BIR sees P6.3-billion loss in foregone collection due to typhoon damage

MANILA, Philippines - The Bureau of Internal Revenue (BIR), the government’s main revenue earner, expects to lose at least P6.3 billion in income tax collections due to the damage left by typhoons “Ondoy” and “Pepeng.”

The amount represents potential income tax collections from individual and corporate income taxpayers whose businesses were affected by the two typhoons which hit the country in September and October, respectively.

The BIR would no longer be able to collect the amount because affected businesses are allowed to file for income tax deductions, according to a memorandum issued in October by then BIR Commissioner Sixto Esquivias IV. 

In a press briefing yesterday, BIR Commissioner Joel Tan-Torres said as of Dec. 10, the cost of damage on businesses registered with the agency has already reached P21 billion. At P21 billion, the BIR’s mandatory 30-percent income tax is P6.3 billion, Tan-Torres said.

“This was not anticipated,” Tan-Torres told reporters.

The BIR chief said the impact of this would be felt in next year’s collections as the affected taxpayers would avail of the tax deduction in April next year when they file their income tax returns.

The agency has a collection target of P875.1 billion next year but Tan-Torres said that while nothing is final yet, the actual figures may just be roughly P830 billion due to the various revenue-eroding measures approved by Congress and other factors such as global economic conditions.

Last October, Esquivias issued a memorandum allowing taxpayers whose enterprises have been damaged by the typhoons to file for income tax deduction for the losses they incurred.

The agency said there should be proof showing the extent of the damage or the condition of the property before and after it was repaired or replaced.

In its memorandum, the BIR said the large taxpayers and non-large taxpayers with business or enterprise should file a sworn declaration of loss and other requirements deemed necessary to prove their losses. The claims shall be submitted to their respective revenue district offices or large taxpayers division where they are registered within 45 days from the date of the event.

The government estimates that the damage caused by the two typhoons has reached roughly P30-P36 billion as it battered key cities and infrastructure areas in Metro Manila and agricultural lands in the northern part of Luzon.