final consultant report

FINAL CONSULTANT REPORT

Continuing Revenue Regulation Review and

PEPPOL Business Case/Implementation Plan Formulation

JANUARY 2021

Final Consultant Report for USAID ePeso Activity: Continuing Revenue Regulation Review and PEPPOL Business Case

8 January 2021

1 Not for publication; strictly for USAID/Chemonics use only

This study is made possible by the support of the American People through the United States

Agency for International Development (USAID). It is prepared for USAID through Chemonics

International Inc. under “E-PESO” Contract No. AID-492-C-15-0001. The author’s views

expressed in this publication do not necessarily reflect the views of the United States Agency

for International Development or the United States Government.

This study was conducted by Sycip Gorres Velayo & Co (SGV & Co.), as commissioned by

USAID as part of E-PESO Activity.

Implemented by:

Chemonics International Inc.

1717 H Street NW

Washington, DC 20006

Phone: +1 202-995-3300

Fax: +1 202-995-3400

www.chemonics.com


8 January 2021


Table of contents

1. PRE-WORD ...........................................................................................................3

2. CONSULTANT’S ACTIVITIES ..............................................................................4

3. SOLUTIONS AND NEXT STEPS ....................................................................... 13

3.1 IMMEDIATE AND MEDIUM-TERM SOLUTIONS 13

3.2 TARGET E-INVOICING FRAMEWORK AND THE HARMONIZATION WITH KOICA14

3.3 PROOF-OF-CONCEPT IMPLEMENTATION 15

4. RECOMMENDATIONS FOR THE STUDY ....................................................... 16

4.1 STRONGER ENGAGEMENT WITH BIR KEY DECISION-MAKERS 16

4.2 BETTER SESSION DYNAMICS WITH BIR 16

4.3 EARLY COORDINATION WITH KOICA 16


8 January 2021


1. Pre-word

This fifth and final deliverable for the USAID E-PESO project is not for publication. This consultant report is

STRICTLY for USAID/Chemonics use only.

This consultant report will serve as a cover for the final discussion paper and will serve as documentation for all activities conducted by the consultant, the agreed actions or next steps of key stakeholders, and other

recommendations of the study


2. Consultant’s Activities

USAID E-PESO engaged the services of SGV & Company to review proposed immediate and medium-term recommendations, engage with stakeholders in a discussion on implications of these solutions, and identify and analyze regulatory policies and guidelines, as well as formulate a business case on PEPPOL implementation in the Philippines

in terms of economic, financial, political, legal, technology, commercial, operational, organizational, and personnel and develop a high-level implementation plan to set a clear

path for PEPPOL implementation.

The preliminary work began with the development of the detailed workplan. This contained a daily record of activities to be conducted throughout the engagement. This also included deliverables and their respective deadlines, which also served as payment milestones throughout the engagement. Below is a high-level version of the detailed

workplan executed.

The engagement started with a kick-off meeting of the project team consisting of USAID E-PESO, IBM-Sterling, and SGV. The development of the discussion paper on the recommended immediate measures began with research and review of proposed solutions and identification of relevant regulations, policies, and guidelines. Plenary sessions

with key stakeholders on implications and considerations of these solutions soon followed. These stakeholders include regulating bodies, private companies, and financial

institutions. See the table below for the final list of FGDs conducted, along with the key informants who provided relevant information for the study.


Company Sector Representative/s Key Points Actual Date of

Session

Stakeholder Session 1: Proposed Intermediate Solutions on Compliance to Regulatory Requirements (Consultation Meeting with HSBC Corporate Clients) November 10, 2020

HSBC Banking (Multinational)

Arthur Tanseco

Angie Colet

Carol Cinco

Lissa Mediavillo

Adrian Tansiongco

Christine May Ocfema

Grace Murphy

• In order to have a viable tactical solution, the following are critical:

o The parties will work with what they have (current systems, current

information) and there will be minimal investment to comply

o Should be aligned with long-term solutions (specifically e-invoicing

framework)

o Businesses must maintain no more than one business process (must

take into consideration counterparties who may not have CAS)

• The following should be clear (by way of revenue regulation)

o Hard copies will no longer be required but soft copies (that may be

printed) will still have to be maintained;

o Solution should meet all compliance purposes (VAT refund, CWT

exchange,etc.)

o Specify data to be made available by the various parties (i.e. banks can

only provide payment details but not invoice level information)

• Next steps

o E-PESO will get feedback on progress / updates on ongoing discussions

on invoices as the only support for substantiating purchases (please see

enclosed HB 7881)

o E-PESO will organize discussions with more financial institutions (PPMI

and perhaps the PESONet Steering Committee)

o Pursue discussions and technical assistance with the BIR / DoF on these

proposed short-term, intermediate solutions

P&G FMCG Gilda Uy-San

RS Components Electronics Nicolo Ruiz

Zuellig Pharma Health Care Glaiza Bormate

Rowena Roxas

PLDT/Smart

Telecommunications Rina Manuel

Melanie Nicolas

Unilever Philippines FMCG

Kathryn Ong

Kevin Magno

Ritchelle Quiroz

Stakeholder Session 2: Proposed Intermediate Solutions on Compliance to Regulatory Requirements (Consultation with PESONet Steering Committee) November 18, 2020

Philippine Payments

Management, Inc.

Melit Araneta

PJ Arguelles • Discussion points

o Short Term Solution: eInvoicing without the eInvoicing System

o Accepting Structured Data

o Data Exchange Ecosystem

o Tax Audit Attestation and Analytics

o Sources of Data and Data Requirements

o Recommended Target State based on USAID/E-PESO Study

• Major points raised

HSBC Banking (Multinational)

Arthur Tanseco

Angie Colet

Jody Chua

Union Bank of the

Philippines Banking (Local)

Ramon Duarte

Nicole Ranna Hao

Ron Arceo



Session

Banco de Oro Unibank, Inc. Banking (Local)

Marie Celeste Esma

Roberto Ramon Santos

Jeannet Ramirez

o Interim solution is a foundational step in operating eInvoicing system in

harmonizing business processes

o Bank secrecy rules must be taken into consideration and make sure that

banks are authorized to disclose the data needed to BIR

o Legal requirements in getting approvals or waivers from clients to share

info

o Involvement of the bank is in terms of providing the data.

Operationalizing shouldn’t be a major challenge as long as legal is sorted

out

o The banks’ concern is in liability brought about by the requirements that

will be submitted to BIR

Bank of the Philippine Islands Banking (Local) Noel Santiago

Benjo Aquino

Security Bank Philippines Banking (Local) John Cary Ong

(PESONet ACH Steering Committee Chairman)

Land Bank of the Philippines Banking (Local) Alan Bornas

JPMorgan Banking (Multinational) Sari Mortel

Jesus Salvador Que

Citibank Philippines Banking (Multinational) Arlene Alvarez Nethercott

Metropolitan Bank & Trust

Company Banking (Local) Antonio Muñoz

Philippine Clearing House

Corporation Financial Services

Emmanuel Barcena

Nico Mendoza

Linley Julian

Stakeholder Session 3: Proposed Intermediate Solutions on Compliance to Regulatory Requirements December 2, 2020

Bangko Sentral ng Pilipinas Regulatory

Vicente de Villa III

Raymond Estioko

Jay Dizon

• Discussion points

o Short Term Solution: eInvoicing without the eInvoicing System

o Accepting Structured Data

o Data Exchange Ecosystem

o Tax Audit Attestation and Analytics

o Sources of Data and Data Requirements

o Recommended Target State based on USAID/E-PESO Study

• Key points

o Collection of structured data will be more valuable than collecting hard

copies

Benefits are clear and these techniques will have to be learned

Applications to make this solution will also be used for the full

target state

o Transactions are envisioned to be submitted to BIR at the end of the

month



Session

o 3 planks of BIR for transformation efforts:

Infrastructure

Prioritization of applications with provision for sandbox

Fusion of workflow and analytics

o KOICA interface is the channel through which the BIR will get the data

from the taxpayers. Storage is the responsibility of the buyers and

suppliers but BIR will have the ability to store for certain taxpayers that

they’ll have to run analytics more frequently for.

o The accreditation process of CAS by BIR is focused on data being

produced while the accreditation process for AP requires compliance of

both the data being produced and the standards set for interoperability,

among others.

o PEPPOL standards are needed for interoperability and cross border

• Next Steps

o Final approval for this to move forward is the DOF. What needs to be

pushed is the document to make its way to DOF and everyone agreeing

to the terms.

o Leverage on the knowledge of BSP in implementing similar processes in

the past

Meeting with Douzone December 15, 2020

Douzone

Technology

• Introduction/Background on E-PESO

o USAID/E-PESO works with the BSP to formulate national payment

system network, as well as expand the digital payment system in the

Philippines. USAID coordinates with the private and public sector to

address development needs of the government.

• E-Invoicing Presentation

o Agenda - To explain the framework that we worked on which

incorporates PEPPOL & clarify understanding what the KOICA

assistance and infrastructure is going to look like. Follow a common

standard for security and data exchange between local and international

companies.

• Discussion of PEPPOL Standard: Uses BIS Standard that just has to be

localized.

o Pain point:

Change in KOICA project from PEPPOL adoption

Bureau of Internal Revenue Regulatory

ACIR Anian Salazar

ACIR Ma. Rosario Charo Enriquez-Curiba

ACIR Teresita Angeles

ACIR Elenita B. Quimosing

ACIR Ma. Luisa Belen

HREA Janette R. Cruz

HREA Beverly S. Milo

HREA Salina Marinduque



Session

Jaime Zabala

Maria Olivia Bernardo

Integrating PEPPOL will take time to reconfigure what Douzone

has already finished

• Discussion of E-invoicing Reporting Model: 4 corner reporting model

ManCom Meeting: Presentation of Blended PEPPOL EIS Business Case December 21, 2020

Bureau of Internal Revenue Regulatory

Comm Cesar Dulay

Deputy Comm Lanee Cui-David

Deputy Comm Arnel Guballa

Deputy Comm Celia King

Deputy Comm Marissa Cabreros

Adonis Samson

ACIR Anian Salazar

ACIR Ma. Rosario Charo Enriquez-Curiba

ACIR Marietta Lorenzo

ACIR Teresita Angeles

ACIR Elenita Quimosing

ACIR Ma. Luisa Belen

ACIR Clavelina Nacar

ACIR Manuel Mapoy

HREA Carolyn Ann Reyes

HREA Janette Cruz

HREA Beverly Milo

HREA Salina Marinduque

Lilibeth Maranan

Sixto Dy Jr.

Maria Olivia Bernardo

Adora Abella

• Relationship between KOICA E-invoicing and PEPPOL Framework

o The KOICA implementation will work for the benefit of domestic

transactions, while PEPPOL unlocks the benefit of cross-border

transactions through compliance with its standards.

• Recommendation

o Adopt PEPPOL because the standards are already in place to aid with

the execution of the pilot.

• PEPPOL complementing KOICA

o Market facing standards and guidelines will be governed by PEPPOL

standards. Adopt PEPPOL framework guidelines for data exchange,

whereas the Korean system can be used to either provide AP for BIR, as

well as backend analaysis and reporting system.

• Super AP

o AP complies with PEPPOL framework, interface to deliver/deposit the

invoice and data. EIS is used for sellers to create invoice of the seller and

acts as the data capture for invoices. BIR AP will follow PEPPOL

messaging standards.

Two months of weekly meetings with Bureau of Internal Revenue (BIR) representatives were conducted to discuss the PEPPOL framework that aided in the formulation of

the business case. Below are the key points discussed in each meeting:


Participants Key Points Pain Points Actual Date

of Session

Kick-off Meeting

Participants: BIR,

DOF, USAID,

IBM Sterling, SGV

& Co.

• BIR is mandated to implement an E-invoicing system. There are a few regulatory and industry

requirements, such as the TRAIN Law, DOF Launching of E-invoicing, ease of doing business

and anti-red tape. Industry requirements include acceptance of scanned documents

supporting sales transactions and soft copy documents for audit purposes.

• The desired outcome is short and medium-term relief measures to businesses while

conforming with the audit requirements of COA. BIR should understand PEPPOL and assess

compatibility with KOICA, as well as issue enabling regulation on E-invoicing and electronic

OR copies. BIR should also repeal BIR RR 5-2014.

• Help on E-invoice implementation, specifically structure,

policy, and tools that can expedite the

implementation. Cybersecurity and privacy have also

been a cause of concern. This is resolved through signing

and encryption of invoices by the Access Points.

Different Access Points have different security models.

Data ownership and data sharing is required by

PEPPPOL to be protected in transmission and

encrypted at rest. PEPPOL can and should adjust to local

rules and regulations.

October 15, 2020

Participants: BIR,

DOF, USAID,

IBM Sterling, SGV

& Co.

• Discussion of Timeline

• Presentation by BIR of the KOICA EIS diagrams

• KOICA Assisted E-invoicing Initiative: Would be a win-win situation for PEPPOL and KOICA.

BIR will be setting the standards of the computerized accounting system of the taxpayer. The

tax authority does not get every single invoice, although they need to have significant IT

infrastructure. IBM may be used as a gateway to conform to PEPPOL standards.

• Sharing of KOICA details won’t happen until an NDA

is signed

October 22, 2020

Participants: BIR,

USAID, IBM

Sterling, SGV &

Co.

• Discussion of Key Concepts, Lessons Learned from Implementation, and Key Considerations

• E-invoicing Business and Process Context: At least 2 banks in the Philippines is expected to

adopt PEPPOL if it is to be used. It uses standards that facilitate exchange of documents in a

lifecycle. This minimizes implementation costs.

• Continuous Transaction Controls: Increase tax collection and increase efficiency and

economic growth. Activities such as certification should not be limited to local vendors.

• PEPPOL + Korean framework can be implemented should 1 harmonized invoice model be

implemented. PEPPOL can take 6 months or longer to tweak into localized standards

depending on some assumptions

October 29, 2020

Participants: BIR,

USAID, IBM

Sterling, SGV &

Co.

• Discussion of the different eInvoicing models and corresponding BIR requirements

• Accreditation of local AP will be done by the PEPPOL authority. PEPPOL is a standard, not a

provider of IT or systems. Hence it cannot be monopolized. PEPPOL will provide collateral

and materials to guide the accreditation of APs. It must also be done by PEPPOL to conserve

the integrity of the ecosystem.

• PEPPOL uses a standard called schematron.

November 5,

2020



of Session

Participants: BIR,

USAID, SGV &

Co.

• Discussion on the characteristics and qualifications for a PEPPOL Authority, and who the

authorities are in other countries.

• BIR existing infrastructure for eFPS will still be in place. KOICA system will run on parallel,

which is not necessarily dependent on PEPPOL. BIR will be prime regulator responsible for

setting and ensuring compliance with standards.

• Assumptions with business case is aligned with BIR. KOICA EIS should receive reports for

the invoices regardless of CAS. The competencies require of BIR to implement the KOICA

model is not different from that of PEPPOL.

• Unsure on the implementing components of

KOICA. There is a need to meet with KOICA

consultants to understand their framework of

implementation.

• There is apprehension on the part of BIR in assuming

the role of a PEPPOL Authority.

November 16,

2020

Participants: BIR,

USAID, SGV &

Co.

• Presentation of Business Case, including workstream assignments

• KOICA does not conflict. E-invoicing system must be corrected for the revenue officer and

the BIR.

• June 2021 for the pilot, full implementation by December 2021. E-invoicing can be in place

for most, if not all, taxpayers in 2022.

• PEPPOL standard will be used for data exchange. The option is given to BIR to choose

between using PEPPOL, or without PEPPOL. The IT infrastructure is to be funded

by KOICA, we must ensure that standards follow PEPPOL provisioning.

• There is apprehension on the initial distribution of

workstream responsibilities. These are to be

consulted with BIR teams internally.

• There is a need to understand the specific standards

to be implemented. What we are referring to when

we say “PEPPOL standards”

November 26,

2020

Participants: BIR,

USAID, IBM

Sterling, SGV &

Co.

• In-depth Discussion of the PEPPOL standards on e-delivery and BIS

• Total preparations from WS 1-4 excluding pilot testing is 255 days. By December 2021, the

pilot is complete taking into consideration all taxpayers. In the pilot testing, participants are

mostly large taxpayers and exporters only. By Q3 2022, the system should be mandated to

all.

• VAT refund will go from 90 days to 5 days assuming that the APs are put in place. This will

require new regulations from BIR and BSP.

• There is a need to clarify the indicators and/or

criteria that there is indeed a sound business case for

BIR to become a PEPPOL Authority and spearhead

implementation in the Philippines

• There is a need to reference the TRAIN Law, on the

mandate to implement Electronic Invoicing

• There is a need for the Business Case to be made

short, brief and concise

December 3, 2020

Participants: BIR,

USAID, SGV &

Co.

• Discussion of Comments to the Draft Business Case

• USAID will investigate the option of focusing how AP services can be provided to almost all

market segments. An advantage of PEPPOL is its flexibility with the documents and data that

can be interchanged.

• USAID can hire SGV to estimate the amount as an external consultant.

• Clarification was sought on who can be access point

providers. These are to be included in the Business

Case.

• Next step is to schedule BIR Mancomm for approval

of the approach and business case.

December 10,

2020



of Session

• 4 different workstreams can be tackled in parallel. Pilot test will not require incentives as

corporate is looking for an alternative to hard copy submission.

• Datasets will cover both invoices and OR. Php 2.83 per invoice is an estimate; intermediaries

will compete with prices. There will be a cap at a certain amount, hence prices will be based

on the competitiveness of the APs.

Participants: BIR,

USAID, IBM

Sterling, SGV &

Co.

• Clarifications raised in Douzone Discussions

• Douzone has been provided the info that will be required to be submitted to the BIR, both

from CAS and POS. POS shares more detailed information compared to CAS.

• Regarding BIR expectation on storing invoice and receipt data, KOICA will be providing the

servers. The duration of the transaction will be discussed over the EIS team.

• The pilot can be done on June 21. 100,000 invoices will be considered production already.

• KOICA will assist on the hardware specifications. There is no special PEPPOL software per

se, it is simply a generic messaging software.

• Hiring of external consultants is upon discretion of BIR.

• The challenge identified is whether Douzone will be

able to adopt the standards in their system. IBM

Sterling and SGV to share specifics on the technical

standards of eDelivery and BIS.

December 17,

2020

All points raised in each meeting were considered when formulating the PEPPOL Implementation business case and the draft of regulatory policies. All deliverables were

then submitted to the client.

13 | STUDY ON E-PAYMENTS ADOPTION BY BUSINESSES USAID/E-PESO

3. Solutions and Next Steps

Leaving off from the last few meetings with BIR, including the culminating meeting with BIR ManCom, what remains

is to secure the approval and concurrence with DOF, the agency that has the ability to find immediate funding and

support for the implementation, outside of the national budget process. Funding and support is an important

concern of BIR’s implementing officers, before they can fully commit and endorse the project for approval. A

constraint that BIR has also identified concerns the availability of internal resources as the same people are

assigned to multiple projects. Lastly, there is existing uncertainty because the necessary assurance that the system

will be interoperable with the EIS of KOICA can only be tackled once KOICA begins implementation.

Below is the summary of solutions presented to BIR, from immediate, medium-term, target state, and even the

Proof-of-Concept solution that was specifically requested the e-invoicing committee of BIR.

The immediate and medium-term solutions may be implemented on a shorter time-frame, while the target state is

the full implementation that may take two years. The POC is not a solution per se, but a short-term demonstration

of the viability of the four-corner model in a tax compliance data exchange application.

3.1 Immediate and Medium-Term Solutions

Allowing Digitally-Signed Soft Copies as Transaction Substantiation

The short-term solution is aimed to ease taxpayers’ pain point of sending hardcopy invoices and receipts to its

counterparties and keeping hardcopies as substantiation for deductions and VAT claim by allowing pdf copies of

invoices and receipts to be presented to BIR as valid substantiation of transactions in the event of an audit. On the

side of the taxpayer, it will provide immediate relief to operations stretched from the effects of the pandemic, ease

the challenging business environment, and contribute to ensuring economic recovery in 2021.

Data and Analytics for Tax Administration

The foundational solution stems from the current ability of large taxpayers to store and transfer structured data,

made possible with computerized accounting systems. Structured data is collected data where input has been pre-

defined and organized according to a schema, making it immediately readable and understandable to a computer for

the purpose of processing and analyzing. This solution aims to maximize the use of existing data for tax compliance,

increase efficiency of BIR and taxpayer, increase cooperation among tax authority, taxpayers, and intermediary, allow

BIR to prepare for tax administration in digital economy, and foster participation of banks and intermediaries in

facilitating early reporting and collection of withholding tax.

Using Invoices as VAT Substantiation

This medium-term solution is proposed to address the dual-basis transaction substantiation for taxation. It is aimed

to simplify VAT substantiation requirements by forgoing the requirement of submitting ORs as support for input

VAT claim from purchases of services and rental payments. Instead of taxpayers and the BIR monitoring the nature

of the transaction and deciding on the proper substantiation accordingly, both will rely on the invoice as the

supporting document regardless of whether the transaction is for goods, services, or both. An update to the law is

required for implementation.


The succeeding steps for the review of the recommended immediate solutions will include the collaboration of the

DOF and the BIR on strategy and implementation of preparatory requirements. The DOF will have to make a

decision with regards to the strategic direction of the e-invoicing model to be adopted, may that be a centralized

model approach or a reporting model approach. Afterwards, the DOF and the BIR will evaluate the timeline of the

KOICA consultant implementation activities, as there is a need to manage expectations based on BIR’s capacity for

execution, as well as have a definite plan for the deployment of an interoperable solution. Lastly, BIR must initiate

preparatory activities for the post-pilot program of e-invoicing, as the contemplation of how BIR processes will

change as the EIS is completed may change how the implementation will be conducted.

3.2 Target E-Invoicing Framework and the Harmonization with KOICA

PEPPOL is a standardized and contemporary approach to e-invoicing which facilitates the transmission of business

documents via a trusted network of pre-approved/accredited access points. The recommended approach for the

target e-invoicing framework is the Reporting Model, in which the taxpayers can issue and receive electronic invoices

and receipts via access points, independent of BIR intervention on a per-transaction level. This is most favorable to

taxpayers, as they will be able to transact without BIR intervention (i.e. dependency on BIR’s systems), which could

be a source of delay or error. With the use of third-party access points, this is the most streamlined, fastest, and cost-

effective approach.

In this model, the BIR will only act as a regulator, as the operational aspect of the framework will be outsourced to

accredited access points, who will handle the exchange of documents between taxpayers. As the regulating body, the

BIR will oversee the entire process to ensure access points’ compliance with both tax and non-tax laws and

regulations.

The integration of PEPPOL framework is expected to be compatible with the KOICA project. In the target

framework discussed in the previous section, the access point for BIR will be the one to facilitate the

communication and document transmission between the market and the BIR. PEPPOL will be responsible for the

messaging standards and guidelines to enable data exchange and interoperability, whereas the Korean system can

be used to provide the access point for BIR, as well as the backend analysis and reporting system for the Bureau.

The following scenarios outline how BIR’s access point may be developed for the transmission of documents:

Scenario 1: Create and Deploy an Access Point from Open Source Codes

In this scenario, BIR’s access point will be developed from open source codes, where BIR will build on existing

source codes to repurpose and create its own software. There are source codes openly available in online

repositories, and these will have to be configured for BIR’s purposes. Since this option involves an access point

through own software, a lot of new and additional skill is needed in the development and subsequent

implementation. This scenario will require more investment in time and effort due to the amount of testing

necessary for the open source solution.

Scenario 2: Create and Deploy an Access Point using B2B Integration Software

This will involve the use of a commercial off-the-shelf software that will function as a B2B integration software. The

software will already be packaged and prepared to serve the needs of the institution, with minimal configuration


involved. There is less risk to implementation as the software has already been tried and tested in the market and

will require less effort on the part of the implementing institution compared to developing the system internally.

Scenario 3: Deploy an Access Point using SAAS

This scenario assumes subscription to an established Access Point with a Software-as-a-Service solution (costing

used is IBM Supply Chain Business Network). Here, responsibilities on the part of BIR and KOICA are reduced as

they would not have to worry about the access point’s PEPPOL accreditation yet BIR will still be performing the

role of the PEPPOL Authority in governing the entire ecosystem. Although fixed costs are lower, this solution

operates on a variable-cost basis as there are costs that will be incurred for every document transmitted between

the parties.

Upon presentation to BIR, implementing officers raised the concern that the approach is intended to adjust to how

the EIS will be implemented prompting the need for a decision. The blended EIS model involving the EIS of KOICA

and the aforementioned target state framework shall be presented to the Department of Finance for their

comments and recommendations on the subject matter as well as their approval for implementation.

3.3 Proof-of-Concept Implementation

In line with the Bureau of Internal Revenue’s interest of exploring the adoption of PEPPOL and for purposes of

determining the feasibility of the PEPPOL in the Philippine context, BIR will be provided the option to use and try

out the IBM Supply Chain Business Network (SCBN) as a SaaS solution for free for a limited scope and timeline.

This aims to assist key stakeholders in understanding how might the PEPPOL framework best work in the

Philippine environment while also aligning with Continuous Transaction Controls (CTC) best practice principles.

Following the target framework, IBM offered its SCBN solution which will act as the access point for BIR where

taxpayers’ documents will be transmitted then transferred to BIR’s internal systems for further processing. This

implementation will only cover a total of less than 1,000 transactions over the course of the POC to demonstrate

the viability of a few of each type of transaction. Though the solution will be provided free-of-charge by IBM during

the 3-month implementation period, BIR will need the help of consultants who will be responsible for the

coordination and management of the entire POC and overseeing the testing that will be conducted.

A feasibility study that will discuss the readiness of BIR, taxpayers, and access points for a data exchange

framework for invoices and ORs, and what it will take for BIR and other stakeholders to do full integration

implementation of the PEPPOL framework, its standards, and its technical requirements will be the output of the

implementation. It will also include an assessment of the market and financial feasibility of a full implementation.

A meeting with BIR was held to discuss the proposed proof-of-concept implementation where they raised

concerns regarding its proposed budget. The details of the proof-of-concept implementation, including its scope,

limitations, and necessary budget, will need to be discussed with the Department of Finance for possible budget

sourcing.


4. Recommendations for the Study

4.1 Stronger engagement with BIR key decision-makers

The three-month engagement was kicked off with little involvement from the BIR Management Committee. The

initiation of the project without the involvement of BIR ManCom proved to be a recurring source of difficulty in the end, as the officers participating in the sessions, although they ultimately bore the responsibility of implementation of the project, proved to be unprepared or unwilling to make decisions or commitments. This was

presumably due to the lack of assurance of support (funding and otherwise) from the BIR ManCom and DOF.

The study might have been more effective if the intentions for the study were made clear to the ManCom from the

beginning, perhaps through a kick-off with ManCom, or at the minimum, a project briefing by BIR Officials to ManCom, and continuous updates. It would be beneficial to set with ManCom, a definite expectation that a decision

will have to be definitively made in the end.

4.2 Better session dynamics with BIR

Frequent sessions with large attendances were held with BIR as updates on the case study and other concerns

were discussed. We observed that these frequent sessions often led to fatigue on both sides, diminished interest and focus, frequent absences, and extended marathon sessions with no definite outcome. It was also apparent that

the BIR project team members were attending concurrent meetings while project team meetings were also ongoing. Meeting materials and recordings of the sessions were provided either before or after the meeting but might not have been utilized well for a much fruitful discussion by the meeting attendees especially by BIR as the

participants are assigned to multiple projects. Another result of these frequent sessions was insufficient time between meetings to improve the breadth and depth of the study, as the comments given by BIR were often recurring and superficial and needed to be addressed within short periods of time.

The study might have been more effective if major BIR meetings, as well as internal catch-up meetings, were not as

frequent, but more structured. This would encourage more engagement from the more senior officers, and distill focus into the most important aspects of the study.

4.3 Early coordination with KOICA

A major unknown in the formulation of a target state and recommendations was the scope and background on the KOICA-funded EIS. For much of the study, the particulars of this aspect of the project was not known, and a

number of recommendations were formulated on the basis of mere assumptions. Although we were eventually able

to meet with the consultants of KOICA, this was too late to make much of a difference.

The study might have been more efficient if the meeting with DOUZONE was conducted much earlier in the timeline. There was initial pushback from the BIR on the request for the EIS, but the meeting with DOUZONE is

ultimately something that could have been put forth more insistently.

final consultant report

Documents