Tax bureau spells out 2017 collection targets

THE TAX BUREAU has set specific goals to ensure it stays on track to collecting what the government needs to spend for its development programs.

Under Revenue Memorandum Order No. 7-2017, issued last Feb. 13, the Bureau of Internal Revenue (BIR) set monthly collection goals — by implementing office and type of tax — to achieve its P1.829-trillion full-year goal.

BIR’s 2017 collection target is 12.9% more than its downward- adjusted P1.62- trillion goal for 2016 which it missed by three percent, actually raking in P1.567 trillion.

The government under former president Benigno S. C. Aquino III had initially entrusted the bureau with a P2.025-trillion target for 2016 that was 21% more than 2015’s P1.674- trillion goal. The BIR missed its 2015 target by 16.8%, collecting P1.433 trillion.

The BIR’s collection target is equivalent to 54.6% of the P3.35-trillion national budget for this year that will see spending on public infrastructure increase 13.79% to P860.7 billion, equivalent to 5.4% of gross domestic product (GDP) in 2017, from P756.4 billion, or 5.1% of GDP, in 2016.

Increased public spending, in turn, is supposed to help support GDP expansion to 6.5-7.5% this year from an actual 6.8% in 2016 that was near the top of the government’s 6-7% growth goal.

The current administration plans to increase spending on infrastructure to 7.1% of GDP by 2022 — the year its term ends — from a programmed 4.3% of GDP in 2015 and 1.8% in 2010.

RMO 7-2017 shows BIR operations — involving collection of income tax, value-added tax ( VAT), percentage tax and other taxes — contributing 97.37%

to total target collections at P1.781 trillion.

Among collections from BIR operations, taxes on net income and profits have been set at P1.057 trillion, accounting for 57.8% of the bureau’s P1.829-trillion total target.

VAT has the second- biggest share of 19.92% at P364.431 billion, excise tax comes next with 10.12% at P185.029 billion, percentage tax will contribute four percent at P73.346 billion, while “other taxes” will bring in P101.028 billion.

In terms of implementing office, the Large Taxpayers Service (LTS) — covering those with total annual gross sales or receipts of at least P1 billion and net worth of at least P300 million at the close of each fiscal year — has been entrusted with 62.47% of the BIR’s total target at P1.143 trillion, while the bureau’s 19 revenue regions nationwide will contribute 34.9% at P638.392 billion.

“The LTS shall allocate its goal among its implementing units and prepare the corresponding memorandum within five working days upon the issuance of this order,” read RMO 7-2017 that was signed by Internal Revenue Commissioner Caesar R. Dulay.

Collections from so- called “non-BIR operations” — consisting of final withholding tax and documentary stamp tax on government securities transactions — will contribute the remaining 2.6% at P48.14 billion.

Sought for comment, Eleanor L. Roque — P&A Grant Thornton’s Tax Advisory & Compliance head and vice- president for external affairs of the Tax Management Association of the Philippines — said the BIR should also prioritize its crackdown on delinquents. “I think their challenge is to really find taxpayers who are not paying or declaring their taxes. I’m sure that will contribute a big percentage in broadening their tax base,” Ms. Roque said by phone.

She also noted that the bureau remains “really undermanned”, citing the importance of proposals to pay BIR personnel more by exempting them from the government’s standardized salary scheme. “Only half of their manpower complement are filled up. That explains why their taxpayer services and their examiners are lacking. That would have great impact on their collection targets,” Ms. Roque said.

The BIR in January issued Revenue Memorandum Circular No. 5- 2017 that spelled out thrusts to achieve this year’s collection targets, including:

• undertake “comprehensive taxpayer profiling and industry benchmarking”, expanding the list of covered industries;

• revive suspension and temporary closure of businesses for non- compliance with VAT requirements under the “Oplan Kandado Program”;

• update zonal values, which are the basis for computing taxes on the sale or transfer of real properties;

• broaden the tax base “by registering unregistered taxpayers/ businesses as a result of tax compliance verification drives and third-party information”;

• implement centralized arrears management in the bureau’s regional offices;

• review cases pending with the Court of Tax Appeals and the Department of Justice “and exert effort to expedite resolution of these cases” as part of the Run After Tax Evaders (RATE) Program;

• and expand the Compromise Settlement Program for large taxpayers. —