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The Philippines: RATE Program (Run After Tax Evaders)

Definition of Terms

R A T E Program- it stands for Run Against Tax Evaders. Tax Evasion or Fraud is the use by the taxpayer of illegal or fraudulent means to defeat or lessen the payment of a tax. Tax Evaders any person, association, partnership and company found to have committed a violation of the provisions of the NIRC of 1997 may be charged under the RATE Program.

Department of Finance - is the executive department of the Philippine government responsible for the formulation, institutionalization and administration of fiscal policies, management of the financial resources of the government, supervision of the revenue operations of all local government units, the review, approval and management of all public sector debt, and the rationalization, privatization and public accountability of corporations and assets owned, controlled or acquired by the government.

Bureau of Internal Revenue - is the premier tax administration agency of the Philippines. Its mission is to raise revenues for the government through effective and efficient collection of taxes, quality service to taxpayers, and impartial and uniform enforcement of tax laws.

WHAT IS THE RATE PROGRAM?

What are the fraudulent activities or criminal tax violations covered by the RATE Program?

a) OFFENSES RELATING TO INCOME

b) OFFENSES RELATING TO DEDUCTIONS

Sources of RATE CASES


Routine audit examination of tax return/s by BIR Taxpayers own information Own tax return declarations Own books of accounts Information obtained by the BIR from third parties as authorized by Section 5(B) of the NIRC of 1997 From private sector From other government offices Referrals from other government agencies Information obtained from intelligence work Newspaper Reports

PROCEDURE IN DEVELOPING TAX FRAUD (RATE) cases

1. PRELIMINARY INVESTIGATION 2. FORMAL INVESTIGATION

3. FILING OF THE CASE

DURATION OF TAX FRAUD INVESTIGATION

HOW TO PROVE FRAUD CASES 1. DIRECT APPROACH METHOD ( Direct Evidence) 2. INDIRECT APPROACH METHOD

Types of Indirect Method:

Net Worth Method or Inventory Method or Net Worth and Expenditures Method
Expenditures Method or Excess Cash Expenditures Method Percentage Method Unit and Value Method

WHO FILES THE TAX FRAUD CASE BEFORE THE DOJ? Based on the investigation report and sworn affidavit executed by the revenue officers assigned to a particular case , the Commissioner of Internal Revenue refers the case to the DOJ for preliminary investigation.

INSTITUTION OF CRIMINAL CASES


All criminal actions before the CTA Division and the regular courts, in the exercise of their original jurisdiction, shall be instituted by: -the filing of an information in the name of the People of the Philippines -which must be approved by the Commissioner of Internal Revenue

PROSECUTION OF CRIMINAL ACTIONS


Criminal Actions involving violation of the NIRC or other laws enforced by the Bureau of Internal Revenue , the prosecution may be conducted by the duly deputized legal officers of the BIR, under the direction and control of the public prosecutors.

Where do you report suspected tax fraud/evasion activities?

CONCLUSIONS
The BIR plays a vital role in implementing this program for an efficient collection of taxes and service to taxpayers. This is an instrumentality in putting the Philippines back to its feet. It shows that the BIR is ensuring that everyone is paying fair share of taxes.

RECOMMENDATIONS The Philippine Government shall strictly implement this program to promote public confidence in the tax system. BIR should organize seminars for the awareness of every taxpayer of the RATE Program. SOURCES www.bir.gov.com IMF-Japan High Level Tax Conference Presentation for Asian and Pacific Countries