DOF orders audit of importers’ tax payments

The Department of Finance has ordered an audit of the tax payments of the country’s top importers.

The DOF directed the Bureau of Customs to provide the Bureau of Internal Revenue a list of the country’s top importers, and at the same time told the BIR to include these entities in the list of large corporate taxpayers whose tax payments are closely monitored.

Finance Secretary Cesar Purisima said subjecting the biggest importers in the country to tax audit by the BIR would help achieve the twin goals of curbing smuggling and deterring tax evasion.

“The Large Taxpayers Service [of the BIR] is asked to include in its list all top importers. Ideally, if a company is a top importer, it should also be one of the biggest taxpayers,” Purisima told reporters Tuesday.

Based on estimates, the government loses over P400 billion in potential revenues a year due to tax evasion and other P200 billion annually due to smuggling.

The Large Taxpayers Service (LTS) is the unit of the BIR tasked with the collection of taxes of large enterprises.

Part of its job is to audit tax payments of large corporate entities, whose tax payments account for about 60 percent of the government’s overall collection of internal revenue taxes.

Under rules and regulations of the BIR, companies that meet a combination of the following criteria are considered “large taxpayers” and are therefore placed under the monitoring of the LTS: quarterly value-added tax payment of at least P200,000, quarterly percentage tax payment of at least P200,000, annual income tax payment of at least P1 million, annual excise tax payment of at least P1 million, and annual documentary stamp tax payment of at least P1 million, and annual remittance of at least P1 million worth of withholding tax.

About 2,000 companies are currently considered large taxpayers.

Purisima said, however, that the actual number of companies earning the biggest corporate profits in the country could be much higher than 2,000.

As such, he said, the BIR’s LTS was tasked to scrutinize the tax compliance of companies that appear to be generating substantial incomes but are not remitting the amounts of taxes that “large taxpayers” ought to be paying.

Purisima said the BIR’s LTS could begin the task of expanding its list of monitored entities by focusing on importers.

BIR Commissioner Kim Henares said in earlier interviews that the tax bureau intended to further shore up its revenue collection through implementation of more anti-tax evasion measures, such as tighter audit of various sectors.

The directive to put top importers on the radar of the BIR’s LTS is said to complement the recently issued DOF regulation requiring importers to first get a tax clearance from the BIR before they could be accredited by the BOC to import goods.

The BIR is tasked with collecting P1.456 trillion in taxes this year, up by about 20 percent from its collection last year.

The BOC, on the other hand, has been assigned to collect P408 billion in import taxes and duties this year, up by 34 percent from its collection last year.