Manila tax collection drive targets business
Tuesday, 26 June 2007
Roel Landingin from Cebu
THE Philippines is to step up tax audits of big companies in an effort to reverse tax collection shortfalls that have raised doubts over the government's plan to balance the budget next year while boosting spending on social services and public works.
Margarito Teves, finance secretary, late last week said he was developing a three-pronged strategy to catch up with revenue targets by year-end. He said the government would intensify tax audits, sell stakes in large and profitable listed companies and try to stem the loss of revenues from generous fiscal incentives and lax tax treatment of self-employed professionals.
Mr Teves said he wanted tax audits to contribute a tenth of the Bureau of Internal Revenue's collections, compared with only 2.0 per cent now.
He is proposing that President Gloria Macapagal Arroyo issue an order that delegates to him her power to examine tax returns.
The finance secretary did not single out any targets but said big companies would be given special attention after a government study found some were paying less than 40 per cent of due taxes, based on profits reported to the local Securities and Exchange Commission. Taxes paid by large companies were sharply lower this year compared with last year.
"The burden of explaining the discrepancy should fall on the shoulders of the companies reporting," Mr Teves told reporters at a Euromoney investment conference.
Raul Concepcion, who heads the Federation of Philippine Industries, said Mr Teves was right to set benchmarks but doubted that targeting the big companies would be productive.
"Many of these companies' shareholders are multinationals who will not risk damaging their reputation by understating their income tax obligations," he said.
"Perhaps the discrepancy could be explained by accounting methodologies used. Maybe some have income tax holidays, or some other fiscal incentives."
Mr Teves' announcement followed the recent firing of Jose Bunag, tax chief, for failing to meet tax collection targets of the BIR, which collects two-thirds of government revenue.
The shortfalls are being blamed for a rise in the budget deficit, which stood at 41bn pesos ($893m, €667m, £448m) in the first five months of the year, 10bn pesos more than the target for the January-June period.
The finance secretary is under pressure to boost revenues this year.
Spending cuts, often resorted to in the past to tackle the budget deficit, are no longer an option. "The policy is not to sacrifice expenditures so the burden really is to raise collections through better tax collection," he said.
Under syndication arrangement
with FE
THE Philippines is to step up tax audits of big companies in an effort to reverse tax collection shortfalls that have raised doubts over the government's plan to balance the budget next year while boosting spending on social services and public works.
Margarito Teves, finance secretary, late last week said he was developing a three-pronged strategy to catch up with revenue targets by year-end. He said the government would intensify tax audits, sell stakes in large and profitable listed companies and try to stem the loss of revenues from generous fiscal incentives and lax tax treatment of self-employed professionals.
Mr Teves said he wanted tax audits to contribute a tenth of the Bureau of Internal Revenue's collections, compared with only 2.0 per cent now.
He is proposing that President Gloria Macapagal Arroyo issue an order that delegates to him her power to examine tax returns.
The finance secretary did not single out any targets but said big companies would be given special attention after a government study found some were paying less than 40 per cent of due taxes, based on profits reported to the local Securities and Exchange Commission. Taxes paid by large companies were sharply lower this year compared with last year.
"The burden of explaining the discrepancy should fall on the shoulders of the companies reporting," Mr Teves told reporters at a Euromoney investment conference.
Raul Concepcion, who heads the Federation of Philippine Industries, said Mr Teves was right to set benchmarks but doubted that targeting the big companies would be productive.
"Many of these companies' shareholders are multinationals who will not risk damaging their reputation by understating their income tax obligations," he said.
"Perhaps the discrepancy could be explained by accounting methodologies used. Maybe some have income tax holidays, or some other fiscal incentives."
Mr Teves' announcement followed the recent firing of Jose Bunag, tax chief, for failing to meet tax collection targets of the BIR, which collects two-thirds of government revenue.
The shortfalls are being blamed for a rise in the budget deficit, which stood at 41bn pesos ($893m, €667m, £448m) in the first five months of the year, 10bn pesos more than the target for the January-June period.
The finance secretary is under pressure to boost revenues this year.
Spending cuts, often resorted to in the past to tackle the budget deficit, are no longer an option. "The policy is not to sacrifice expenditures so the burden really is to raise collections through better tax collection," he said.
Under syndication arrangement
with FE