RP relies on honesty of telcos' income reports

MANILA, Philippines - The Philippines only relies on the honesty of telecommunications companies since it has no means of verifying their actual income and revenues earned from their operations, the Bureau of Internal Revenue (BIR) admitted. “Practically, [the agency is] relying on the honesty of telcos in declaring their correct income," BIR revenue district officer Gerardo Florendo said during a hearing of the House Ways and Means committee. The government collected P34 billion and P11 billion in income and value added taxes from 13 telecommunications companies last year, the Department of Finance (DOF) said. It is also difficult to monitor the amount of prepaid credit being loaded into mobile phones, as most are done through electronic load (e-load) which requires no issuance of receipts, he added. The BIR official made this assertion during deliberations on Quezon Rep. Danilo Suarez's proposal to install a metering system that would monitor mobile phone transactions, particularly text messages, to ensure that telcos pay their proper taxes. However, monitoring mobile phone transactions would not give a good picture of telcos’ revenues because it does not consider widely-used promos such as unlimited texting, said Globe Telecom Inc., one of the country's biggest telcos. “While perhaps this metering may reflect the number of numerical transactions, it does not reflect the aggregate revenue income," said lawyer Rodolfo Salalima, Globe's senior adviser and chief legal counsel, during the hearing. Suarez's proposal to cut text message costs to P50 centavos from P1 and to impose a P5 centavo broad spectrum fee to pay for the metering system would result in massive revenue losses for telecommunication firms, Salalima added. Suarez, chair of the Oversight committee, earlier threatened to have telcos' books opened if they refuse to heed the proposal, once it is approved. The lawmaker said only a resolution from the National Telecommunications Commission (NTC) is needed to impose the new text messaging fees, adding that NTC officials appeared cooperative when they discussed his proposal. - GMANews.TV