Olongapo SubicBay BatangGapo Newscenter

Sunday, September 05, 2004

Tension grips SBMA over BIR closure order

SUBIC Bay Freeport -- Tension builds up in the vicinity of the Asia International Auctioneer Inc. (AIAI) following speculation that the Bureau of Internal Revenue District Office here would padlock the company last Friday morning. Revenue District Office 19 officer Edgar B. Tolentino, however, denied the report, saying that "all actions emanate from the Office of the Commissioner and we will only implement it upon order of the national office." Tolentino said the BIR will also coordinate any action, warrant or closure order with Subic Bay Metropolitan Authority (SBMA) pursuant to Republic Act 7227.
Earlier, the BIR led by its officials in Revenue Region No. 4, Pampanga and Revenue District Office No. 19, SBFZ served warrants of garnishment signed by Commissioner of Internal Revenue Guillermo L. Parayno Jr. AIAI with Subic Bay Motors Corporation (SBMC) protested the alleged arbitrary and abusive exercise of powers by the BIR for issuing warrant of garnishment last week in all of its depository banks for non-payment of excise tax and value-added taxes. Meanwhile, the Subic Bay Freeport Chamber of Commerce (SBFCC) warned the government that several investors have already echoed their plans to close shop which could lead to a massive layoff of thousands of workers should the BIR insist on its plot to collect more taxes. The pullout of foreign investments and the loss of thousands of jobs in Subic will contravene two items in PGMA's 10-point agenda: the generation of more jobs and the development of the Subic-Clark corridor. The SBFCC added that "changing the rule in the midstream" is definitely not acceptable to investors and that not only the government, but the entire country will be on the losing end once the retrenchment and the imminent exodus of foreign investors happen."
The protest stemmed after the BIR announced the impending issuance of revenue regulations which would amend Revenue Regulations (RR) 1-95 governing the implementation of tax incentives given to Subic locators. Under the BIR's proposed amendments, trading enterprises will only be allowed to deduct the cost of sales in the computation of gross income subject to the 5% special tax rate. In regard to other categories of businesses operating here, particularly manufacturers, service enterprises and financial enterprise, the BIR's draft, while not altering the enumerated deductible costs, makes the enumeration exclusive, thereby excluding other items which may be considered as direct costs since they are directly and exclusively incurred in the conduct of the registered activity. The BIR proposes to disallow all "administrative, selling and operating expenses" even if particular types of expenses can be shown to have been incurred directly and exclusively in the registered activity.


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