BIR: Billions in VAT lost to ‘ghost receipts’

MANILA, Philippines — Billions of pesos in value-added tax (VAT) are lost to “ghost receipts,” according to the Bureau of Internal Revenue (BIR).

BIR Commissioner Romeo Lumagui Jr., a resource person at the hearing of the House committee on ways and means on Tuesday, said there is a “VAT gap” of 13 percent in the agency’s total tax collection goal for 2023, amounting to P2.6 trillion.

If computed, this is equivalent to P338 billion in lost revenues.

Lumagui said it would “greatly help” the BIR in hitting its collection target if the problems on “ghost receipts” used to evade paying taxes are addressed.

“This is why we’re very serious in our crackdown on these fake transactions,” he told the panel deliberating on House Bill 7583, which seeks to penalize padding of tax deduction through “unauthorized, falsified or fake revenue documents.”

Last month, Lumagui formed the Run After Fake Transactions to go after those using fake receipts to evade paying taxes.

“What started out as a small time operation several years ago, perhaps as early as 2009, has evolved into wide scale economic sabotage,” he added.

The official warned that the BIR will “continue to hound the participants in this chain of tax evasions be it  sellers, buyers and also accountants who aid in this transaction.”

So far, the BIR has filed criminal charges against four corporations and accountants involved in this irregularity.

“This is just an initial filing of case, we will file some more as the cases are developed … The initial batch of cases against the buyers (of fake receipts) is also being prepared,” he said.

Lumagui assured the public that aside from filing cases against the buyers, the BIR will collect the taxes “that they did not pay in connection with the purchase of ghost receipts.”

“We would like to put an end to the criminal syndicates who wish to profit from this economic sabotage because instead of the money going into the coffers of the government, it goes to pockets of syndicates,” he added.

He maintained the BIR wants to send the message “across to the sellers that they should stop this scheme.”

On the other hand, the BIR wants to destroy the buyer’s “false sense of security in buying fake receipts that we are not able to catch them.”