The House Committee on Ways and Means said the Bureau of Internal Revenue (BIR) erred in announcing a closure order against bilyonaryo Andrew Tan’s Megaworld Corp. without providing enough avenues for the conglomerate to resolve the issue first.
In an aide memoire submitted to House Speaker Lord Allan Velasco, the panel said BIR committed several lapses when its Regional Office 8-B called for a media briefing to announce its action against Megaworld set on May 18.
“Megaworld Corporation appears to have had limited recourse as to its concern on jurisdiction. While BIR did follow a process, the process appears to have given the respondent taxpayer limited opportunity for redress or reconsideration,” the committee said.
It noted that the tax issue was not upon Megaworld itself, but rather of a joint venture deal with the Bases Conversion and Development Authority.
“To prevent similar incidents from taking place, we propose a common procedure, embodied in a single BIR issuance, which sets the responsibilities expected of taxpayers during the audit process, authority and jurisdiction for audit, mechanisms for redress of protest, responses and actions that taxpayers can expect from the tax authorities, and the extent and proportionality of legal and administrative action taken by the BIR,” the committee added.
“We also recommend rules clarifying the delineation of tax compliance responsibilities among parties to joint ventures.”
The panel also pointed out how the whole fiasco likely hurt Megaworld’s share prices as a publicly-listed firm. It said this should have been considered when the BIR regional officer acted haphazardly.
“The ‘leakage’ of the media advisory, without clear confirmation that it was an official release, cannot have been made without knowledge of its damaging effects on the value of company,” the committee said.
“I am particularly concerned about the seeming lack of due process in the issuance of the closure order. Had it passed, the disproportionateness of the BIR response to a question of jurisdiction would have amounted to a confiscatory policy. We must ease the market’s worries,” it added.
The panel has asked the House Committee on Good Government and Public Accountability to hold a separate probe on the controversy.
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