BIR targets tax-evading, self-employed professionals

The government is going after self-employed professionals to strengthen the tax effort and widen the collection base, Cabinet officials said Monday, warning that authorities will chase and make cheats pay what is due to the state. 

 

"There is no excuse in not paying taxes," Internal Revenue Commissioner Kim Jacinto-Henares told reporters in a tax forum in Quezon City. 

 

At the same forum, Finance Secretary Cesar Purisima noted the “need for compliance in laws across the board.

 

"Non-payment of taxes is a crime, it's robbing the people of funds for social and infrastructure programs,” said Purisima. 

 

According to Bureau of Internal Revenue estimates, ratio of self-employed, business professionals (SEP) to individual tax collections have gone down to 6.8 percent last year from 8.0 percent in 2009. 

 

This compares with a burden of compensation earners estimated at 81.5 percent in 2012 relatively unchanged from  81.7 percent in 2009.

 

SEPs collectively paid P15.1 billion of the estimated P223 billion collected in 2012, while compensation owners accounted for P181.7 billion, data showed. 

 

Current collections from SEPs account for 0.13 percent of the country's gross domestic product (GDP), Purisima said, adding that they want to increase this to 2.1 percent of GDP or P360 billion by 2016. 

 

Henares said they will ensure that the 1.8 million SEPs registered with the BIR properly pay their taxes. 

 

The figure is well below the 2 million active professionals listed by the Professional Regulatory Commission and the 816,759 registered micro, small and medium enterprises. 

 

"It is imperative that we broaden the tax base. In our survey of a prominent business association, we discovered that 23 percent of their members had no TIN (tax identification number) and 50 percent [of those registered] did not file returns," Henares said.  

 

"There is still a lot of room for improvement. The 1.8 million taxpayer target is conservative," she added.

 

Aside from widening the tax base, Purisima said the government will "drastically increase average payments" to achieve the 2.1 percent tax-to-GDP ratio of SEPs.

 

"The current average annual payment of P33,441 implies a monthly income of P23,647. This is unbelievable considering the lifestyles of most entrepreneurs and professionals," he said, noting that BIR records show lawyers and doctors paying as low as P200 income tax annually.

 

"It is reasonable to expect the average to reach P200,000. Our focus is those who are the top of SEPs, those who really are earning in millions," said Purisima. 

 

Efforts to achieve the target include information sharing that cover business and mayor's permits, looking into memberships in professional organizations, capacity building in information-technology infrastructure, and bench-marking rates by profession and industry. 

 

Henares said she recently issued a memorandum circular on auditing SEPs—who pay below P200,000 in annual income tax—based on certain conditions like growth rate in tax payments and inventory. 

 

"The revenue memorandum circular will look at payments in the future, present and past. And it will be released at the latest tomorrow," she said.

 

Last year, the government sustained its double-digit revenue growth, collecting P1.53 trillion or an increase of 12.9 percent from P1.35 trillion a year earlier. 

 

The BIR—government's main revenue agency—collected P1.057 trillion in 2012, up 14.48 percent from the collections in 2011. —  VS, GMA News