Ambojia, Franchette R.

BSA 301
Income Taxation: BIR Organizational Structure

What is BIR?
● In the Philippines, the primary government organization in charge of tax administration
and collection is the Bureau of Internal Revenue (BIR). Value-added tax (VAT), income
tax, and other levies are collected by the Bureau of Internal Revenue (BIR), which is part
of the Department of Finance and is responsible for ensuring compliance with tax
regulations. It manages taxpayer registration and filings, audits, and the enforcement of
tax laws. The BIR also promotes revenue production, advises on tax policy revisions,
and teaches the public about tax obligations. Its district and regional offices provide local
tax administration and enforcement, which is essential to the nation's fiscal stability.

History of BIR
● EARLY STAGES:

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. He was the Chief Arbitrator whose decisions
on financial matters were final except when revoked by the Council of Indies.
During these times, taxes that were collected from the inhabitants varied from
tribute or head tax of one gold maiz annually; tax on value of jewelries and gold
trinkets; indirect taxes on tobacco, wine, cockpits, burlas and powder. From 1521
to 1821, the Spanish treasury had to subsidize the Philippines in the amount of P
250,000.00 per annum due to the poor financial condition of the country, which
can be primarily attributed to the poor revenue collection system.

American Period: From 1898 to 1901, the Philippines was governed by American
military officials. In 1902, a civilian government was established under William H. Taft,
but it wasn't until Luke E. Wright's term that the Bureau of Internal Revenue (BIR) was
created by Reorganization Act No. 1189 on July 2, 1904. The BIR officially began
operations on August 1, 1904, with Henry Ide as Secretary of Finance and John S. Hord
as the first Commissioner.Initially, the BIR had 69 employees and included positions
such as Collector, Vice-Collector, and various clerks and division chiefs. Subsequent
American collectors included Ellis Cromwell, William T. Holting, and James J. Rafferty.
Under Holting’s tenure, the BIR was reorganized on January 1, 1913, creating eight
divisions.Following the Filipinization policy, Filipino Collectors took over starting with
Wenceslao Trinidad, Juan Posadas, Jr., and Alfredo Yatao. In 1921, Act No. 299
abolished the Real Estate, License, and Cash Divisions, transferring their functions to
the City of Manila and leaving the BIR with five divisions.In 1937, Regulation No. 95
reorganized provincial inspection districts and established Internal Revenue Offices in
 each province under the supervision of Provincial Agents. Except for minor changes, the
BIR's structure remained stable from 1921 to 1941.

Japanese Era: At the outbreak of World War II, under the Japanese regime
(1942-1945), the Bureau was combined with the Customs Office and was
headed by a Director of Customs and Internal Revenue

Post-Independence Era:

Post-War Independence: After the Philippines gained independence from the United
States in 1946, the BIR continued to evolve under the new Republic. The agency's
structure and functions were adjusted to fit the needs of an independent nation, focusing
on developing a more efficient tax system to support national development.

Reforms and Modernization: Over the decades, the BIR has undergone various
reforms to improve tax collection and administration. In the late 20th and early 21st
centuries, modernization efforts included the implementation of new technologies, the
introduction of computerized systems for tax filing and payment, and the enhancement of
taxpayer services.

Recent Developments:

Anti-Evasion Measures: In recent years, the BIR has focused on combating tax
evasion and improving compliance through stricter enforcement measures and
increased transparency.

Digital Transformation: The BIR has increasingly embraced digital tools to streamline
operations, such as online tax filing and payment systems, aiming to make tax
compliance more convenient for taxpayers.

BIR MISSION
● We collect taxes through just enforcement of tax laws for nation-building and the
upliftment of the lives of Filipinos

BIR VISION
● By 2028, the BIR is highly digital, propelled by empowered Revenuers with integrity,
providing excellent services aligned with international tax standards.
● The Bureau of Internal Revenue is an institution of service excellence and integrity