BIR eyes higher collection of property taxes

AS THE economy continues to grow and incomes rise, the Bureau of Internal Revenue (BIR) wants to improve the collection of what it calls “wealth-related taxes,” such as those slapped on properties.

In a presentation during the recent Sixth International Monetary Fund-Japan High-Level Tax Conference for Asian Countries held in Tokyo, Japan, Revenue Commissioner Kim S. Jacinto-Henares said that “property-related taxes are minor sources of government revenue but can potentially contribute more.”

In the Philippines, property-related taxes include capital gains tax, documentary stamp tax, donor’s tax, estate tax and value-added tax (VAT) levied on the gross selling price or gross value of money derived from the lease or sale of property.

In shoring up revenues from property-related taxes, there are still challenges that have to be overcome, Henares said. These include the lack of centralized and uniform property valuation methodologies and systems, the existence of multiple taxes on property ownership and transfers, as well as relatively high transfer taxes, which she said “discourage formal transactions.”

It does not help that the enforcement of property-related taxes in the country is still “weak,” the Revenue chief added.

To address these issues, Henares said the BIR stepped up its collection of estate tax starting last year.

Also, the BIR has been strengthening coordination and monitoring efforts with other government agencies. For one, the BIR has been working to curb the practice of splitting residential properties into smaller units so that the owners will not not exceed the VAT-exempt threshold amount, Henares said.

Hence, under three revenue regulations issued by the BIR, adjacent lots are being counted as one and those that exceed the threshold amount are subjected to VAT, she said.

Last week, Henares told reporters that the BIR’s tax collections likely grew by a double-digit pace in the first quarter—a faster rate of increase than that of the entire 2014.

Although the Bureau of the Treasury has yet to release the official numbers, Henares revealed that the BIR’s take during the first three months of 2015 could have grown by “over 12 percent” year-on-year.

In the first quarter of 2014, the BIR collected P264.7 billion—P104.1 billion in January, P78.4 billion in February, and P82.2 billion in March last year.

Year-on-year growth of more than 12 percent would bring the BIR’s first quarter collection to at least P296.5 billion.

But Henares noted that the first quarter figure still came up short of the agency’s goal of a 30-percent increase year-on-year.

“Our target is really aspirational,” she said.

The revenue commissioner said the rise in collections so far was felt across the board—from large taxpaying entities to small taxpayers covered by the agency’s regional district offices.

For the rest of the year, Henares said, the BIR “will work very hard” to achieve the full-year collection goal of P1.674 trillion.

Last year, the BIR’s tax collections rose by 9.7 percent to P1.335 trillion, but it was below the P1.456-trillion target.