BIR lowers boom on professionals

KIM HERNARES: Targeting under-taxed professionals. Inquirer file photo

The country’s internal revenue authorities will soon embark on a “name and shame” drive to get the Philippines’ highest-paying—and perennially “under-taxed”—professionals to pay the proper amount of taxes.

In a recent interview with the Inquirer, Internal Revenue Commissioner Kim Jacinto-Henares said the new campaign would aim to collect an estimated P90 billion in taxes from doctors, lawyers and other professionals—taxes that they were currently evading.

“We have about 1.7 million professionals in the country,” Ms. Henares said, citing the latest data from the BIR. “Last year, they paid only P9.8 billion in taxes.”

Based on this amount, each working Filipino professional paid an average of only P5,764 in taxes last year.

Under the scheme, the BIR would publish lists that rank the tax payments of professionals on a per-industry basis, giving special attention to professionals who pay the highest taxes in their industries as well as those who pay the lowest.

Henares stressed, however, that the BIR would not be revealing the names of the taxpayers to the public, but would instead use the information on the amount of taxes they pay as a benchmark for the other members of their industries.

The BIR chief estimated that, based on their income levels, professionals should be paying an average P100,000 in taxes each—a gap that indicated a 90-percent tax evasion rate among doctors, lawyers, accountants, engineers, architects and entertainers, among others.

“Ideally, we should be collecting about P100 billion in taxes annually from these professionals,” Henares said.

In contrast to professionals, the country’s 11 million compensation-income earners—the so-called “regular employees” who mostly belong to the middle class—paid a total of P115.7 billion in taxes last year, according to the BIR.

“We will be coming out with information quite soon showing the performance of each profession,” she explained. “We will show statistics about the Top 500 [taxpayers per sector], for example.”

Henares said a new policy was expected to be implemented “in the next month or two.”

At the same time, the BIR chief noted the strides the government has made in bringing actors and actresses back in line when it came to paying the right amount of taxes.

“In the entertainment industry, there were a lot of education programs that were implemented,” she said. “We reached out to the different TV stations, and we also put in a withholding tax system that requires whoever hired them to withhold taxes to ensure that leakages are managed.”

Henares added that the finance department’s Run after Tax Evaders program also helped boost tax compliance in the entertainment industry, especially after several high-profile actors and actresses were sued in recent years.

“So I won’t totally agree that entertainers are under-taxed now,” she said. “Maybe they were before when they weren’t paying the right taxes, but now a lot of them already are.”

For his part, Finance Secretary Cesar Purisima pointed out that his department’s Revenue Integrity Protection Service has also managed to reduce corruption in the BIR and the Bureau of Customs through the various cases they have filed against officials suspected of malfeasance.