BIR bullish it will meet P56-B collection target

The Bureau of Internal Revenue (BIR) has expressed optimism that it will meet and possibly overshoot its P56-billion collection target this year, but the P9 billion expected from the value added tax on professional services will not be realized.

The BIR said that as of April 16, the day after the April 15 deadline for filing income tax returns, its collection had already amounted to 64 percent of the April target.

According to BIR Commissioner Guillermo Parayno, the April 16 numbers were only the earliest indicators and the bulk of the collections have not been reported to determine the total.

"When all the numbers come in, we expect we will meet our target for the month, maybe even surpass it," Parayno said.

He said the BIR’s April target was about 1.5 times more than the average monthly target as corporate and individual taxpayers beat the annual deadline for paying and filing their income taxes.

According to Parayno, however, the collection of the value added tax (VAT) on professional services has been low and they are not likely to meet the projected P9- billion annual collection.

Parayno explained that the exemption of doctors and lawyers from the VAT on professionals had an impact on the monthly VAT collections from professionals and will ultimately bring down the annual collection.

Under Philippine tax laws, professionals pay an annual income tax, but they are also required to pay a 10-percent tax on professional services.

The re-imposition of the gross receipts tax on financial transactions came into effect this year but it also exempted lawyers from the VAT that was applicable to all professionals except medical practitioners.

The Department of Finance had lobbied for a line-veto against the VAT exempt status of lawyers, but Malacañang allowed the provision to stand after it was inserted by Sen. Edgardo Angara, founder of the ACRRA Law Offices, one of the country’s biggest law firms.