^

Business

Tax credits erode BIR collections

Elijah Felice Rosales - The Philippine Star
Tax credits erode BIR collections
BIR deputy commissioner Arnel Guballa yesterday said revenue collections grew by seven percent to P485.4 billion in the first quarter from P452.9 billion a year ago.
BW file photo

MANILA, Philippines — The Bureau of Internal Revenue (BIR) fell P47.2 billion short of its collection target in the first quarter after providing firms with tax credits under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

BIR deputy commissioner Arnel Guballa yesterday said revenue collections grew by seven percent to P485.4 billion in the first quarter from P452.9 billion a year ago.

However, the BIR failed to meet its tax target of P532.6 billion for the period as set by the Cabinet-level Development Budget Coordination Committee (DBCC).

Guballa said the BIR failed to deliver the DBCC goal as firms started to maximize the outright crediting of input VAT on capital goods. Under the TRAIN Law, enterprises may avail of the VAT credits on specific purchases all in one go.

Prior to Jan. 1, 2022, the Tax Code required that input VAT on capital goods with a total cost of P1 million and above be spread out over a period of 60 months. That was changed, however, by the TRAIN Law, resulting in losses on the side of the BIR.

As such, Guballa said the BIR posted a shortfall of P17.4 billion on VAT collections and another P9.4 billion on income tax efforts.

On the other hand, he said the agency raised P18.1 billion in non-tax operations, which if included on record, would bring the BIR’s total to P503.5 billion in the first quarter.

Based on data, VAT collections also went up by 16 percent year on year to P113.5 billion from P97.9 billion on improved efficiency in tax efforts.

The BIR, as the lead agency in tax collection, targets to collect P2.43 trillion in revenues for the year. The bulk of the amount at P1.25 trillion will come from taxes on net income and profits.

The BIR is relied on to deliver much of the revenue increase needed by the government to cut its budget deficit. The deficit spiked by 22 percent to a record P1.67 trillion last year from P1.37 trillion in 2020, as the rise in state spending outpaced the recovery in revenue collections.

When measured against the gross domestic product (GDP), the deficit ballooned to 8.6 percent, from 7.6 percent, on a yearly basis.

In the medium term, the government wants to trim the deficit to 7.7 percent of the GDP in 2022, then to 6.1 percent in 2023 and 5.1 percent in 2024.

BIR

TAX

Philstar
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with