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Philippines: BIR tax effort hits 10.67% in 2020
MANILA, Philippines — The Bureau of Internal Revenue (BIR)’s tax effort eased to 10.67 percent in 2020 as the pandemic-induced economic crisis slowed down the agency’s revenue generating capacity last year, the Department of Finance (DOF) reported yesterday.
Citing an updated preliminary report from the BIR, the DOF said the tax effort of the country’s largest revenue generating agency dropped by about 0.5 percentage point last year from 11.2 percent of gross domestic product (GDP) in 2019.
Collections of the BIR reached P1.94 trillion in 2020, 11.23 percent lower than the previous year’s P2.19 trillion. This is slightly higher than the initial full-year collection reported by the agency earlier this month, which was at P1.9 trillion.
But despite being lower year-on-year, the DOF said the BIR’s collection was still 15.14 percent higher than the revised goal of P1.68 trillion, set by the Development Budget Coordination Committee in July last year.
Finance Secretary Carlos Dominguez said the decrease in the BIR’s collection was “understandable,” considering the adverse economic impact of the pandemic and subsequent contraction of the economy.
In the third quarter of 2020, the economy shrunk by 11.5 percent, bringing the year-to-date contraction to an average of 10 percent.
As more Filipinos shifted to contactless transactions amid the pandemic, the BIR said P1.67 trillion or 86 percent of its total collections last year was coursed through digital payment channels.
Internal Revenue Commissioner Caesar Dulay said P4.98 billion of the amount were collected through mobile wallet PayMaya, which was launched last year as the latest addition in the BIR’s digital payment options.
About 21.5 million or 94 percent of the 22.86 million tax returns filed last year were also submitted online, given the movement restrictions imposed by the government to contain the spread of COVID-19.
Meanwhile, the BIR noted that there was a 6.15 percent increase in the number of new business taxpayers who registered with the tax agency, reaching 4.37 million from the previous year’s level of 4.11 million.
Dulay expressed optimism that the BIR would be able to perform strongly this year, as he cited Bangko Sentral ng Pilipinas’ pronouncements that the Philippines was already on its path toward recovery.
“We will continue rowing and plowing and collecting these taxes,” Dulay said.
For this year, the BIR is targeting to collect P2.081 trillion, 7.27 percent higher than the actual collection in 2020.
Source: https://www.philstar.com/business/2021/01/26/2072944/bir-tax-effort-hits-1067-2020