Dominguez orders BIR to look into settling tax cases with GOCCs

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Finance Secretary Carlos Dominguez III has directed the Bureau of Internal Revenue (BIR) to explore the possibility of amicably settling its pending and future tax disputes with government-owned and – controlled corporations (GOCCs) to avoid costly and protracted legal battles.

Dominguez said it would be pointless for both the BIR and the GOCCs to argue their respective cases before the courts and spend taxpayers’ money in the process on legal fees, given that their common goal is either to save or collect funds to fill the state coffers.

“Can we avoid going to court for wholly-owned (state) companies? I want that as a rule. If there is a government-to-government problem, don’t go to court, just settle it among yourselves,” Dominguez told BIR Deputy Commissioner Celia King during a recent Department of Finance (DOF) Executive Committee (Execom) meeting.

King, who handles the BIR’s Resource Management Group, had informed Dominguez that the bureau’s Large Taxpayers Service has identified several “big-ticket items that would help it achieve its (collection) goal” in the last quarter, including possible settlements with some private firms and GOCCs.

She cited, for instance, the case involving a debt-ridden GOCC, which filed a complaint against the BIR before the Court of Tax Appeals, although the bureau would have preferred to open talks with this firm on a possible compromise settlement or abatement of penalties.

Dominguez said resorting to legal action would benefit neither the BIR nor the company.

He instructed King during the Execom meeting to discuss with officials of the GOCC the possibility of settling their tax issues out of court.

Dominguez pointed out that even if the BIR succeeds in collecting taxes from the GOCC, the firm would just borrow more money that would go back to the National Treasury anyway, and, in the process, only burden the government, which would have to pay off the GOCC’s loan plus the interest rate.

The finance secretary said at the Execom meeting that settling tax matters with GOCCs out of court would save the BIR’s Litigation Division, the Office of the Solicitor General and the Office of the Government Corporate Counsel (OGCC), which are all paid for with taxpayers’ money, from additional work and legal fees.