BIR targets self-employed tax evaders in new campaign

MANILA, Philippines – The Department of Finance (DOF) and Bureau of Internal Revenue (BIR) are targeting the self-employed such as lawyers and doctors in their latest campaign against tax evaders.

According to BIR Commissioner Kim Jacinto-Henares, there are around 1.8 million self-employed professionals (SEPs) working in the Philippines, but only 402,934 actually file taxes. “This is a very conservative estimate,” she said.

Finance Secretary Cesar Purisima said current collections from SEPs account for 0.13% of the country's gross domestic product (GDP). The BIR is looking to increase this to 2.1% of GDP or P360 billion by 2016.

According to BIR calculations, SEPs share in individual income tax collections went down to 6.8% in 2012 from 8% in 2009.

Purisima said they would "wage war" against SEP tax evaders. “One of the things we're going to do is use information to help us with our efforts. The quality of information has improved dramatically,” said Purisima.

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

According to BIR data, even with a P1-billion increase in tax payments made by SEPs from 2010 to 2012, that sector only constitutes 6.8% of total individual income taxes, way below the 81.5% share of those whose taxes are automatically deducted from their salaries.

“During our visit to a certain revenue region we discovered that the top 10 lawyers in the region had annual income tax payments that were below P20,000. This implies that these lawyers earn even less than minimum wage. A newly hired public school teacher pays substantially more than that,” Purisima said.

Purisima added that across regions, payments are extremely low. There were doctors in Pangasinan that paid only P800 for the year, lawyers in Bacolod that paid only 200, a radio and TV practitioner in Quezon City that paid only P400 and a businessman in Cagayan de Oro that paid only P1,000, he said.

The second poorest area in the country has higher average collection from SEPs than San Juan, South Cebu and even Borocay, he also said.

“In adition to expanding the base, we have to drastically increase average payments. 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. It is reasonable to expect the average to reach P200,000,” Purisima said.

The BIR previously said it was looking to boost its individual income tax collections by 16.4% in 2013, as it intensifies its drive against tax evaders. The agency is tasked to collect P1.253 trillion during the year, higher than 2012's goal of P1.066 trillion.

The BIR under the Aquino administration filed 140 cases worth P44.27 billion against tax evaders as of 2012. -