Law Summary
Current Numbering System Limitations
- BIR uses multiple numbering systems (TAN, assessment number, withholding agent number, VAT and non-VAT registration numbers) for the same taxpayer.
- These systems are unintegrated, causing data sharing difficulties and inefficiencies.
- Lack of integration leads to redundant data and wasted computer resources.
Importance of a Unique Taxpayer Identification Number (TIN)
- A single unique TIN is essential to track all taxpayer transactions regardless of tax type.
- The TIN will replace existing numbering systems, including the present TAN, improving control and data processing efficiency.
Structure and Function of the Present Tax Account Number (TAN)
- The TAN is a 12-digit alphanumeric code generated under the Soundex System.
- It is required to be indicated on tax returns and other documents filed with the BIR.
Technical and Implementation Deficiencies of the TAN
- TAN lacks unique digital indicators for taxpayer type and jurisdictional RDO.
- Its alphanumeric and lengthy design complicates data encoding and increases storage costs.
- Implementation is poor; many documents lack proper TAN indication.
- TAN issuance is uncontrolled, causing duplication and issuance to non-filers.
- Inadequate matching capacity of existing hardware leads to repeated issuance of TANs to the same taxpayers.
Consequences of Maintaining the Current Numbering Systems
- Names and addresses must be encoded repeatedly due to lack of a unique identifier.
- Multiple numbering systems increase data redundancy and computer storage use.
- The current TAN system cannot serve as an effective primary key to link data across various tax systems.
- The VAT, non-VAT, and withholding agent numbers are issued by RDOs and require changes when taxpayer location changes, complicating data tracking.
Rationale for Replacing TAN with a Unique TIN
- Maintaining TAN requires extensive taxpayer education and clean-up of duplicate entries.
- Despite clean-up efforts, TAN’s technical deficiencies persist and hinder relational database use.
- The TIN system offers a shorter, numeric unique identifier facilitating efficient tax data management.
Transition Procedures: Introduction of the New TIN Structure
- The TIN is a 9-digit numeric code where the first digit identifies taxpayer type (0 for corporations, 1-9 for individuals).
- The following seven digits are sequential, with the ninth digit serving as a check digit.
- TIN is easier to encode and will replace all existing numbering systems.
Coordination with the National Computer Center (NCC)
- The TIN design was submitted to the NCC for policy compliance and technical review.
- NCC endorsed the adoption of the TIN with some observations and suggestions.
Implementation and Publicity
- BIR will implement the TIN system in accordance with Revenue Memorandum Order No. 22-91.
- Internal revenue officers and concerned personnel are instructed to widely disseminate information about the TIN adoption.