Can the BIR meet its target of collecting P342 million every hour?

The BIR hopes to meet the lofty target through the withholding tax on online sellers, digitalization, and an enhanced capability to run after corporate tax evaders

MANILA, Philippines – Finance Secretary Ralph Recto has challenged the Bureau of Internal Revenue (BIR) to collect P3.05 trillion in 2024, a target even higher than the P2.64-trillion mark that the agency failed to hit last year.

“The truth is, when fiscal targets are not met, it is the people who pay for such failure. Projects that would improve their lot today are denied of funding, creating a pile-up of debts that will be paid by our children tomorrow,” Recto said in his keynote speech at the BIR’s 120th Anniversary on Thursday, August 1.

According to the Department of Finance, 75% of the country’s tax revenues comes from the BIR. Even including non-tax revenue, the BIR is the dominant source of revenue for the country, contributing around 70%.

With that role comes massive expectations. To put the sheer size of BIR’s 2024 target in perspective, that would mean the agency has to collect P8.2 billion on average every day – more than what big companies like Cebu Pacific and GCash earned throughout 2023. Stated another way, the BIR has to rake in P342.5 million every hour.

BIR Commissioner Romeo Lumagui Jr. admitted that it would be “challenging,” especially now that the year was already halfway through. Still, he expected “billions” in revenue to come from online sellers who are now subject to withholding tax.

“Medyo challenging pa rin, ano? Kaya naman patuloy pa rin ang ating pinaigting na mga activities para makuha ito, especially ‘tong withholding tax on online transactions,” Lumagui said during the 120th anniversary celebration of the BIR, according to an ABS-CBN News report.

(It’s still challenging, right? That’s why we’re continuing activities to attain this, especially the withholding tax on online transactions.)

Under the regulation, the BIR has imposed a 1% creditable withholding tax on half of the gross remittances by e-marketplace operators, such as Shopee and Lazada, and digital financial service providers, such as GCash, to online merchants after their goods and services are sold through the platform.

Shopee and Lazada started imposing withholding taxes on July 15, while digital financial service providers like GCash and Maya have until October 12, 2024, before they too have to impose the withholding tax on their online merchants.

Lumagui believes this will help the agency cash in from the shift to online sellers, many of whom have avoided paying taxes. But this alone will unlikely be enough for the BIR to hit the ambitious revenue target it has for the year.

However, Recto does not believe more and more new taxes have to be implemented to reach the target. Instead, he has highlighted the role of efficiency and digitalization.

“I am sticking to my guns that more revenues can be raised by simplifying, shortening, streamlining, and speeding up the process, without leaving the government shortchanged, than a slew of higher, newer tax laws,” he said on Thursday.

During its 120th anniversary, the BIR also announced the launch of its new web portal, which it touts as more user-friendly. (WATCH: BIR unveils new logo to celebrate 120th anniversary )

“The new web portal aims to create a balance between convenience in accessing tax information, BIR updates, eServices, and an impression of professionalism and modernity in the 21st century,” the BIR said in a press release on Thursday.

Other digitalization initiatives in the pipeline include the online registration update system, optimized knowledge management for chatbot review, and electronic one-time transaction system.

The BIR and Securities and Exchange Commission (SEC) also recently launched the Swift Corporate and Other Records Exchange (SCORE) Protocol, which allows the sharing of data between the two agencies and allows the BIR to “harmonize records of registered corporations to enhance tax collection efficiency.”

According to the BIR, the data-sharing agreement with SEC will allow them to run after “big-time corporate tax evaders” as the bureau will now have access to all the corporate documents of any SEC-registered taxpayer.

“The BIR will maximize our partnership with the SEC by running after big-time corporate tax evaders. This sharing of information between the agencies will be used to investigate large-scale tax fraud activities perpetrated by companies such as that of Ghost Receipts and corporate tax evasion,” Lumagui said in a press release on July 18.

In 2023, the BIR collected a record-high P2.5 trillion, but this still fell short of the government’s target of P2.64 trillion. – Rappler.com