Evolution of

Philippine TAXATION
Topics
Taxation during Spanish era
Taxation during American era
Taxation under Commonwealth
Taxation during Marcos administration
Taxation during Aquino administration
Taxation during Ramos administration
Taxation during Estrada administration
Taxation during Arroyo administration
Taxation during Pnoy administration
Taxation during Duterte administration
Taxation during
Spanish
colonization
REPORTER: CANONIGO
 Taxation during Spanish colonization
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. He was the Chief Arbitrator whose decisions on financial
matters were final except when revoked by the Council of Indies.
During this time, taxes levied on the people included a one-gold-
maiz annual tribute, a tax on the value of jewels and gold trinkets,
and indirect taxes on tobacco, wine, cockpits, burlas, and powder.
The Spanish Treasury had to subsidize the Philippines in
the amount of P 250,000.00 each year from 1521 to 1821
due to the country's poor financial situation, which was mostly
due to a bad revenue collection system.
Taxation during
American
colonization
REPORTER: CANONIGO
 Taxation during American colonization
In the early American regime from the period 1898 to 1901, the
country was ruledby American military governors. In 1902, the first
civil government was establishedunder William H. Taft. However, it
was only during the term of second civil governorLukeE. Wright that
the Bureau of Internal Revenue (BIR) was created through
thepassage of Reorganization Act No. 1189 dated July 2, 1904.On
August 1, 1904, the BIR was formally organized and made operational
under theSecretary of Finance, Henry Ide (author of the Internal
Revenue Law of (1904)
Taxation during American colonization
with John S. Hord as the first Collector (Commissioner). The first
organization started with 69 employees, which consisted of a
Collector, Vice-Collector, one Chief Clerk, one Law Clerk, one
Records Clerk and three Division Chiefs. Following the tenure of John
S. Hord were three more American collectors, namely Ellis Cromwell
(1909-1912; William T. Holting (1912-1214); and James J. Rafferty (1914-
1918). They were all appointed by the Governor-General with the
approval of the Philippine Commission and the US President.
Taxation during
Commonwealth

REPORTER: CANONIGO
 Taxation during Commonwealth
New measures and legislation were introduced to make the taxation
system appear more equitable during the commonwealth.
Income tax rates were increased in 1936, adding a surtax rate
on individual net incomes in excess of 10,000 pesos. Income tax rates
of corporations were also increased. In 1937, the cedula tax was
abolished, which appeared to be a progressive move; but in 1940, a
residence tax was imposed on every citizen aged 18 years old and on
every corporation. In 1939, the commonwealth government
drafted the National Internal Revenue Code, introducing major
changes in the new tax system, as follows:
1. The normal tax of tree percent and the surtax on income was
replaced by a single tax at a progressive rate.
2. Personal exemption we're reduced.
3. Corporation income tax was slightly increased by introducing
taxes on inherited estates or gifts donated in the name of dead
persons.
4. The cumulative sales tax was replaced by a single
turnover tax of 10% on luxuries.
5. Taxes on liqours, cigarettes, forestry products, and mining were
increased.
6. Dividends were made taxable.
1. The normal tax of tree percent and the surtax on income was
replaced by a single tax at a progressive rate.
2. Personal exemption we're reduced.
3. Corporation income tax was slightly increased by introducing
taxes on inherited estates or gifts donated in the name of dead
persons.
4. The cumulative sales tax was replaced by a single
turnover tax of 10% on luxuries.
5. Taxes on liqours, cigarettes, forestry products, and mining were
increased.
6. Dividends were made taxable.
Taxation during Commonwealth
The introduced tax structure was an improvement of the earlier
system introduced by the Americans, but still remained inequitable.
The lower class still felt the bulk of the burden of taxations, while the
upper class, the landed elite or the people in political positions,
were able to maneuver the situation that would benefit them
more. The agriculture sector was still taxed low to promote growth,
but there was no incentive for industrial investment to take root and
develop.
Finally, a common character of taxation during the Americans
occupation in the Philippines was not used to diversify the
economic or direct economic development as some sectors still
carried the disproportionate share of the tax burden.
Taxation during
Marcos
administration
REPORTER: CANONIGO
 Taxation during Marcos administration
The appointment of Misael Vera as Commissioner in 1965 led the
Bureau to a "new direction" in tax administration. The most notable
programs implemented were the "Blue Master Program" and the
"Voluntary Tax Compliance Program". The first program was
adopted to curb the abuses of both the taxpayers and BIR personnel,
while the second program was designed to encourage professionals
in the private and government sectors to report their true income
and to pay the correct amount of taxes.
It was also during Commissioner Vera's administration that the
country was further subdivided into 20 Regional Offices and 90
Revenue District Offices, in addition to the creation of various
offices which included the Internal Audit Department (replacing the
Inspection Department), Administrative Service Department,
International Tax Affairs Staff and Specific Tax Department.
Taxation during Marcos
administration
Providing each taxpayer with a permanent Tax Account Number
(TAN) in 1970 not only facilitated the identification of taxpayers but
also resulted to faster verification of tax records. Similarly, the
payment of taxes through banks (per Executive Order No. 206), as
well as the implementation of the package audit investigation by
industry are considered to be important measures which contributed
significantly to the improved collection performance of the Bureau.
The proclamation of Martial Law on September 21, 1972 marked the
advent of the New Society and ushered in a new approach in the
developmental efforts of the government. Several tax amnesty
decrees issued by the President were promulgated to enable erring
taxpayers to start anew. Organization-wise, the Bureau had also
undergone several changes during the Martial Law period (1972-
1980).
 Taxation during Marcos administration
In 1976, under Commissioner Efren Plana's administration, the
Bureau's National Office transferred from the Finance Building in
Manila to its own 12-storey building in Quezon City, which was
inaugurated on June 3, 1977. It was also in the same year that
President Marcos promulgated the National Internal Revenue Code
of 1977, which updated the 1934 Tax Code.
On August 1, 1980, the Bureau was further reorganized under the
administration of Commissioner Ruben Ancheta. New offices were
created and some organizational units were relocated for the
purpose of making the Bureau more responsive to the needs of the
taxpaying public.
Taxation during
Aquino
administration
REPORTER: ARGME
 Taxation during Aquino
administration
·The Corazon Aquino administration initiated a tax reform program
in 1986 to improve revenue yield, promote tax equity, reduce
distortionary effects on employment and production, and improve
compliance.
·a major reform in the tax system was also introduced under the term
of president Aquino, which was the introduction of the value-added
tax (VAT). it was signed 1986 and was put to effect on 1988
·along with tax reform came the administrative reforms, such as the
restructing of the department of finance and its attached agency,
the bureau of internal revenue (BIR), through the executive order 127.
The tax reform of Aquino administration, both tax and revenue effort
rose, increasing from 10.7% to 15.4% in 1992.
Taxation during
Ramos
administration
REPORTER: MAHINAY
 Taxation during Ramos
administration
The year 1993 marked the entry into the Bureau of its first lady
Commissioner, Liwayway Vinzons-Chato. In order to attain the
Bureau's vision of transformation, a comprehensive and integrated
program known as the ACTS or Action-Centered Transformation
Program was undertaken to realign and direct the entire
organization towards the fulfillment of its vision and mission.
It was during Commissioner Chato's term that a five-year Tax
Computerization Project (TCP) was undertaken in 1994. This involved
the establishment of a modern and computerized Integrated Tax
System and Internal Administration System.
Taxation during Ramos
administration
Further streamlining of the BIR was approved on July 1997 through
the passage of EO No.430, in order to support the implementation
of the computerized Integrated Tax System. Highlights of the said
EO included the: 1) creation of a fourth Revenue Group in the BIR,
which is the Legal and Enforcement Group (headed by a Deputy
Commissioner); and 2) creation of the Internal Affairs Service,
Taxpayers Assistance Service, Information Planning and Quality
Service and the Revenue Data Centers.
Taxation during
Estrada
administration
REPORTER: CANONIGO
 Taxation during Estrada
administration
With the advent of President Estrada's administration, a Deputy
Commissioner of the BIR, Beethoven Rualo, was appointed as
Commissioner of Internal Revenue. Under his leadership, priority
reform measures were undertaken to enhance voluntary compliance
and improve the Bureau's productivity. One of the most significant
reform measures was the implementation of the Economic Recovery
Assistance Payment (ERAP) Program, which granted immunity from
audit and investigation to taxpayers who have paid 20% more than
the tax paid in 1997 for income tax, VAT and/or percentage taxes.
In order to encourage and educate consumers/taxpayers to demand
sales invoices and receipts, the raffle promo "Humingi ng Resibo,
Manalo ng Libo-Libo" was institutionalized in 1999. The Large
Taxpayers Monitoring System was also established under
Commissioner Rualo's administration to closely monitor the tax
compliance of the country's large taxpayers.
Taxation during Estrada
administration
The coming of the new millennium ushered in the changing of the
guard in the BIR with the appointment of Dakila Fonacier as the new
Commissioner of Internal Revenue. Under his administration,
measures that would enhance taxpayer compliance and deter tax
violations were prioritized. The most significant of these measures
include: full utilization of tax computerization in the Bureau's
operations; expansion of the use of electronic Documentary Stamp
Tax metering machine and establishment of tie-up with the national
government agencies and local government units for the prompt
remittance of withholding taxes; and implementation of Compromise
Settlement Program for taxpayers with outstanding accounts
receivable and disputed assessments with the BIR.
 Taxation during Estrada
administration
Memoranda of Agreement were also forged with the league of local
government units and several private sector and professional
organizations (i.e. MAP, TMAP, PCCI, FFCCCI, etc.) to help the BIR
implement tax campaign initiatives.
In September 1, 2000, the Large Taxpayers Service (LTS) and the
Excise Taxpayers Service (ETS) were established under EO No. 175 to
reinforce the tax administration and enforcement capabilities of the
BIR. Shortly after the establishment of said revenue services, a new
organizational structure was approved on October 31, 2001 under
EO No. 306 which resulted in the integration of the functions of the
ETS and the LTS.
Taxation during Estrada
administration
In line with the passage of the Electronic Commerce Act of 2000 on
June 14, the Bureau implemented a Full Integrated Tax System (ITS)
Rollout Acceleration Program to facilitate the full utilization of tax
computerization in the Bureau's operations. Under the Program,
seven (7) ITS back-end systems were released in stages in RR 8 -
Makati City and the Large Taxpayers Service.
Taxation during
Arroyo
administration
REPORTER: DUMALAGAN
 Taxation during Arroyo
administration
Under his administration, the Bureau attained success in a number of
key undertakings, which included the expansion of the RATE Program
to the Regional Offices; inclusion of new payment gateways, such as
the Efficient Service Machines and the G-Cash and SMART Money
facilities; implementation of the Benchmarking Method and
installation of the Bureau’s e-Complaint System, a new e-Service
that allows taxpayers to log their complaints against erring
revenuers through the BIR website.
In 2007, the National Program Support for Tax Administration Reform
(NPSTAR), a program funded by various international development
agencies, was launched to improve the BIR efficiency in various
areas of tax administration (i.e. taxpayer compliance, tax
enforcement and control, etc.).
Taxation during Arroyo
administration
On June 29, 2007, Commissioner Buñag relinquished the top post of
the BIR and was replaced by Deputy Commissioner for Operations
Group, Lilian B.
The conduct of special operations on high profile tax evaders, which
resulted to the filing of tax cases under the Run After Tax Evaders
(RATE) Program marked Commissioner Parayno’s administration as
well as the conduct of Tax Compliance Verification Drives and
accreditation and registration of cash register machines and point-
of-sale machines.
 Taxation during Arroyo
administration
To enhance the collection performance of the BIR, Commissioner
Parayno adopted the use of new systems such as the Reconciliation
of Listings for Enforcement or RELIEF System to detect under-
declarations of taxable income by taxpayers and the electronic
broadcasting system to enhance the security of tax payments.
Taxation during
Aquino Pnoy
administration
REPORTER: GERVACIO
 Taxation during Aquino Pnoy
administration
During her first few months in the BIR, Commissioner Henares
focused on the filing of tax evasion cases under the Run After Tax
Evaders (RATE) Program, in compliance with the SONA
pronouncements of President Aquino. She also continued the closure
of erring business establishments under the “Oplan Kandado”
Program.
Many electronic services were also developed under her term to
automate various taxpayer service transactions. These include the
eBIRForms System;Electronic Certificate Authorizing Registration
(eCAR); Mobile Revenue Collection Officers System (MRCOS);
Electronic Documentary Stamp Tax (eDST) System; Electronic
Authority to Release Imported Goods (eATRIG); Internal Revenue
Stamps Integrated System (IRSIS) for Alcohol Products; Electronic
Official Registry Book (eORB); and Electronic Tax Remittance Advice
(eTRA) System.
Taxation during Aquino Pnoy
administration
Several internal processes were also automated to promote good
governance within the BIR, and these include the development of
Accounts Receivable Management System (ARMS); Collection
Reconciliation System (CRS); and Electronic Letter of Authority
Monitoring System (eLAMS).
To improve the BIR’s delivery of taxpayer services, Commissioner
Henares also initiated the establishment of eLounge in Revenue
District Offices and the ISO Certification of the Bureau’s business
registration processes, which started in Quezon City’s district
offices.
 Taxation during Aquino Pnoy
administration
Commissioner Henares also delivered historic achievement during
her term by being the first Commissioner to hit the trillion-peso mark
tax collection in CY 2012 and in the succeeding years. It was also
during Commissioner Henares’ term that the Bureau’s “Net Sincerity
Rating in Fighting Corruption” dramatically improved, from a “Very
Bad” rating to “Neutral” (per result of survey conducted by the Social
Weather Station from November 14, 2014 to May 12, 2015).
Taxation during
Duterte
administration
REPORTER: CEBALLO
 Taxation during Duterte
administration
* June 30, 2016, Atty. Caesar R. Dulay was appointed as the new
Commissioner of Internal Revenue. * Cases under the RATE Program
and closure of erring business establishm
ents (which include POGOs) under the “Oplan Kandado” Program
*The first revision was made under the Tax Reform for Acceleration
and Inclusion or TRAIN Act (per RA No. 10963), which took effect on
January 1, 2018. -
This was followed by the passage of the Corporate Recovery and
Tax Incentives for Enterprises (CREATE) Act per RA No. 11534, which
took effect on April 11, 2021. A Tax Amnesty Program (per RA No.
11213) was also implemented covering tax delinquencies and unpaid
Estate Tax.
Taxation during Duterte
administration
* The BIR has received a commendation from the House of
Representatives “for achieving an all-time high of 15.14% over its tax
collection target for the Fiscal Year 2020”. *A total of P 1.94 Trillion
was collected by the BIR in 2020, exceeding its goal of P 1.69 Trillion
by 15% or P 255.19 Billion.
Several organizational changes also happened in the BIR during
Commissioner Henares’ administration, which resulted to the
renaming, merging, splitting, abolition and creation of several
offices. Five (5) new divisions were created under the Large
Taxpayers Service (LTS) to establish industry-based groupings among
the respective divisions.
In addition, five (5) new divisions were created in the National
Office, namely: Project Development and Management Division;
Project Monitoring and Evaluation Division; VAT Credit Audit Division;
Tax Audit Review Division; and Collection Performance Monitoring
Division;
Thank You
for listening!