BIR’s VAT collections up 4% to P121B in 10 mos

The Bureau of Internal Revenue’s (BIR) value added tax (VAT) collections for the first 10 months of the year went up slightly by four percent to P121.1 billion, from a year ago level, latest data from the agency showed.  

This is P4.8 billion higher than the P116.4 billion collected in the same period last year, data further showed.  

The BIR, the government’s number one revenue earner, has been struggling to collect VAT due to the utilization of excess input tax credits VAT by companies.  

Input VAT is the amount of sales tax shouldered by a firm every time it purchases a good or a product that already includes the 12-percent VAT in the price. Output VAT is the gross VAT liability of a firm computed as the 12 percent of its gross sales.  

VAT is the second biggest source of revenue for the government after net income and profits but tax agencies perennially fail to meet collection targets. 

Under Republic Act 9337 or the Expanded Value Added Tax Act of 2005, a ceiling was imposed on input VAT claims to avoid abuses wherein taxpayers claim input VAT in excess of their output VAT forcing the government to refunds the claims made by taxpayers. 

The removal of the ceiling resulted in P4.5 billion in lost revenues on the part of the BIR, Finance Undersecretary Gil Beltran said.  

BIR Deputy Commissioner for Operations Nelson Aspe also said the BIR would prioritize taxpayers having low VAT compliance as part of efforts to boost tax collection and enhance voluntary compliance. 

The agency, he said, has found out that most taxpayers cannot even meet the effective VAT rate of at least three percent for the sale of goods and five percent for the sale of service.  

Aspe said that taxpayers’ compliance for VAT purposes appears to be weak and this has resulted to lower VAT payments. 

 The government had hopes for VAT or sales taxes after Congress raised the rate to 12 percent in February 2006 from 10 percent previously as part of the government’s fiscal reform agenda.   

Despite problems in tax compliance, the BIR is still hopeful that it would meet its collection target for the year of P765.9 billion this year or 17.5 percent higher than last year’s P651.9 billion.