DURING a recent firm visit attended by accountancy students, I had the opportunity to sit as one of the panelists and speak with students who were beginning to explore what it means to work in public practice. At one point, I was asked what I considered to be one of the challenging experiences in my profession, particularly in tax. My answer was not about the technical difficulty of interpreting the Tax Code, preparing tax returns, or keeping up with the constant stream of regulations and issuances from the Bureau of Internal Revenue (BIR).
These challenges are, after all, part of the profession and generally come with difficulties. But what I find more difficult is the tension between helping clients understand and comply with their tax obligations while, at the same time, seeing the recurring public concerns over how the taxes collected by the government are eventually used.
As tax practitioners, we tell our clients that compliance matters. We remind them of their obligations, help them navigate complicated rules, and advocate compliance, even when doing so can be costly or inconvenient. Yet there is an uncomfortable question that sometimes follows: How do we sustain that message when taxpayers themselves begin asking whether the government is exercising the same degree of discipline, accountability, and fidelity to the law in managing the money it collects from its people?
That question becomes even more difficult in an environment where allegations of corruption, questions about the use of public funds, and concerns regarding government accountability regularly occupy public conversation, as it often draws public attention to the stewardship of government resources. Regardless of the merits of any allegation or controversy, these situations nonetheless touch on something more than politics, and that is public trust. The funds being discussed are ultimately public funds, and a significant portion of government revenue comes from taxes paid by ordinary Filipinos and businesses.
The issue, therefore, is not simply whether a particular government official or agency has complied with the rules governing public expenditure. Rather, it raises a broader question about the relationship between citizens and the State: What happens to taxpayer confidence when people begin to doubt how the revenue generated from their taxes is managed after it has been collected?
I would say that this is not an argument against taxation; it is an argument for trust in the tax system. Every tax withheld from an employee’s salary, every VAT passed on in consummation of goods and services, and every business tax remitted to the government represents money that citizens and businesses surrender by force of law. Because taxation is compulsory, the government is expected to bear a heightened responsibility to exercise its authority lawfully and accountably.
Taxpayers cannot simply refuse to pay because they disagree with how public resources are spent; they must generally comply first and challenge an assessment through the remedies provided by law. The rule of law, due process, and accountability are therefore essential to maintaining the confidence of those asked to contribute to the public treasury.
The importance of these safeguards becomes most apparent when the State’s authority to collect taxes is weighed against the taxpayer’s right to due process. Recent jurisprudence illustrates how the courts preserve this balance by requiring the government to exercise its taxing power within the limits imposed by law.
The Supreme Court’s (SC) decision in Commissioner of Internal Revenue v. Robinsons Convenience Stores, Inc., G.R. No. 259968, 27 August 2025, involved the government’s effort to collect a tax assessment while the taxpayer challenged its validity. By suspending the collection proceedings, the Court recognized the need to protect taxpayer rights and affirmed that the government’s power to collect is not unlimited. Although the case may appear to concern technical issues, such as the suspension of tax collection, the validity of issuance of a Warrant of Distraint and/or Levy, and the dispensation of the bond requirement, its broader significance is clear, that the State, too, is bound by law.
A second recent decision provides another perspective on the importance of fairness and predictability in taxation. In Melco Resorts Leisure (PHP) Corporation v. Commissioner of Internal Revenue, G.R. No. 271261, 02 April 2025, the SC clarified the reckoning point for the two-year period for claiming a refund of erroneously paid VAT. Although the taxpayer ultimately did not obtain the refund because the Court found that the payment was not actually erroneous or illegal, the taxpayer, being engaged in VAT-exempt transactions, cannot claim a refund of input VAT, because such input VAT simply becomes part of the cost of its purchases.
The Court held that the period should be counted from the date the taxpayer actually paid the VAT to the BIR, rather than from the date the taxpayer’s suppliers remitted the tax. The decision is noteworthy because the Court rejected an interpretation that would have effectively required the taxpayer to establish the remittance of VAT by hundreds of suppliers and produce a substantial number of their tax returns, which is almost impossible to do. In determining the proper reckoning point, the Court considered principles of substantial justice, equity, and fair play.
For businesses, particularly micro, small, and even medium enterprises, this kind of jurisprudence matters beyond the legal technicalities. A taxpayer needs to know not only how much tax is due, but also what rights and remedies are available when an error occurs. The predictability of tax rules affects business decisions, cash flow, and financial planning. A tax system can become difficult to trust when taxpayers feel that they are being asked to carry burdens that the law does not actually impose upon them.
This brings us back to taxpayer confidence. When the government applies tax laws fairly and consistently, compliance is more likely to be seen as a civic duty. When the system appears arbitrary or burdensome, trust erodes and compliance rests more on fear of penalties than confidence in the system. The credibility of taxation therefore depends on the government exercising its authority within constitutional and legal safeguards.
For those of us in public practice, this is particularly important. Tax practitioners occupy a unique position between taxpayers and the government. We help clients understand rules that can sometimes be complicated, prepare them for compliance requirements, correct mistakes, and navigate disputes with tax authorities. In doing so, we become part of the mechanism through which the State encourages voluntary compliance. We tell clients that taxes are not optional and that ignorance of the law is not a defense. We advise them to keep proper records, reconcile any discrepancies, meet prescribed filing deadlines, issue appropriate documents as mandated in the Tax Code, as amended, and report their transactions accurately. But there is a limit to what technical tax advice can accomplish if the larger system loses the confidence of the people it is asking to comply with.
Recent controversies involving public funds remind us why trust matters in the first place. Public discussions about confidential funds, government expenditures, and alleged irregularities can easily become partisan. The SC’s recent tax decisions offer an important reminder that the rule of law applies on both sides of the fiscal equation. The taxpayer must pay what the law requires, but the government must collect only what the law permits. The taxpayer must comply with legitimate requirements, but the government must respect the rights and remedies that the law gives to taxpayers. Once taxes have been collected, the public has every reason to expect that those funds will be used, accounted for, and protected according to law.
Perhaps, a key challenge for tax practitioners is not only helping taxpayers comply, but also preserving their confidence in the system. Sustainable compliance depends not on fear and penalties alone, but on fair rules, accessible remedies, and accountable institutions.
Taxes are the lifeblood of government, but trust may be the lifeblood of tax compliance. The first can be collected through law. The second has to be earned.
Trust, once lost, is far more difficult to collect than taxes.
Charisse is a manager in the Tax Advisory & Compliance Practice Area of P&A Grant Thornton. One of the leading audit, tax, advisory, and outsourcing firms in the Philippines, P&A Grant Thornton is composed of 29 Partners and 1,500 staff members. We’d like to hear from you! Connect with us on LinkedIn and like us on Facebook: P&A Grant Thornton and email your comments to business.development@ph.gt.com. For more information, visit our website: www.grantthornton.com.ph.
