revenue
efficiency of all officers and employees of the Bureau of Internal taxes – Sec. 12, NIRC
Revenue under his supervision, and to report in writing to the The following are hereby constituted agents of the Commissioner:
Commissioner, through the Regional Director, any neglect of duty, a) The Commissioner of Customs and his subordinates with
incompetency, delinquency, or malfeasance in office of any internal respect to the collection of national internal revenue taxes on
revenue officer of which he may obtain knowledge, with a imported goods;
statement of all the facts and any evidence sustaining each case. b) The head of the appropriate government office and his
subordinates with respect to the collection of energy tax; and
c) Banks duly accredited by the Commissioner with respect to
6. Authority of a revenue officer – Sec. 13, NIRC receipt of payments internal revenue taxes authorized to be
Subject to the rules and regulations to be prescribed by the made thru banks.
Secretary of Finance, upon recommendation of the Commissioner, a
Revenue Officer assigned to perform assessment functions in any Any officer or employee of an authorized agent bank assigned to
district may, pursuant to a Letter of Authority issued by the Revenue receive internal revenue tax payments and transmit tax returns or
Regional Director, examine taxpayers within the jurisdiction of the documents to the Bureau of Internal Revenue shall be subject to the
district in order to collect the correct amount of tax, or to same sanctions and penalties prescribed in Sections 269 and 270 of
recommend the assessment of any deficiency tax due in the same this Code.
manner that the said acts could have been performed by the
Revenue Regional Director himself.


7. Authority of officers to administer oaths and take testimony – COMMISSIONER OF INTERNAL REVENUE
Sec. 14, NIRC
The Commissioner, Deputy Commissioners, Service Chiefs, Assistant (CIR)
Service Chiefs, Revenue Regional Directors, Assistant Revenue
Regional Directors, Chiefs and Assistant Chiefs of Divisions, Revenue 1. Power to interpret tax laws and decide tax cases
District Officers, special deputies of the Commissioner, internal Sec. 4, NIRC
revenue officers and any other employee of the Bureau thereunto The power to interpret the provisions of this Code and other tax
especially deputized by the Commissioner shall have the power to laws shall be under the exclusive and original jurisdiction of the
administer oaths and to take testimony in any official matter or Commissioner, subject to review by the Secretary of Finance.
investigation conducted by them regarding matters within the The power to decide disputed assessments, refunds of internal
jurisdiction of the Bureau. revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under this Code or other laws or
8. Authority of internal revenue officers to make arrests and portions thereof administered by the Bureau of Internal Revenue is
seizures – Sec. 15, NIRC vested in the Commissioner, subject to the exclusive appellate
The Commissioner, the Deputy Commissioners, the Revenue jurisdiction of the Court of Tax Appeals.
Regional Directors, the Revenue District Officers and other internal
revenue officers shall have authority to make arrests and seizures
for the violation of any penal law, rule or regulation administered by
the Bureau of Internal Revenue. Any person so arrested shall be
forthwith brought before a court, there to be dealt with according to

§ BIR Organizational Structure

2. Power to obtain information, and to summon, examine, and modified, changed, or amended: Provided, further, That no notice
take testimony of persons – Sec. 5, NIRC* for audit or investigation of such return, statement or declaration
In ascertaining the correctness of any return, or in making a return has in the meantime been actually served upon the taxpayer.
when none has been made, or in determining the liability of any
person for any internal revenue tax, or in collecting any such liability, (B) Failure to Submit Required Returns, Statements, Reports and
or in evaluating tax compliance, the Commissioner is authorized: other Documents. - When a report required by law as a basis for the
assessment of any national internal revenue tax shall not be
(a) To examine any book, paper, record, or other data which forthcoming within the time fixed by laws or rules and regulations or
may be relevant or material to such inquiry; when there is reason to believe that any such report is false,
(b) To obtain on a regular basis from any person other than incomplete or erroneous, the Commissioner shall assess the proper
the person whose internal revenue tax liability is subject to tax on the best evidence obtainable.
audit or investigation, or from any office or officer of the
national and local governments, government agencies and In case a person fails to file a required return or other document at
instrumentalities, including the Bangko Sentral ng Pilipinas the time prescribed by law, or willfully or otherwise files a false or
and government-owned or -controlled corporations, any fraudulent return or other document, the Commissioner shall make
information such as, but not limited to, costs and volume or amend the return from his own knowledge and from such
of production, receipts or sales and gross incomes of information as he can obtain through testimony or otherwise, which
taxpayers, and the names, addresses, and financial shall be prima facie correct and sufficient for all legal purposes.
statements of corporations, mutual fund companies,
insurance companies, regional operating headquarters of (C) Authority to Conduct Inventory-taking, Surveillance and to
multinational companies, joint accounts, associations, joint Prescribe Presumptive Gross Sales and Receipts. - The Commissioner
ventures of consortia and registered partnerships, and may, at any time during the taxable year, order inventory-taking of
their members; goods of any taxpayer as a basis for determining his internal revenue
(c) To summon the person liable for tax or required to file a tax liabilities, or may place the business operations of any person,
return, or any officer or employee of such person, or any natural or juridical, under observation or surveillance if there is
person having possession, custody, or care of the books of reason to believe that such person is not declaring his correct
accounts and other accounting records containing entries income, sales or receipts for internal revenue tax purposes. The
relating to the business of the person liable for tax, or any findings may be used as the basis for assessing the taxes for the
other person, to appear before the Commissioner or his other months or quarters of the same or different taxable years and
duly authorized representative at a time and place such assessment shall be deemed prima facie correct.
specified in the summons and to produce such books,
papers, records, or other data, and to give testimony; When it is found that a person has failed to issue receipts and
(d) To take such testimony of the person concerned, under invoices in violation of the requirements of Sections 113 and 237 of
oath, as may be relevant or material to such inquiry; and this Code, or when there is reason to believe that the books of
(e) To cause revenue officers and employees to make a accounts or other records do not correctly reflect the declarations
canvass from time to time of any revenue district or region made or to be made in a return required to be filed under the
and inquire after and concerning all persons therein who provisions of this Code, the Commissioner, after taking into account
may be liable to pay any internal revenue tax, and all the sales, receipts, income or other taxable base of other persons
persons owning or having the care, management or engaged in similar businesses under similar situations or
possession of any object with respect to which a tax is circumstances or after considering other relevant information may
imposed. prescribe a minimum amount of such gross receipts, sales and
taxable base, and such amount so prescribed shall be prima facie
The provisions of the foregoing paragraphs notwithstanding, nothing correct for purposes of determining the internal revenue tax
in this Section shall be construed as granting the Commissioner the liabilities of such person.
authority to inquire into bank deposits other than as provided for in
Section 6(F) of this Code. (D) Authority to Terminate Taxable Period. - When it shall come to
the knowledge of the Commissioner that a taxpayer is retiring from
business subject to tax, or is intending to leave the Philippines or to
3. Power to make assessments and prescribe additional remove his property therefrom or to hide or conceal his property, or
requirements for tax administration and enforcement Sec. 6, NIRC* is performing any act tending to obstruct the proceedings for the
(A) Examination of Return and Determination of Tax Due. After a collection of the tax for the past or current quarter or year or to
return has been filed as required under the provisions of this Code, render the same totally or partly ineffective unless such proceedings
the Commissioner or his duly authorized representative may are begun immediately, the Commissioner shall declare the tax
authorize the examination of any taxpayer and the assessment of period of such taxpayer terminated at any time and shall send the
the correct amount of tax: Provided, however, That failure to file a taxpayer a notice of such decision, together with a request for the
return shall not prevent the Commissioner from authorizing the immediate payment of the tax for the period so declared terminated
examination of any taxpayer. and the tax for the preceding year or quarter, or such portion
thereof as may be unpaid, and said taxes shall be due and payable
The tax or any deficiency tax so assessed shall be paid upon notice immediately and shall be subject to all the penalties hereafter
and demand from the Commissioner or from his duly authorized prescribed, unless paid within the time fixed in the demand made by
representative. the Commissioner.

Any return, statement of declaration filed in any office authorized to (E) Authority of the Commissioner to Prescribe Real Property Values.
receive the same shall not be withdrawn: Provided, That within - The Commissioner is hereby authorized to divide the Philippines
three (3) years from the date of such filing, the same may be into different zones or areas and shall, upon consultation with
competent appraisers both from the private and public sectors, possession or control of a person within the
determine the fair market value of real properties located in each jurisdiction of the Philippines;
zone or area. For purposes of computing any internal revenue tax, (e) To the extent known, the name and address of any
the value of the property shall be, whichever is the higher of: person believed to be in possession of the requested
(1) The fair market value as determined by the Commissioner; information;
or (f) A statement that the request is in conformity with
(2) The fair market value as shown in the schedule of values of the law and administrative practices of the said
the Provincial and City Assessors. foreign tax authority, such that if the requested
information was within the jurisdiction of the said
(F) Authority of the Commissioner to Inquire into Bank Deposit foreign tax authority then it would be able to obtain
Accounts and Other Related information held by Financial the information under its laws or in the normal
Institutions. [4] - Notwithstanding any contrary provision of Republic course of administrative practice and that it is in
Act No. 1405, Republic Act No. 6426, otherwise known as the conformity with a convention or international
Foreign Currency Deposit Act of the Philippines, and other general or agreement; and
special laws, the Commissioner is hereby authorized to inquire into (g) A statement that the requesting foreign tax
the bank deposits and other related information held by financial authority has exhausted all means available in its
institutions of: own territory to obtain the information, except
(1) A decedent to determine his gross estate; and those that would give rise to disproportionate
(2) Any taxpayer who has filed an application for compromise difficulties.
of his tax liability under Section 204(A)(2) of this Code by
reason of financial incapacity to pay his tax liability. The Commissioner shall forward the information as promptly
as possible to the requesting foreign tax authority. To ensure a
In case a taxpayer files an application to compromise the prompt response, the Commissioner shall confirm receipt of a
payment of his tax liabilities on his claim that his financial request in writing to the requesting tax authority and shall
position demonstrates a clear inability to pay the tax assessed, notify the latter of deficiencies in the request, if any, within
his application shall not be considered unless and until he sixty (60) days from receipt of the request.
waives in writing his privilege under Republic Act No. 1405,
Republic Act No. 6426, otherwise known as the Foreign If the Commissioner is unable to obtain and provide the
Currency Deposit Act of the Philippines, or under other information within ninety (90) days from receipt of the
general or special laws, and such waiver shall constitute the request, due to obstacles encountered in furnishing the
authority of the Commissioner to inquire into the bank information or when the bank or financial institution refuses to
deposits of the taxpayer. furnish the information, he shall immediately inform the
requesting tax authority of the same, explaining the nature of
(3) A specific taxpayer or taxpayers subject of a request for the obstacles encountered or the reasons for refusal.
the supply of tax information from a foreign tax authority
pursuant to an international convention or agreement on tax The term "foreign tax authority," as used herein, shall refer to
matters to which the Philippines is a signatory or a party of: the tax authority or tax administration of the requesting State
Provided, That the information obtained from the banks and under the tax treaty or convention to which the Philippines is a
other financial institutions may be used by the Bureau of signatory or a party of.
Internal Revenue for tax assessment, verification, audit and
enforcement purposes. (G) Authority to Accredit and Register Tax Agents. - The
Commissioner shall accredit and register, based on their professional
In case of a request from a foreign tax authority for tax competence, integrity and moral fitness, individuals and general
information held by banks and financial institutions, the professional partnerships and their representatives who prepare and
exchange of information shall be done in a secure manner to file tax returns, statements, reports, protests, and other papers with
ensure confidentiality thereof under such rules and or who appear before, the Bureau for taxpayers. Within one
regulations as may be promulgated by the Secretary of hundred twenty (120) days from January 1, 1998, the Commissioner
Finance, upon recommendation of the Commissioner. shall create national and regional accreditation boards, the members
of which shall serve for three (3) years, and shall designate from
The Commissioner shall provide the tax information obtained among the senior officials of the Bureau, one (1) chairman and two
from banks and financial institutions pursuant to a convention (2) members for each board, subject to such rules and regulations as
or agreement upon request of the foreign tax authority when the Secretary of Finance shall promulgate upon the
such requesting foreign tax authority has provided the recommendation of the Commissioner.
following information to demonstrate the foreseeable
relevance of the information to the request: Individuals and general professional partnerships and their
(a) The identity of the person under examination or representatives who are denied accreditation by the Commissioner
investigation; and/or the national and regional accreditation boards may appeal
(b) A statement of the information being sought, such denial to the Secretary of Finance, who shall rule on the appeal
including its nature and the form in which the said within sixty (60) days from receipt of such appeal. Failure of the
foreign tax authority prefers to receive the Secretary of Finance to rule on the Appeal within the prescribed
information from the Commissioner; period shall be deemed as approval of the application for
(c) The tax purpose for which the information is being accreditation of the appellant.
(d) Grounds for believing that the information (H) Authority of the Commissioner to Prescribe Additional
requested is held in the Philippines or is in the Procedural or Documentary Requirements. - The Commissioner may
prescribe the manner of compliance with any documentary or revenue stamps when they are returned in good condition by the
procedural requirement in connection with the submission or purchaser, and, in his discretion, redeem or change unused stamps
preparation of financial statements accompanying the tax returns. that have been rendered unfit for use and refund their value upon
proof of destruction. No credit or refund of taxes or penalties shall
4. Authority to delegate power – Sec. 7, NIRC be allowed unless the taxpayer files in writing with the
The Commissioner may delegate the powers vested in him under the Commissioner a claim for credit or refund within two (2) years after
pertinent provisions of this Code to any or such subordinate officials the payment of the tax or penalty: Provided, however, That a return
with the rank equivalent to a division chief or higher, subject to such filed showing an overpayment shall be considered as a written claim
limitations and restrictions as may be imposed under rules and for credit or refund.
regulations to be promulgated by the Secretary of Finance, upon
recommendation of the Commissioner: Provided, however, That the A Tax Credit Certificate validly issued under the provisions of this
following powers of the Commissioner shall not be delegated: Code may be applied against any internal revenue tax, excluding
(a) The power to recommend the promulgation of rules and withholding taxes, for which the taxpayer is directly liable. Any
regulations by the Secretary of Finance; request for conversion into refund of unutilized tax credits may be
(b) The power to issue rulings of first impression or to reverse, allowed, subject to the provisions of Section 230 of this Code:
revoke or modify any existing ruling of the Bureau; Provided, That the original copy of the Tax Credit Certificate showing
(c) The power to compromise or abate, under Sec. 204 (A) and a creditable balance is surrendered to the appropriate revenue
(B) of this Code, any tax liability: Provided, however, That officer for verification and cancellation: Provided, further, That in no
assessments issued by the regional offices involving basic case shall a tax refund be given resulting from availment of
deficiency taxes of Five hundred thousand pesos (P500,000) or incentives granted pursuant to special laws for which no actual
less, and minor criminal violations, as may be determined by payment was made.
rules and regulations to be promulgated by the Secretary of
finance, upon recommendation of the Commissioner, The Commissioner shall submit to the Chairmen of the Committee
discovered by regional and district officials, may be on Ways and Means of both the Senate and House of
compromised by a regional evaluation board which shall be Representatives, every six (6) months, a report on the exercise of his
composed of the Regional Director as Chairman, the Assistant powers under this Section, stating therein the following facts and
Regional Director, the heads of the Legal, Assessment and information, among others: names and addresses of taxpayers
Collection Divisions and the Revenue District Officer having whose cases have been the subject of abatement or compromise;
jurisdiction over the taxpayer, as members; and amount involved; amount compromised or abated; and reasons for
(d) The power to assign or reassign internal revenue officers the exercise of power: Provided, That the said report shall be
to establishments where articles subject to excise tax are presented to the Oversight Committee in Congress that shall be
produced or kept. constituted to determine that said powers are reasonably exercised
and that the Government is not unduly deprived of revenues.
5. Authority to compromise tax payments, abate or cancel tax
liability and refund or credit taxes 6. Other duties and functions
Sec. 204, NIRC
The Commissioner may -
(A) Compromise the payment of any internal revenue tax, when:
(1) A reasonable doubt as to the validity of the claim against
the taxpayer exists; or
(2) The financial position of the taxpayer demonstrates a clear
inability to pay the assessed tax.
The compromise settlement of any tax liability shall be subject to the
following minimum amounts:
For cases of financial incapacity, a minimum compromise rate
equivalent to ten percent (10%) of the basic assessed tax; and
For other cases, a minimum compromise rate equivalent to
forty percent (40%) of the basic assessed tax.

Where the basic tax involved exceeds One million pesos

(P1,000.000) or where the settlement offered is less than the
prescribed minimum rates, the compromise shall be subject to the
approval of the Evaluation Board which shall be composed of the
Commissioner and the four (4) Deputy Commissioners.

(B) Abate or cancel a tax liability, when:

(1) The tax or any portion thereof appears to be unjustly or
excessively assessed; or
(2) The administration and collection costs involved do not
justify the collection of the amount due.
All criminal violations may be compromised except: (a) those
already filed in court, or (b) those involving fraud.

(C) Credit or refund taxes erroneously or illegally received or

penalties imposed without authority, refund the value of internal