Philippines, Russia eye cooperation on tax data capture

MANILA, Philippines — The Philippines and Russia are exploring possible bilateral cooperation that could further improve the country’s tax administration and compliance.

Officials of the Bureau of Internal Revenue (BIR) met with the Federal Tax Service (FTS) of Russia last Jan. 13 to discuss the latter’s best practices that could be applied in the Philippines.

During the Zoom meeting with FTS deputy commissioner Dmitry Volvach, both countries explored a possible bilateral cooperation agreement between the revenue agencies.

In a report to Finance Secretary Carlos Dominguez during a recent executive committee meeting at the Department of Finance (DOF), BIR Deputy Commissioner Arnel Guballa commended Russia’s tax administration system.

Guballa reported Russia’s system uses artificial intelligence and data analytics to capture taxpayers’ information.

“They have good tax administration. They started their digitalization in 2016 and, after five years, they are now into capturing almost all the data of taxpayers,” Guballa stated in his report.

Guballa pointed out FTS now audits only one out of 7,000 taxpayers as a result of Russia’s well-placed and efficient system that encourages people to comply with tax laws.

The BIR launched its Internal Revenue Integrated System (IRIS) last Jan. 15 to serve as the agency’s central tool and repository to process taxpayers’ information.

The agency expects to roll out the system in the fourth quarter of 2021. This forms part of the deliverables this year under the BIR’s long-term digital transformation program.

Collections of the BIR declined by 11.2 percent to P1.94 trillion last year from P2.19 trillion in 2019, translating to a lower tax effort of 10.67 percent of gross domestic product (GDP) from 11.2 percent of GDP.

Dominguez earlier said the decrease in the BIR’s collection was “understandable,” considering the adverse economic impact of the pandemic and subsequent contraction of the economy.

For this year, the BIR is targeting to collect P2.08 trillion, more than seven percent higher than last year’s P1.94 trillion.