Raising the number of large taxpayers vital to reforms – DoF

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EXPANDING the Large Taxpayers Service (LTS) of the Bureau of Internal Revenue (BIR) complements the proposed overhaul of outdated tax policies in the country to simplify the system and make it more fair and efficient to the poor and the low- and middle-income taxpayers, according to the Department of Finance (DoF).

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The expansion means that the BIR must go out and find other large taxpayers that have managed to operate under the radar and avoided the bureau’s registry, Finance Secretary Carlos Dominguez 3rd said in a statement over the weekend.

In the first nine months of 2016, collections under the LTS totaled P891 billion or a 9.41 percent increase over the same period in 2015.

“Those opposing the tax reform program argue that we should focus on improving the tax effort instead of introducing new revenue measures. There is no argument about improving the efficiency of tax collection.

“We have, in fact, improved collection dramatically the past few months,” Dominguez was quoted as saying during the LTS tax campaign kick-off ceremony last week.

Dominguez finds the LTS performance “exemplary,” having accounted for the lion’s share of BIR collections despite being manned by only 564 “highly qualified and dedicated” personnel. But the Cabinet official noted more needs to be done to expand the LTS roster of 2,320 active large taxpayers.

The LTS collection goal is P1.152 trillion this year, or 63 percent of the BIR target of P1.829 trillion.

“I find the number of registered large taxpayers rather small, considering the rapid expansion of our economy,” Dominguez said.

“If we are able to significantly add to the number of large taxpayers supervised by the LTS, I am sure we can increase the tax effort equally significantly,” he said.

The first task is to “seriously review and update the registry of large taxpayers” to enable the bureau to better meet its collection targets and demonstrate “not only significant but substantial improvements in our tax effort.”

The BIR said it is looking at increasing the number of large corporate taxpayers under the LTS to 3,000 or more from 2,320 at present.

“We are working on it but I signed some papers already, advising some taxpayers that we have identified, to start reporting under the large taxpayers,” BIR Commissioner Caesar Dulay said.

However, Dominguez said there is a need to convince legislators that the government needs to reform its tax policies. “Our taxes should be rendered simpler and fairer to generate the volume of revenues necessary to push our economic program forward.”

The DOF said the House of Representatives ways and means committee is discussing several tax reform measures filed in the Congress.

One is House Bill 4774 which seeks to lower personal income tax rates along with donor and estate taxes. At the same time, the bill seeks to raise fuel and automobile excise tax rates and expand the value-added tax base while keeping exemptions for seniors and persons with disabilities. It also proposed to introduce a new tax on diesel.

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2 Comments

  1. Secretary Dominguez,can you recall that August or September of last year,there is a BIR official who instructed Senator Manny Pacquiao (on a TV news report) to pay a one billion pesos income tax as a compromise settlement on his more than three billion pesos tax arrears pending at the Court of Tax Appeals in QC. What is the status of this case since this case is of national interest.

  2. I think it’s still important to focus on acquiring the small players, kind of like what Taxumo.com is doing to make it easier for freelancers and solopreneurs who earn millions of pesos to pay their taxes…it makes sense to do it.