Get Real

Why did Kim Henares blink?

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Internal Revenue Commissioner Kim Henares was the first to blink in the confrontation with the Philippine Chamber of Commerce and Industry (PCCI) over Revenue Regulation (RR) No. 18-2012. Under this RR, issued on Oct. 22, 2012, and published on Jan. 3, 2013, all unused receipts/invoices printed prior to the RR’s effectivity will no longer be valid after June 30 of this year—whether these be official receipts, or sales/commercial invoices—and should be turned over to the Bureau of Internal Revenue. Starting July 1, they will have to issue receipts printed under new authorities to print, which they had until April 30 to apply for.

And what was the reason for this RR? In essence, to tighten up the authorization and printing process (including the accreditation of printers and limited periods of validity) of those receipts/invoices,  in order to reduce, if not eliminate entirely, the proliferation of fake receipts that reduce the government’s tax take.  Moreover, printing businesses set up solely to print the receipts/invoices, and owned by BIR employees or their relatives, were barred from accreditation, thus eliminating the pernicious practice whereby businessmen asking for the authority to print were given a hard time unless they gave the printing job to the BIR employee/relative.

In other words, the RR was issued as part of the government’s war on inefficiency/waste/corruption.  So one would have thought that the business sector, which regularly complains both loudly and bitterly about inefficiency and corruption in the BIR, would jump at the chance to help close the loopholes, as it were.

Unfortunately, one would have thought wrong. The businessmen were in an “uproar,” to quote a newspaper report. The six-month transition period provided in the RR was too short, apparently, and would result in small businesses incurring losses. If Sergio Ortiz-Luis, an officer of the PCCI and president of the Exporters Confederation, has been quoted accurately, businessmen needed “at least” one year for that transition, presumably to avoid those losses.

So that’s what the controversy was all about:  Kim Henares maintaining that six months was actually more than sufficient time to prepare for the reforms, and the business community saying that it needed “at least” one year.

Who is correct? Look at it this way, Reader. For Ortiz-Luis’ claim to hold any water, his assumption must be that businesses, at the start of the year, have on hand one year’s worth of receipt booklets, rather than at most six months’ worth of those booklets (which is what the BIR and Kim Henares are obviously assuming).

For big businesses, whether they hold six months’ or one year’s worth of receipts is immaterial, because the cost of six months’ worth of receipt booklets has to be minuscule in their scheme of things. So they are out of the picture, and we are left with the small businesses, the hand-to-mouth businesses, as it were.

But if they were small, hand-to-mouth operations, why would they be putting their scarce cash into one year’s worth of receipt booklets at the beginning of the year, when there are so many competing demands on that cash? It wouldn’t make sense, right?

In other words, Kim Henares’ assumption has to be the correct one.

And yet, she blinked. And postponed the July 1 start of the system of new receipts by another 60 days.

Frankly, if Kim Henares is left to her own devices, I don’t think she would have given in to pressure from the PCCI. She calls the shots as she sees them. She must have given in, therefore, to pressure from her administrative superior, Finance Secretary Cesar Purisima, who was the one who signed RR 18-2012 in the first place, with Kim Henares’ signature over the words “Recommending Approval.”  That she gave in to a two-month extension of the deadline rather than a six-month extension indicates that she can be pushed only so far.

But the real loser in this controversy isn’t Kim Henares. The real loser is the Filipino people. In our war against corruption and inefficiency, Kim Henares has been one of our most committed and persevering warriors. I have heard complaints about her stubbornness, but not one single complaint about her integrity and competence. She’s not doing it for herself, she’s doing it for us.

Obviously, she has not endeared herself to a lot of people in the process. There are the 160 cases that the BIR has filed in the Department of Justice against alleged tax evaders (only 22 of which seem to be in the courts at this moment, but that’s not her fault), who certainly are not pleased. There are some BIR employees whose little businesses and “rackets” she is trying to close down, with RR 18-2012 as well as with other reforms. So they’re not going to take that sitting down. And then there are the big businesses whose backs she will not scratch, because she doesn’t need for them to scratch hers in the first place. They are certainly not pleased.

Many knives are out for Kim Henares, and this confrontation with the business community, unfortunately, may be one of their manifestations, with arguments, however asinine, being raised against her. The most asinine is the complaint that the imposition of a P50,000 fine for not issuing the new receipts by July 1 (now moved to Sept. 1) is excessive, and will hurt (again) small businesses.

Reminders: One, it will hurt them only if they do not comply with the law; and two, it is about time people were punished, instead of coddled and protected, when they do not comply with the law.

Kim Henares deserves bouquets, not brickbats.

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  • http://www.pulisnapogi.blogspot.com/ Pulis Na Pogi

    this article is from a view point of somebody who does not issue receipts in her course of business.

    very myopic…

  • Alan Hotchkiss

    Henares blinked because she knew that her people did not properly disseminate the new Revenue Regulation. I am a small business owner in the countryside and I did not receive a notice from our local Revenue District informing me of the new order by the Commissioner. If they were serious about it, why did they not inform about it right after the regulation came out? In fact, they had a few months to do it. Do you think it is fair to penalize us when we did not know about it in the first place? You imply that it would be foolhardy for small business owners to order official receipts in bulk because of our limited resources. The reality is our local printers require a minimum order before they print our receipts and our orders usually equal to at least six-months worth of receipts and invoices. You’re right, it is foolish for us to pay for large volumes of invoices and receipts just to store it in our stockroom but that’s how the cookie crumbles here in our neck of the woods.

    • ramaries

      totally agree ako sa pananaw mo pare……..
      bago ko lang rin nalaman yung RR na yan.

  • Cerise David

    Bakit hindi na lang hulihin ang printers ng fake receipts? Kung talamak yan, palagay ko naman e madaling ma-trace yan.

  • ApoLapullapu

    “Many knives are out for Kim Henares.” And one of them is from Cesar Purisima, her boss?

    • joni_depp

      The fact is tinubuan na ng sungay itong si Henares. Dahil nauuto niya si PNoy, akala nya na mas may kapangyarihan sya kaysa Finance Secretary. Eh pareho kasing mga recycled officials galing sa Arroyo administration ang mga ito. Ngunit mas ambisyoso at walang awa itong si Henares. Ito’y isang taong walang puso. Sya ay isang tong collector lamang, nguni’t gusto nyang maaagawan ng kapangyarihan si Purisima. Dapat mag-ingat si Purisima!

  • Exo

    I think may balak naman talagang iextend ng konti ni Kim ang deadline dahil kokonti lang talaga ang nakakaalam about sa bagong policy about sa ORs. Sa simula ay medyo matigas lang ng konti para mapressure ang mga negosyante na magpaprint na. Alam mo naman ang mga pinoy, last minute na kung kikilos.

    • DestronLeader

      After finding out when the prescribed layouts were released, wala na kinalalaman yung last minute na sinasabi ninyo. We’re now just talking about two months to comply. January to April was a complete waste.

  • tweakthor

    MARAMING HINDI NAGBABAYAD NG BUWIS!!! that is a fact. As I understand it, less than 20% of those who have to pay taxes do so. Kaya yung nagbabayad ang syang nagdudusa …. iniimbistiga at pinapahirapan ng kung ano-anong regulasyon.
    Yung hindi nagbabayad, isa lang ang problema … how to continue getting away with it! Kaya sa mga Chinoy businessmen, 1/3 never pay taxes and get away with it. May they ROT in hell !

    Si Kim Henares, ASAR ako …. BUT that is beside the point …. she has a job to do . I hope she will survive all the “assaults” until the end of Pinoy’s term.

  • Manga Gamud

    How can you be sure that these new Receipts and Invoices cannot be faked. During the time of Comm. Chatto she introduced the computerazition of the BIR to eliminate corruption, wala rin nangyari. As long as there are corrupt people in the BIR nothing will happen.

  • DestronLeader

    The GVA accounting firm is kind enough to provide the public with a guide to the new invoicing requirements. I would post the link but my post would be automatically removed. So just google “Guide to BIR’s New Invoicing Requirements effective June 30, 2013″ or something similar and look for a link to the website of gvacpas.

    If their post regarding BIR memorandum is correct, then the new receipts layout did not come out until May 3, 2013. So, pity the businesses that had their ATP approved and printed new receipts during January to April.

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