Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui Jr. just this week announced that the emerging full-year tax collection figures for 2024 will “definitely reach the P2.848 trillion mark,” even as the revenue collection agency will still have to finalize the actual tax collections by mid-February this year.
As of end-November 2024, the BIR’s revenue was reported at P2.667 trillion, already at 93.64 percent of the full-year P2.8-trillion target.
The BIR chief proudly declared in a statement that his agency’s 2024 performance could be “the first time in 20 years that the BIR achieved its goal.” He attributed the agency’s good collection performance for last year to “our dedication to good governance reforms, manifested by our shift to a taxpayer-oriented agency,” which he said led to the increased voluntary compliance of taxpayers. He added that “this goes to show that if government agencies improve their services, processes, and programs, our countrymen will do the right thing and pay their proper share of taxes.”
Indeed, perhaps for the most part, the very good-looking Commissioner Lumagui could proudly boast of the BIR’s effort to improve its tax collection and compliance—a trend that taxpayers have experienced, especially in tax collection and business permit centers at the start of the annual renewal of licenses and permits, real estate taxes, and income tax payments, with these centers offering free coffee. In fact, even in provinces such as Baliwag, Bulacan, business owners and taxpayers have been pampered by the Baliwag Business Permits and Licensing Office with free refreshments and snacks as they use the business center’s streamlined and automated processes in the one-stop shop location.
Unfortunately, however, even in the very efficient business center of Makati, under Mayor Abby Binay, a few bad and tax-cheating establishments—and I assure you this occurs elsewhere in various parts of Mega Manila—continue to manage to get away with cheating on their tax payments by refusing to issue official receipts (OR) and cheating senior citizens of the law-mandated 20 percent discount and 12 percent value-added tax exemption.
I personally experienced this Wednesday evening at a Korean restaurant along Valero St. in Makati, right across the BDO office, which even led to the Barangay Bel-Air tanod personally assisting us to get the Korean owner and cashier to give us the mandated senior citizen discount but not the VAT exemption because it turns out that the establishment either did not want to issue an OR or supposedly could not issue one on the claim that their request for an OR is “still under process.” This seems oddly strange considering that a business should not be able to start operations if it cannot issue an OR. Instead, what we got for our payment was a stamped service invoice.
The dispute started when we asked to settle our bill for three senior citizens after consuming a meal that included a meat dish, a soup dish, a fish dish, a rice dish and one extra order of appetizer aside from the usual free appetizers, steamed egg dish and tofu stew dish that goes along with the meat dish.
The cashier refused to give the mandated 20 percent SC discount and only offered a 10 percent discount, adding that our meat dish was not subject to a discount as it was a “promo” dish, even though their menu clearly did not have any stamp or notification indicating a special promotion.
We asked to talk to the Korean owner, who further tried to evade granting the discount with the reason that under the “law,” we were all entitled to only one meal each??? Since we could still not agree, she threatened to call the police, which we welcomed. But alas, the first responder was the building’s security guard, who, of course, has no authority to mediate the matter. Finally, after about an hour, the Barangay Bel-Air tanods arrived to properly mediate the matter. The owner and cashier claimed that we refused to pay our bill, but upon hearing about the actual dispute, they overturned the Korean owner’s refusal to give the 20 percent discount. It was then we discovered that she did not have an OR “yet,” on the claim that “it is still under process.”
As the dispute had already taken over three hours, the Barangay Bel-Air tanods asked us to compromise and not insist on the VAT exemption and OR issuance, which we agreed to as it was already 11 p.m.
Hence, the need, once and for all, to bring this matter to the BIR chief’s attention: the rampant violation of OR issuance and the continued refusals of some establishments to properly grant the mandated SC discount and VAT payment exemption. Even a well-known optometry shop where I had a pair of special, graded, and coated reading glasses made had in the past refused to issue an OR for my purchase, insisting that the order receipt served as an OR even though it did not contain the Tax Identification Number of the establishment.
In a previous column, I had also written about an artisanal pizza establishment in Ortigas Center that refused to grant us our SC discount and VAT exemption after ordering and consuming two pizzas in the restaurant on the ground that the pizzas were meant for four people, even though we fully demolished the two plate-sized pizzas, which, in Italy, is the traditional way pizzas are ordered individually and eaten. However, the difference with the artisanal pizza place is that it issued a proper OR even though it erroneously (or intentionally) argued that a plate-sized order is meant for sharing and an SC discount cannot be given even if the whole pizza is consumed in the restaurant without any takeout!
But whoa! I have to give credit where credit is due to one take-out and delivery establishment, the very popular and delicious Amber’s Pancit. When I recently ordered a delivery for my colleagues at The Philippine STAR Business desk, I was pleasantly surprised when the order-taker asked if I wanted to avail myself of my SC discount. I could not help but feel that there are still a few law-abiding establishments out there.
While the BIR has a continuous campaign reminding customers to request their official receipts, the convenience of paying through contactless credit card payments actually allows most establishments to get around the request for an OR, claiming that the credit card payment receipt serves as the OR, and most just accept that as standard practice.
In truth, however, a customer is still entitled to request an OR, especially for liquidation purposes for company or private business-related expense accounts. And this is when the tax cheating occurs on a massive scale, which, if the BIR were more zealous, could result in better and higher collections.
Tax cheats have various ways of avoiding the issuance of ORs. The most common excuse is that they “ran out” of ORs and offer instead to issue an invoice receipt, which, of course, is not an OR. Without the OR, they can misdeclare their actual earnings. Another common excuse is that they “just started the business” and their ORs are still being processed by the BIR, thus shifting the blame on the “laggard processing” by the tax collection agency – ”kasalanan ng BIR, mabagal ho sila mag-process.”
To make things worse, the BIR does not readily attend to its hotline or clearly and regularly update the contact numbers for the public to call and ask for immediate redress. Instead, the public just gives up and accepts or abets the rampant tax cheating.
In all of this, taxpayers—especially the properly licensed and law-abiding businesses and professionals—are the bulk of the country’s taxpayers who end up accounting for the “higher” collections, while the massive leakage remains unplugged because the revenue agency is not properly going after tax cheats.
Pretty much like the non-revenue water leaks of our water providers, perhaps seeking out tax cheats is a tedious process that only harms the general public, which ends up filling the void that should be properly paid.
Good day, Commissioner Lumagui!