MANILA, Philippines - The Department of Finance is seeking to widen the tax net by doubling the large taxpayers base to more than 4,000 companies.
In a speech delivered during an event for the Large Taxpayers Service (LTS) group, Finance Secretary Cesar Purisima said expanding the number of its corporate taxpayers will help the government boost its revenues.
The LTS currently accounts for the biggest share of BIR’s total revenues at 64 percent comprising a little over 2,000 corporations.
Those falling under the LTS group are conglomerates, their subsidiaries and affiliates, multinational companies, universal/commercial and foreign banks and firms with an authorized capital of at least P300 million.
Purisima said while the LTS has steadily contributed the lion’s share of BIR’s collections, the tax base remains narrow.
“Maybe increase it by another 2,000, or even more over a period of time because we’ve proven that by focusing and segmenting the target market or target groups, we are better able to generate the right amount of revenues,” Purisima said.
Purisima said that while the manufacturing and wholesale and retail trade industries grew last year, the tax efficiency of these sectors actually decreased.
He said tax collections from financial institutions likewise fell even as the underlying economy grew.
“Obviously, interest rates are lower, but if we look at the latest Bangko Sentral data, it’s growing faster than our tax collections: total net loans and receivables increased by 19 percent year-on-year as of November 2014, while total deposits increased by 33 percent in 2013. These areas are what we need to look into,” Purisima said.
Purisima also noted that while construction’s percentage on the economy is about six percent, it comprised only one percent of the government’s large taxpayer collection.
“We should make the coverage of the Large Taxpayer Service more representative of the size of its underlying economy,” Purisima said.
For this year, the BIR expects collections from the country’s large taxpayers to reach at least P1 trillion or nearly 60 percent of the agency’s total revenue goal.
This amount was lower than the original target of P1.07 trillion.
The BIR revised downward its LTS collection goal to P1.05 trillion after taking into account the estimated P30 billion in revenue losses from the higher tax exemption ceiling on bonuses of workers in both the public and private sector.
Out of the P30 billion estimated revenue losses, about P19 billion will come from the LTS.
Read more on The Philippine Star.