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BIR History

Spanish Era During the 17th and 18th centuries, the Contador de' Resultas served as the Chief Royal Accountant whose functions were similar to the Commissioner of Internal Revenue. e was the Chief Ar!itrator whose decisions on financial matters were final e"ce#t when revo$ed !y the Council of Indies. During these times, ta"es that were collected from the inha!itants varied from tri!ute or head ta" of one gold mai% annually& ta" on value of 'ewelries and gold trin$ets& indirect ta"es on to!acco, wine, coc$#its, !urlas and #owder. (rom 1)*1 to 18*1, the +#anish treasury had to su!sidi%e the ,hili##ines in the amount of , *)-,---.-- #er annum due to the #oor financial condition of the country, which can !e #rimarily attri!uted to the #oor revenue collection system. American Era In the early American regime from the #eriod 18.8 to 1.-1, the country was ruled !y American military governors. In 1.-*, the first civil government was esta!lished under /illiam . 0aft. owever, it was only during the term of second civil governor 1u$e 2. /right that the 3ureau of Internal Revenue 43IR5 was created through the #assage of Reorgani%ation Act 6o. 118. dated 7uly *, 1.-8. 9n August 1, 1.-8, the 3IR was formally organi%ed and made o#erational under the +ecretary of (inance, enry Ide 4author of the Internal Revenue 1aw of 1.-85, with 7ohn +. ord as the first Collector 4Commissioner5. 0he first organi%ation started with :. em#loyees, which consisted of a Collector, ;ice<Collector, one Chief Cler$, one 1aw Cler$, one Records Cler$ and three 4=5 Division Chiefs. (ollowing the tenure of 7ohn +. ord were three 4=5 more American collectors, namely> 2llis Cromwell 41.-.<1.1*5, /illiam 0. olting 41.1*<1*185 and 7ames 7. Rafferty 41.18<1.185. 0hey were all a##ointed !y the ?overnor<?eneral with the a##roval of the ,hili##ine Commission and the @+ ,resident. During the term of Collector olting, the 3ureau had its first reorgani%ation on 7anuary 1, 1.1= with the creation of eight 485 divisions, namely> 15 Accounting, *5 Cash, =5 Clerical, 85 Ins#ection, )5 1aw, :5 Real 2state, 75 1icense and 85 Records. Collections !y the Real 2state and 1icense Divisions were confined to revenue accruing to the City of Aanila. In line with the (ili#ini%ation #olicy of then @+ ,resident AcBinley, (ili#ino Collectors were a##ointed. 0he first three 4=5 3IR Collectors were> /enceslao 0rinidad 41.18<1.**5& 7uan ,osadas, 7r. 41.**<1.=85 and Alfredo Catao 41.=8<1.=85. 9n Aay 1.*1, !y virtue of Act 6o. *.., the Real 2state, 1icense and Cash Divisions were a!olished and their functions were transferred to the City ofAanila. As a result of this transfer, the 3ureau was left with five 4)5 divisions, namely> 15 Administrative, *5 1aw, =5 Accounting, 85 Income 0a" and )5 Ins#ection. 0hereafter, the 3ureau esta!lished the following> 15 the 2"aminer's Division, formerly the Income 0a" 2"aminer's +ection which was later merged with the Income 0a" Division and *5 the +ecret +ervice +ection, which handled the detection and surveillance activities !ut was later a!olished on 7anuary 1, 1.)1. 2"ce#t for minor changes and the creation of the Aiscellaneous 0a" Division in 1.=., the 3ureau's organi%ation remained the same from 1.*1 to 1.81. In 1.=7, the +ecretary of (inance #romulgated Regulation 6o. .), reorgani%ing the ,rovincial Ins#ection Districts and maintaining in each #rovince an Internal Revenue 9ffice su#ervised !y a ,rovincial Agent. Japanese Era At the out!rea$ of /orld /ar II, under the 7a#anese regime 41.8*<1.8)5, the 3ureau was com!ined with the Customs 9ffice and was headed !y a Director of Customs and Internal Revenue. Post War Era 9n 7uly 8, 1.8:, when the ,hili##ines gained its inde#endence from the @nited +tates, the 3ureau was eventually re<esta!lished se#arately. 0his led to a reorgani%ation on 9cto!er 1, 1.87, !y virtue of 2"ecutive 9rder 6o. .8, wherein the following were underta$en> 15 the Accounting @nit and the Revenue

Accounts and +tatistical Division were merged into one& *5 all records in the Records +ection under the Administrative Division were consolidated& and =5 all legal wor$ were centrali%ed in the 1aw Division. Revenue Regulations 6o. ;<* dated 9cto!er *=, 1.87 divided the country into =1 ins#ection units, each of which was under a ,rovincial Revenue Agent 4e"ce#t in certain s#ecial units which were headed !y a City Revenue Agent or su#ervisors for distilleries and to!acco factories5. 0he second ma'or reorgani%ation of the 3ureau too$ #lace on 7anuary 1, 1.)1 through the #assage of 2"ecutive 9rder 6o. =.*. 0hree 4=5 new de#artments were created, namely> 15 1egal, *5 Assessment and =5 Collection. 9n the latter #art of 7anuary of the same year, Aemorandum 9rder 6o. ;<188 created the /ithholding 0a" @nit, which was #laced under the Income 0a" Division of the Assessment De#artment. +imultaneously, the im#lementation of the withholding ta" system was ado#ted !y virtue of Re#u!lic Act 4RA5 :.-. 0his method of collecting income ta" u#on recei#t of the income resulted to the collection of a##ro"imately *)D of the total income ta" collected during the said #eriod. 0he third ma'or reorgani%ation of the 3ureau too$ effect on Aarch 1, 1.)8 through Revenue Aemorandum 9rder 4RA95 6o. 81. 0his led to the creation of the following offices> 15 +#ecific 0a" Division, *5 1itigation +ection, =5 ,rocessing +ection and the 85 9ffice of the City Revenue 2"aminer. 3y +e#tem!er 1, 1.)8, a 0raining @nit was created through RA9 6o. ;<8<87. As an initial ste# towards decentrali%ation, the in Davao on 7uly *-, 1.)) #er RA9 6o. ;<)=:. assisted !y Chiefs of five 4)5 3ranches, namely> )5 Administrative. 0he creation of the Regional three 4=5 revenue regions. 3ureau created its first * Regional 9ffices in Ce!u and 2ach Regional 9ffice was headed !y a Regional Director, 15 0a" Audit, *5 Collection, =5 Investigation, 85 1egal and 9ffices mar$ed the division of the ,hili##ine islands into

0he 3ureau's organi%ational set<u# e"#anded !eginning 1.): in line with the regionali%ation scheme of the government. ConseEuently, the 3ureau's Regional 9ffices increased to 485 eight and later into ten 41-5 in 1.)7. 0he Accounting Aachine 3ranch was also created in each Regional 9ffice. In 7anuary 1.)7, the #osition title of the head of the 3ureau was changed from Collector to Commissioner. 0he last Collector and the first Commissioner of the 3IR was 7ose Aranas. A significant ste# underta$en !y the 3ureau in 1.)8 was the esta!lishment of the 0a" Census Division and the corres#onding 0a" Census @nit for each Regional 9ffice. 0his was done to consolidate all statements of assets, incomes and lia!ilities of all individual and resident cor#orations in the ,hili##ines into a 6ational 0a" Census. 0o strictly enforce the #ayment of ta"es and to further discourage ta" evasion, RA 6o. *== or the Rewards 1aw was #assed on 7une 1., 1.). where!y informers were rewarded the *)D eEuivalent of the revenue collected from the ta" evader. In 1.:8, the ,hili##ines was re<divided anew into 1) regions and 7* ins#ection districts. 0he 0o!acco Ins#ection 3oard and Accounta!le (orms Committee were also created directly under the 9ffice of the Commissioner. Marcos Administration 0he a##ointment of Aisael ;era as Commissioner in 1.:) led the 3ureau to a Fnew directionF in administration. 0he most nota!le #rograms im#lemented were the F3lue Aaster ,rogramF and F;oluntary 0a" Com#liance ,rogramF. 0he first #rogram was ado#ted to cur! the a!uses of !oth ta"#ayers and 3IR #ersonnel, while the second #rogram was designed to encourage #rofessionals in #rivate and government sectors to re#ort their true income and to #ay the correct amount of ta"es. ta" the the the

It was also during Commissioner ;era's administration that the country was further su!divided into *Regional 9ffices and .- Revenue District 9ffices, in addition to the creation of various offices which included the Internal Audit De#artment 4re#lacing the Ins#ection De#artment5, Administrative +ervice De#artment, International 0a" Affairs +taff and +#ecific 0a" De#artment.

,roviding each ta"#ayer with a #ermanent 0a" Account 6um!er 40A65 in 1.7- not only facilitated the identification of ta"#ayers !ut also resulted to faster verification of ta" records. +imilarly, the #ayment of ta"es through !an$s 4#er 2"ecutive 9rder 6o. *-:5, as well as the im#lementation of the #ac$age audit investigation !y industry are considered to !e im#ortant measures which contri!uted significantly to the im#roved collection #erformance of the 3ureau. 0he #roclamation of Aartial 1aw on +e#tem!er *1, 1.7* mar$ed the advent of the 6ew +ociety and ushered in a new a##roach in the develo#mental efforts of the government. +everal ta" amnesty decrees issued !y the ,resident were #romulgated to ena!le erring ta"#ayers to start anew. 9rgani%ation<wise, the 3ureau had also undergone several changes during the Aartial 1aw #eriod 41.7*<1.8-5. In 1.7:, under Commissioner 2fren ,lana's administration, the 3ureau's 6ational 9ffice transferred from the (inance 3uilding in Aanila to its own 1*<storey !uilding in Gue%on City, which was inaugurated on 7une =, 1.77. It was also in the same year that ,resident Aarcos #romulgated the 6ational Internal Revenue Code of 1.77, which u#dated the 1.=8 0a" Code. 9n August 1, 1.8-, the 3ureau was further reorgani%ed under the administration of Commissioner Ru!en Ancheta. 6ew offices were created and some organi%ational units were relocated for the #ur#ose of ma$ing the 3ureau more res#onsive to the needs of the ta"#aying #u!lic. Aquino Administration After the ,eo#le's Revolution in (e!ruary 1.8:, a renewed thrust towards an effective ta" administration was #ursued !y the 3ureau. F9#eration> /alang 1agayF was launched to #romote the efficient and honest collection of ta"es. 9n 7anuary =-, 1.87, the 3ureau was reorgani%ed under the administration of Commissioner 3ienvenido 0an, 7r. #ursuant to 2"ecutive 9rder 4295 6o. 1*7. @nder the said 29, two 4*5 ma'or functional grou#s headed and su#ervised !y a De#uty Commissioner were created, and these were> 15 the Assessment and Collection ?rou#& and *5 the 1egal and Internal Administration ?rou#. /ith the advent of the value<added ta" 4;A05 in 1.88, a massive cam#aign #rogram aimed to #romote and encourage com#liance with the reEuirements of the ;A0 was launched. 0he ado#tion of the ;A0 system was one of the structural reforms #rovided for in the 1.8: 0a" Reform ,rogram, which was designed to sim#lify ta" administration and ma$e the ta" system more eEuita!le. It was also in 1.88 that the Revenue Information +ystems +ervices Inc. 4RI++I5 was a!olished and transferred !ac$ to the 3IR !y virtue of a Aemorandum 9rder from the 9ffice of the ,resident dated Aay *8, 1.88. 0his transfer had im#lications on the delivery of the com#uteri%ation reEuirements of the 3ureau in relation to its functions of ta" assessment and collection. 0he entry of Commissioner 7ose 9ng in 1.8. saw the advent of the F0a" Administration ,rogramF which is the em!odiment of the 3ureau's mission to im#rove ta" collection and sim#lify ta" administration. 0he ,rogram contained several ta" reform and enhancement measures, which included the use of the 0a"#ayer Identification 6um!er 40I65 and the ado#tion of the 6ew ,ayment Control +ystem and +im#lified 6et Income 0a"ation +cheme. Ramos Administration 0he year 1..= mar$ed the entry into the 3ureau of its first lady Commissioner, 1iwayway ;in%ons<Chato. In order to attain the 3ureau's vision of transformation, a com#rehensive and integrated #rogram $nown as the AC0+ or Action<Centered 0ransformation ,rogram was underta$en to realign and direct the entire organi%ation towards the fulfillment of its vision and mission. It was during Commissioner Chato's term that a five<year 0a" Com#uteri%ation ,ro'ect 40C,5 was underta$en in 1..8. 0his involved the esta!lishment of a modern and com#uteri%ed Integrated 0a" +ystem and Internal Administration +ystem. (urther streamlining of the 3IR was a##roved on 7uly 1..7 through the #assage of 29 6o.8=-, in order to su##ort the im#lementation of the com#uteri%ed Integrated 0a" +ystem. ighlights of the said 29 included the> 15 creation of a fourth Revenue ?rou# in the 3IR, which is the 1egal and 2nforcement ?rou#

4headed !y a De#uty Commissioner5& and *5 creation of the Internal Affairs +ervice, 0a"#ayers Assistance +ervice, Information ,lanning and Guality +ervice and the Revenue Data Centers. Estrada Administration /ith the advent of ,resident 2strada's administration, a De#uty Commissioner of the 3IR, 3eethoven Rualo, was a##ointed as Commissioner of Internal Revenue. @nder his leadershi#, #riority reform measures were underta$en to enhance voluntary com#liance and im#rove the 3ureau's #roductivity. 9ne of the most significant reform measures was the im#lementation of the 2conomic Recovery Assistance ,ayment 42RA,5 ,rogram, which granted immunity from audit and investigation to ta"#ayers who have #aid *-D more than the ta" #aid in 1..7 for income ta", ;A0 andHor #ercentage ta"es. In order to encourage and educate consumersHta"#ayers to demand sales invoices and recei#ts, the raffle #romo F umingi ng Resi!o, Aanalo ng 1i!o<1i!oF was institutionali%ed in 1.... 0he 1arge 0a"#ayers Aonitoring +ystem was also esta!lished under Commissioner Rualo's administration to closely monitor the ta" com#liance of the country's large ta"#ayers. 0he coming of the new millennium ushered in the changing of the guard in the 3IR with the a##ointment of Da$ila (onacier as the new Commissioner of Internal Revenue. @nder his administration, measures that would enhance ta"#ayer com#liance and deter ta" violations were #rioriti%ed. 0he most significant of these measures include> full utili%ation of ta" com#uteri%ation in the 3ureau's o#erations& e"#ansion of the use of electronic Documentary +tam# 0a" metering machine and esta!lishment of tie<u# with the national government agencies and local government units for the #rom#t remittance of withholding ta"es& and im#lementation of Com#romise +ettlement ,rogram for ta"#ayers with outstanding accounts receiva!le and dis#uted assessments with the 3IR. Aemoranda of Agreement were also forged with the league of local government units and several #rivate sector and #rofessional organi%ations 4i.e. AA,, 0AA,, ,CCI, ((CCCI, etc.5 to hel# the 3IR im#lement ta" cam#aign initiatives. In +e#tem!er 1, *---, the 1arge 0a"#ayers +ervice 410+5 and the 2"cise 0a"#ayers +ervice 420+5 were esta!lished under 29 6o. 17) to reinforce the ta" administration and enforcement ca#a!ilities of the 3IR. +hortly after the esta!lishment of said revenue services, a new organi%ational structure was a##roved on 9cto!er =1, *--1 under 29 6o. =-: which resulted in the integration of the functions of the 20+ and the 10+. In line with the #assage of the 2lectronic Commerce Act of *--- on 7une 18, the 3ureau im#lemented a (ull Integrated 0a" +ystem 4I0+5 Rollout Acceleration ,rogram to facilitate the full utili%ation of ta" com#uteri%ation in the 3ureau's o#erations. @nder the ,rogram, seven 475 I0+ !ac$<end systems were released in stages in RR 8 < Aa$ati City and the 1arge 0a"#ayers +ervice. Arroyo Administration (ollowing the momentous events of 2D+A II in 7anuary *--1, newly<installed ,resident ?loria Aaca#agal< Arroyo a##ointed a former De#uty Commissioner, Atty. RenI ?. 3aJe%, as the new Commissioner of Internal Revenue. @nder Commissioner 3aJe%'s administration, the 3IRKs thrust was to transform the agency to ma$e it ta"#ayer<focused. 0his was underta$en through the im#lementation of change initiatives that were directed to> 15 reform the ta" system to ma$e it sim#ler and suit the ,hili##ine culture& *5 reengineer the ta" #rocesses to ma$e them sim#ler, more efficient and trans#arent& =5 restructure the 3IR to give it financial and administrative fle"i!ility& and 85 redesign the human resource #olicies, systems and #rocedures to transform the wor$force to !e more res#onsive to ta"#ayers' needs. Aeasures to enhance the 3ureau's revenue<generating ca#a!ility were also im#lemented, the most nota!le of which were the im#lementation of the ;oluntary Assessment ,rogram and Com#romise +ettlement ,rogram and e"#ansion of coverage of the credita!le withholding ta" system. A technology< !ased system that #romotes the #a#erless filing of ta" returns and #ayment of ta"es was also ado#ted through the 2lectronic (iling and ,ayment +ystem 4e(,+5.

/ith the resignation of Commissioner 3aJe% on August 1., *--*, (inance @ndersecretary Cornelio C. ?ison was designated as interim 3IR Commissioner. 2ight days later 4on August *7, *--*5, former Customs Commissioner, ?uillermo 1. ,arayno, 7r. was a##ointed as the new Commissioner of Internal Revenue 4CIR5. 3arely a month since his assum#tion to duty as the new CIR, Commissioner ,arayno offered a ;oluntary Assessment and A!atement ,rogram 4;AA,5 to ta"#ayers with under<declared salesHrecei#tsHincome. 0o enhance the collection #erformance of the 3IR, Commissioner ,arayno ado#ted the use of new systems such as the Reconciliation of 1istings for 2nforcement or R21I2( +ystem to detect under<declarations of ta"a!le income !y ta"#ayers and the electronic !roadcasting system to enhance the security of ta" #ayments. It was also under Commissioner ,araynoKs administration that the 3IR e"#anded its electronic services to include the we!<!ased 0I6 a##lication and #rocessing& electronic raffle of invoicesHrecei#ts& #rovision of e<#ayment gateways& e<su!stituted filing of ta" returns and electronic su!mission of sales re#orts. 0he conduct of s#ecial o#erations on high #rofile ta" evaders, which resulted to the filing of ta" cases under the Run After 0a" 2vaders 4RA025 ,rogram mar$ed Commissioner ,araynoKs administration as well as the conduct of 0a" Com#liance ;erification Drives and accreditation and registration of cash register machines and #oint<of<sale machines. 0o im#rove ta"#ayer service, the 3ureau also esta!lished a 3IR Contact Center in the 6ational 9ffice and e1ounges in Regional 9ffices. 9n 9cto!er *8, *--:, De#uty Commissioner for 1egal and Ins#ection ?rou#, 7ose Aario C. 3uJag was a##ointed as full<fledged Commissioner of Internal Revenue. @nder his administration, the 3ureau attained success in a num!er of $ey underta$ings, which included the e"#ansion of the RA02 ,rogram to the Regional 9ffices& inclusion of new #ayment gateways, such as the 2fficient +ervice Aachines and the ?<Cash and +AAR0 Aoney facilities& im#lementation of the 3enchmar$ing Aethod and installation of the 3ureauKs e<Com#laint +ystem, a new e<+ervice that allows ta"#ayers to log their com#laints against erring revenuers through the 3IR we!site. 0he 6ationwide Rollout of Com#uteri%ed +ystems 46RC+5 was also underta$en to e"tend the use of the 3ureauKs Integrated 0a" +ystem across its non<com#uteri%ed Revenue District 9ffices. In *--7, the 6ational ,rogram +u##ort for 0a" Administration Reform 46,+0AR5, a #rogram funded !y various international develo#ment agencies, was launched to im#rove the 3IR efficiency in various areas of ta" administration 4i.e. ta"#ayer com#liance, ta" enforcement and control, etc.5. 9n 7une *., *--7, Commissioner 3uJag relinEuished the to# #ost of the 3IR and was re#laced !y De#uty Commissioner for 9#erations ?rou#, 1ilian 3. efti, ma$ing her the second lady Commissioner of the 3IR. Commissioner efti focused on the strengthening of the use of !usiness intelligence !y em!ar$ing on data matching of income #ayments of withholding agents against the re#orted income of the concerned reci#ients. Information sharing !etween the 3IR and the 1ocal ?overnment @nits 41?@s5 was also intensified through the 1?@ Revenue Assurance +ystem, which aims to uncover fraud and non<#ayment of ta"es. 0o enhance the 3ureauKs audit ca#a!ilities, the use of Com#uter<Assisted Audit 0ools and 0echniEues 4CAA00s5 was also introduced in the 3IR under her term. /ith the resignation of Commissioner efti in 9cto!er *--8, former 3IR De#uty Commissioner for 1egal and 2nforcement ?rou#, +i"to +. 2sEuivias I; was a##ointed as the new Commissioner of Internal Revenue. Commissioner 2sEuiviasK administration was mar$ed with the conduct of nationwide closure of erring !usiness esta!lishments under the L9#lan BandadoM ,rogram. A 0a"#ayer (eed!ac$ Aechanism 4through the eCom#laint facility accessi!le via the 3IR /e!site5 was also esta!lished under his term where com#laints on erring 3IR em#loyees and ta"#ayers who do not #ay ta"es and do not issue 9RsHinvoices can !e re#orted. In *--., the 3ureau revived its L andang Aagling$odM ,ro'ect where the !est frontline offices were recogni%ed for rendering effective ta"#ayer service. /hen Commissioner 2sEuivias resigned in 6ovem!er *--., +enior De#uty Commissioner, 7oel 1. 0an< 0orres assumed the #osition of Commissioner of Internal Revenue. @nder his administration, Commissioner 0an<0orres #ursued a high visi!ility #u!lic awareness cam#aign on the 3ureauKs enforcement and ta"#ayersK service #rograms. e institutionali%ed several #rogramsH#ro'ects to im#rove revenue collections, and these include ,ro'ect R.I., 4Rest in ,eace5& intensified filing of ta" evasion cases under the re<invigorated RA02 ,rogram& conduct of 0a"#ayers 1ifestyle Chec$ and develo#ment of Industry Cham#ions. 1in$ages with various agencies 4i.e. 109, +2C, 31?(, , A10RA, etc.5 were also esta!lished through the signing of several Aemoranda of Agreement to im#rove s#ecific areas of ta" administration. P-Noy Aquino Administration

(ollowing the highly<acclaimed inauguration of ,resident 3enigno C. AEuino III on 7une =-, *-1-, a former 3IR De#uty Commissioner, Atty. Bim +. 7acinto< enares, was a##ointed as the new Commissioner of Internal Revenue. During her first few months in the 3IR, Commissioner enares focused on the filing of ta" evasion cases under the RA02 ,rogram, in com#liance with the +96A #ronouncements of ,resident AEuino.