BIR Organization, Powers, and Taxpayer Classifications

Key vocabulary covering the organization and powers of the BIR, its issuances, rules, and taxpayer classifications in Philippine tax law.

Bureau of Internal Revenue (BIR)

Agency under the Department of Finance responsible for assessing, collecting, and enforcing all national internal revenue taxes, fees, and charges.

Commissioner of Internal Revenue (CIR)

Chief of the BIR vested with exclusive authority to interpret tax laws and exercise the Bureau’s statutory powers.

Deputy Commissioners

Four assistant chiefs who head the BIR’s divisions on Operations, Legal, Resource Management, and Information Systems.

Operations Division (BIR)

Branch of the BIR headed by a Deputy Commissioner that oversees field assessment, collection, and enforcement activities.

Legal Division (BIR)

Branch that handles litigation, rulings, and other legal matters for the BIR.

Resource Management Division (BIR)

BIR branch in charge of human, financial, and other internal resources.

Information Systems Division (BIR)

Unit that manages the Bureau’s information technology and data-processing systems.

Revenue Region

Geographic area of jurisdiction in the Philippines headed by a Revenue Regional Director.

Revenue District Office (RDO)

Smallest BIR administrative unit, supervised by a Revenue District Officer, that directly services taxpayers.

Functions of the BIR

Assessment and collection of national internal revenue taxes and enforcement of related forfeitures, penalties, and judgments.

Quasi-legislative Power (BIR)

Authority to issue rules and regulations for enforcing the NIRC, exercised through the Secretary of Finance upon recommendation of the CIR.

Quasi-judicial Power (BIR)

Power of the CIR to decide disputed assessments, refund claims, and other matters, subject to appeal to the Court of Tax Appeals.

Revenue Regulations (RR)

SOF-signed rules that implement tax laws; primary expression of the BIR’s quasi-legislative power.

Revenue Memorandum Order (RMO)

Internal BIR issuance prescribing procedures, processes, and policies for personnel.

Revenue Audit Memorandum Order (RAMO)

Type of RMO that sets detailed audit and investigation procedures.

Revenue Administrative Order (RAO)

RMO dealing with the Bureau’s administrative structure and functions.

Revenue Delegation Authority Order (RDAO)

Issuance whereby the CIR authorizes specific officials to perform acts such as signing letters of authority.

Revenue Special Order (RSO)

Instruction that applies only to particular cases or circumstances, e.g., audit of a specific taxpayer.

Revenue Memorandum Circular (RMC)

Document that reiterates, clarifies, or amplifies existing laws or regulations and makes public announcements.

BIR Ruling

Written response of the BIR to a taxpayer’s query; binding only on the requesting taxpayer under stated facts.

Legislative Rule (Administrative)

BIR issuance that fills in details of a statute and creates new obligations; requires notice, hearing, and publication.

Interpretative Rule

Issuance that merely explains or clarifies a statute without creating new rights or duties.

Contingent Rule

Regulation operative only upon the existence of specified facts or conditions.

Validity Requirements for Revenue Regulations

Must (1) be germane to the law’s purpose, (2) conform to statutory standards, and (3) aim solely to carry out the tax law.

Non-retroactivity of Rulings

Revoked or modified rulings cannot apply retroactively if prejudicial to taxpayers, except for misstatement, new facts, or bad faith.

Best Evidence Obtainable Rule

Allows the CIR to assess taxes using estimates when required reports are absent, false, or incomplete.

Third-party Information

Data obtained from persons other than the taxpayer (e.g., via the RELIEF System) to verify sales, purchases, and income.

Summons (BIR)

Order issued by the CIR to compel the appearance of persons and production of records relevant to tax inquiries.

Inventory-taking and Surveillance

Power of the CIR to count goods or observe business operations when under-declaration is suspected.

Bank Secrecy Law (RA 1405)

Law that makes bank deposits confidential but allows CIR access in specific tax situations.

Bank Secrecy Exceptions for CIR

CIR may examine deposits of (a) a decedent, (b) a taxpayer seeking compromise due to financial incapacity, or (c) a taxpayer named in a foreign tax-information request.

Foreign Tax Authority Information Exchange

Procedure allowing CIR to share bank data when a treaty partner provides required details and demonstrates foreseeable relevance.

Zonal Value

BIR-prescribed fair market value of real property for tax purposes, formerly adjusted every three years (superseded by RPVARA SMV).

Real Property Valuation and Assessment Reform Act (RPVARA)

RA 12001 replacing zonal values with Schedule of Market Values prepared by local assessors.

Accreditation of Tax Agents

Process by which the CIR registers representatives allowed to file returns or appear before the BIR, based on competence and integrity.

Delegable Powers of the CIR

Most CIR powers may be assigned to officials of division-chief rank or higher.

Non-delegable Powers of the CIR

Cannot be delegated: recommending regulations, issuing rulings of first impression or reversals, and compromising/abating tax over ₱500,000.

Resident Citizen

Filipino who lives in the Philippines or returns within the taxable year; taxed on worldwide income.

Non-resident Citizen

Filipino who establishes physical presence abroad with intent to reside, leaves as immigrant or permanent employee, works abroad ≥183 days, or arrives mid-year to settle permanently.

Resident Alien

Non-citizen individual whose residence is within the Philippines; taxed only on Philippine-source income.

Non-resident Alien

Individual who is not a Filipino citizen and whose residence is outside the Philippines.

Jus sanguinis

Citizenship principle where a child inherits nationality from parent(s) regardless of birthplace.

Naturalization

Legal process by which a foreigner acquires Philippine citizenship through administrative, judicial, or legislative means.

Loss of Philippine Citizenship

May occur via naturalization abroad, express renunciation, oath of allegiance to another state, foreign military service, cancellation of naturalization, desertion, or marriage to a foreigner acquiring spouse’s nationality.

Non-resident Alien Engaged in Trade or Business

Alien who stays in the Philippines for >180 days in a calendar year; taxed differently from those not so engaged.

Purely Compensation Income Earner

Individual whose only income arises from an employer-employee relationship.

Self-employed Individual / Professional

Person earning income from the practice of profession or conduct of business as sole proprietor or partner.

Mixed Income Earner

Taxpayer receiving both compensation income and income from business or professional practice.

Micro, Small, Medium, Large Taxpayers

Classification based on annual gross sales/net of VAT: Micro (

Estate (for tax purposes)

Mass of property, rights, and obligations of a decedent that survives death and constitutes a separate taxable entity.

Trust

Fiduciary relationship where the trustor transfers property to a trustee for the benefit of a beneficiary.

Domestic Corporation

Corporation created or organized in the Philippines; always treated as resident.

Foreign Corporation

Corporation organized under foreign laws; may be resident or non-resident for tax purposes.

Resident Foreign Corporation

Foreign corporation engaged in trade or business within the Philippines.

Non-resident Foreign Corporation

Foreign corporation not engaged in trade or business within the Philippines.

Doing Business (General Test)

Continuous commercial dealings or performance of acts in pursuit of business objectives within the Philippines.

Foreign Investments Act – Doing Business

Includes soliciting orders, opening offices, appointing agents staying ≥180 days, or taking part in management of a Philippine enterprise.

Activities Not Considered Doing Business

Mere share investment or appointing an independent distributor that acts in its own name and account.

Court of Tax Appeals (CTA)

Special court with exclusive appellate jurisdiction over decisions of the CIR on assessments, refunds, and other tax matters.