DOF warns individuals, entities who evade paying taxes

MANILA, Philippines - Individuals or entities engaged in highly profitable ventures but are paying less taxes face scrutiny, the Department of Finance (DOF) said yesterday.

The DOF and the Bureau of Internal Revenue  (BIR) are combing through the list of top taxpayers in a bid to stamp out tax evasion and get taxpayers to pay correct taxes.

Finance Secretary Cesar Purisima said the BIR would use the top taxpayers list as basis to audit tax-eligible entities.

Purisima said taxpayers with large differences in payments from one year to the next and those involved in highly profitable industries but are not included in the top taxpayers list might be flagged for audit.

“We closely review the top taxpayers lists when we analyze our tax collection data. Based on our research and benchmarks, we have expectations for the profile of taxpayers that appear on these lists and we investigate findings that diverge from our conclusions,” Purisima said.

The top taxpayers list, Purisima said, is used as a basis to countercheck income tax payment, particularly for self-employed, business and professional taxpayers.

The BIR also checks the top taxpayers list against lists of top importers, top businesses by market share and other metrics to determine inconsistencies in data.

“These lists serve as another way to double- and triple-check income tax payments in populations that are historically difficult to track, such as the self-employed, businesses, and professionals. Our most successful business personalities and corporate citizens should also be top taxpayers – and if that is not the case, we need to find out why,” Purisima said.

The BIR publishes the list of top individual taxpayers annually per Revenue District Office and line of business. It also publishes a list of top 500 non-individual taxpayers on its website, www.bir.gov.ph.

Purisima is hopeful that this rigorous investigation by the BIR will lead to larger revenue collections and more fiscal space for the government’s priority projects.

The BIR wants to boost the taxpayer base and average tax payments to 1.8 million and P200,000, respectively. The twin objectives are seen to translate to an additional P360 billion in collections or 2.1 percent of the country’s gross domestic product (GDP).

The government has intensified its campaign against tax fraud due to declining collections from self-employed individuals.

Data from the BIR show that only 402,000 of the 1.8 million registered individual taxpayers and professionals filed their tax returns, paying an average of P33,441 or a total of P13.4 billion, which accounts for only 0.13 percent of the GDP.