Tax Payment System and Central Bank Expenses

The Central Bank’s role in tax collection is grounded on directions under Executive Orders Nos. 2, 206, 339, and 425 dated January 5, 1966, January 9, 1970, September 9, 1971, and February 16, 1974, respectively.
The Central Bank is directed to collect for the government taxes, duties, levies, and revenues using banking system facilities under Republic Act No. 6125 and Presidential Decree No. 230.
The Letter of Instruction ties the Central Bank’s expense reimbursement to implementation of Republic Act No. 6125, Presidential Decree No. 230, and the referenced Executive Orders.
The Letter of Instruction also covers “such other laws, Presidential orders, and directives” that require Central Bank participation in a tax or revenue collection program.

The Letter of Instruction affirms that using banking system facilities is very effective for the government’s tax collection efforts.
The Letter of Instruction requires that Central Bank expenses incurred in assisting the government’s tax collection efforts be passed on to the National Government.

The Letter of Instruction covers all expenses of the Central Bank of the Philippines connected with its tax collection activities assisting the National Government.
The scope applies to tax collection activities in implementing Republic Act No. 6125 and Presidential Decree No. 230, and in carrying out the programs under the listed Executive Orders.
The scope extends to future laws, Presidential orders, and directives requiring Central Bank participation in any tax or revenue collection program that uses or involves banking system facilities.

The Letter of Instruction provides that all Central Bank expenses in connection with tax collection activities assisting the National Government shall be booked as Central Bank accounts receivable from the National Government.
The booking requirement applies to expenses incurred in connection with implementation of Republic Act No. 6125, Presidential Decree No. 230, and the listed Executive Orders.
The booking requirement applies to expenses arising from participation in tax or revenue collection programs under “such other laws, Presidential orders, and directives” that require Central Bank participation.

The Letter of Instruction authorizes the Central Bank and the Bureau of Internal Revenue to make the necessary changes in the existing system of effecting tax payment through banks.
The Letter of Instruction authorizes expansion of the tax payment through banks system to the extent warranted by requirements of the collection system.

The Letter of Instruction authorizes the Secretary of Finance to set up, within the Department of Finance, the Bureau of Internal Revenue, and the Bureau of Customs, the necessary counterpart office units, personnel complement, and facilities to assist implementation of the collection system.
The Letter of Instruction authorizes the Central Bank to advance the additional expenses incurred in connection with setting up and operating the counterpart offices, personnel, and facilities.
The advanced additional expenses are likewise treated as Central Bank accounts receivable from the National Government.

The Letter of Instruction directs that the necessary funds for liquidation of the Central Bank accounts receivable from the National Government shall be drawn by the Central Bank from its profits under Section 41 of the Central Bank Charter.