BIR to audit real estate, construction companies
The Bureau of Internal Revenue has been tasked to conduct an audit of real estate and construction companies as weak tax collection from this sector elicited suspicions of rampant tax evasion. AP FILE PHOTO
MANILA, Philippines—The Bureau of Internal Revenue has been tasked to conduct an audit of real estate and construction companies as weak tax collection from this sector elicited suspicions of rampant tax evasion.
The Department of Finance (DOF), parent agency of the BIR, said tax payments by real estate and construction firms should be growing robustly given the significant increase in business activities in their sector.
However, the DOF said that tax collection from the industry actually dropped by 7.5 percent to P5.5 billion last year despite the fact that construction activities grew by 11.1 percent, serving as one of the key growth drivers of the economy.
Finance Secretary Cesar Purisima told reporters that the BIR was urged to look into the disconnect between tax payments and actual industry profits to possibly shore up tax collection and push companies in the sector to pay the right taxes.
“The real estate and construction sector underperformed in terms of tax payments. Figures from the national income accounts would show that construction was one of the drivers of growth of the country and yet tax collection from the sector was weak,” Purisima said.
Purisima said that while overall tax collection by the BIR was growing substantially, there were a few sectors that needed to be tax-audited given their relatively poor performance in tax payments.
At a time when economic growth is robust and profits of businesses were rising, he said the government’s tax collection from sectors driving the economy should also be increasing.
The Philippine economy grew by 7.2 percent in real terms last year, one of the fastest in Asia. This year, the government expects economic growth to reach anywhere between 6.5 and 7.5 percent.
The BIR last year collected P1.22 trillion from individuals and corporate entities. This was about 3-percent short of its target but was 15-percent higher from the previous year’s level. The BIR is assigned a tax collection target of P1.46 trillion in 2014.
The double-digit increase in tax collection was credited by BIR officials to the various anti-tax evasion measures and administrative programs to shore up tax collection, including the Run After Tax Evaders (RATE), under which the BIR files cases against suspected tax evaders once every two weeks.
