BIR collections hit P1.217T last year

Bureau of Internal Revenue building. INQUIRER FILE PHOTO

MANILA, Philippines—Collections by the Bureau of Internal Revenue (BIR) rose at a double-digit pace in 2013 compared to the previous year’s level in what officials credited to the anti-tax evasion drive and rising incomes resulting from economic growth.

However, the collections for the year amounting to P1.217 trillion fell short of the official target of P1.253 trillion as revenue-generation measures of the BIR continued to be overwhelmed by widespread tax delinquency across sectors of the economy.

The Department of Finance, the parent agency of the BIR, reported Wednesday that collections of the tax bureau were up 15 percent from the level in 2012, but were short of the official target by about 3 percent.

For the month of December, tax collection reached P96.63 billion, up year on year by 9.1 percent and higher by 6.4 percent than the target for the month.

Internal Revenue Commissioner Kim Henares earlier said the government agency was subjecting as many sectors as possible to tighter auditing in a bid to curb tax evasion.

The growth in tax collection last year followed the continued implementation of the Run After Tax Evaders (RATE) program, under which the BIR filed tax evasion cases with the Department of Justice once every two weeks.

So far, more than 200 tax-evasion cases have been filed with the justice department since the start of the Aquino administration. However, the bulk of the cases remained pending at the justice department and the BIR has yet to win a conviction.

The BIR also issued several revenue regulations clarifying tax obligations of various sectors. One of the more popular regulations issued last year was that requiring hospitals, health maintenance organizations (HMOs) and clinics to withhold income tax liabilities of doctors and other medical practitioners.

Another was the regulation requiring organizers of the mass-market “tiangge” to withhold tax liabilities of owners of said stores.

The BIR last year also started the “Tax Watch” campaign, under which it publishes on a weekly basis tax payments of enterprises belonging to certain sectors. The objective of this campaign is to make taxpayers conscious about complying with their tax obligations and paying the right amount of taxes.

Officials said the anti-tax evasion measures of the BIR significantly helped boost the growth in tax collection to a pace much faster than the growth of the economy.

The Philippine economy last year expanded by 7.2 percent in real terms (adjusted for the effects of inflation) and by 9.3 percent in nominal terms, thus becoming one of the fastest-growing economies in Asia.

The favorable performance of the economy was partly credited for the higher tax collection last year as rising earnings boosted the collection of income and value-added taxes.

Despite the significant growth in tax collection, the government is believed to still be losing potential revenues due to tax evasion. The government loses an estimated P400 billion in potential revenues a year due to tax delinquencies. This is bigger than the government’s annual budget deficit, which last year was expected to have fallen below the official ceiling set of P238 billion.