This paper is a backgrounder on the tax assessment schemes adopted by the ASEAN countries. It compares the tax assessment scheme obtaining in the Philippines with its ASEAN counterparts to determine areas of possible reforms/improvements.
An assessment is one of the main functions of tax administration. It refers to the calculation of tax liabilities through the application of governing rates to the final tax base as specified by law. It is not an action or proceeding for the collection of taxes. It is merely a notice to the effect that the amount stated therein is due as a tax and contains a demand for the payment thereof. There are two (2) systems of assessment for tax purposes: (1) Self-assessment; and (2) Official or Authoritative Assessment. The self-assessment is a system whereby taxpayers themselves calculate or determine their own tax liabilities. The taxpayer subsequently files a tax return together with payment for the tax liabilities so calculated on or before the due date. On the other hand, the official/authoritative assessment requires a so-called authority or an assessment officer to calculate the tax liability for tax payment before the time limit fixed for filing a return, whether or not the data concerning the taxpayer’s activities are available. Under this method, the taxpayer must pay the tax within a specified period reckoned from the date of receipt of the assessment notice.
On the comparative assessment methods, the Philippines, Indonesia, Malaysia, and Myanmar are adopting the self-assessment system in determining the taxes due. On the other hand, Brunei Darussalam, Singapore, and Lao PDR, are employing the official/authoritative method of assessment. It was gathered, however, that Singapore is contemplating on moving from the official/authoritative system to the self-assessment scheme.
The rest, i.e., Thailand, Cambodia, and Vietnam are optimizing the benefits from making use of both the self-assessment and the official/authoritative assessment systems to allow a more flexible means of assessing taxes payable to the state/government. It was further gathered that Vietnam is also planning to implement the self-assessment method on a nationwide scale by year 2010.
It is apparent, therefore, that the trend is to go towards the self-assessment system as it puts the burden of determining the tax liability on the part of the taxpayer.
Whatever assessment scheme a country adopts, it may be noted that its success can only be gauged or measured through the amount of revenues that the tax collection machinery generates and the consistency by which such revenues are sustained considering the various expenditure programs that are dependent on such revenues. The effectiveness of the assessment system in this regard is greatly dependent on how effective or efficient the tax machinery is in coping with the nuances of the adopted assessment scheme. Thus, the tax machinery should be able, through audit, information, or other technologies, to determine whether the assessment scheme is being manipulated by unscrupulous taxpayers. Otherwise, the correct amount of taxes due from a taxpayer may not be forthcoming.
