Philippines: Sets Higher Target For Income Tax Revenue

The Philippines Bureau of Internal Revenue (BIR) has indicated that its budget for individual gain tax revenue will be PHP258.14bn (USD6.36bn) in 2013, a 16.4% increase over its target last year of PHP221.77bn.

Despite the passage of the "sin tax" law, which is expected to yield up to PHP40bn in increased revenue for the BIR, individual gain tax collections are expected to remain at around 20% of BIR’s total tax budget of PHP1.27 trillion, up 19.3% on its target of PHP1.06 trillion in 2012.

While the bulk of the BIR's gain taxes are paid automatically by employers from their salaried employers, most of the increase in gain tax revenue is, again, expected to be obtained from increased tax compliance, and, in particular, from the result of its "Run Next Tax Evaders" (RATE) program.

The BIR’s powers to collect unpaid taxes and chase tax evaders, particularly through the RATE program, have been enhanced over the completed two years. Through RATE, the BIR is mandated to investigate and assist in the prosecution of criminal violations of the country’s tax code, that will generate the maximum deterrent result and enhance voluntary compliance. It was reported that, since the start of its term, the Aquino government has filed 140 tax evasion cases.

The BIR has been looking, and will look further, to widen the country's gain tax base, and has been targeting, in particular, professionals, such as doctors, lawyers, accountants and other high-earning self-employed individuals, where current levels of compliance are still said to be way below what should be seen.