BIR’s tax-hunting evolves

If ain’t broke, don’t fix it, as a popular idiom goes. On the other hand, another oft-repeated adage says: if you can’t lick them, join them. As the head of the government’s chief public funds collecting agency, Bureau of Internal Revenue (BIR) commissioner Romeo Lumagui Jr. believes they must “evolve” with advances in digital technology among the measures to improve tax collection efficiency and plug revenue leaks due to tax-shaving schemes.

Lumagui has committed to pursue aggressively the digital transformation of the BIR in line with the program of President Ferdinand “Bongbong” Marcos Jr. (PBBM). More importantly, Lumagui pointed to the Law on Ease of Doing Business, in which they at the BIR are mandated to make taxpayers comply voluntarily with ease and convenience.

At the Kapihan sa Manila Bay news forum last Wednesday, Lumagui cited digital transformation as among the pillars he has instituted at the BIR since he assumed office in November 2022. Along with the hiring of more professional and service-oriented personnel and integrity of the institution and its programs, Lumagui believes these pillars have been guiding his stewardship at the BIR.

If these pillars are not enough, it is only then the BIR applies its “aggressive enforcement activities,” Lumagui added. Such happened in many of the BIR raids against retailers of illegal vapes and smuggled cigarettes that have cost the government billions of pesos in unpaid excise taxes, he pointed out.

These are the so-called “sin products,” including alcoholic drinks that are considered public health risk products. Hence, these are heavily taxed to discourage consumption, especially by minors.

Unscrupulous traders trying to avoid paying higher rates of duties and excise taxes resort to peddling unregistered products like vapes, using “ghost receipts” as well as fake BIR stamps on smuggled cigarettes and alcoholic drinks.

Aside from technology, Lumagui counts upon the “whole-of-government” approach in the campaign against these illegal trading and smuggling activities. Given limited personnel and resources to run after those defrauding the State coffers, Lumagui taps the help of the Philippine National Police (PNP), the National Bureau of Investigation (NBI), and other law enforcement authorities.

Also at the same Kapihan sa Manila Bay news forum, lawyer Leon Mogao Jr., Bureau of Customs (BOC) chief of the Investigation Division, confirmed having filed seizure and criminal cases against those behind these unregistered vapes and smuggled cigarette products. From 2022 to 2024, Mogao admitted though they were only able to convict two cases of cigarette smuggling.

Lumagui credited partly their much improved collection efficiency to the BIR’s automation-aided services. In fact, he noted, the BIR has collected nearly one-third of the collection target of P3.2 trillion for the entire year. He could not, however, recall exact figures but latest available data showed the BIR collections reached P1.11trillion as of end-April. This went up 14.5 percent from the P970.3 billion in the same period last year.

The BIR has been working double-time to meet its revenue collection target this year, Lumagui vowed.

The collection target of BIR is a huge 70 percent chunk of the P4.64-trillion overall revenue goal of the national government. Others would come from the Bureau of Customs, non-tax revenues and privatization proceeds to finance the Congress-approved budget for this year.

Despite being one of the biggest revenue collecting agencies of the government, the BIR operates only with a P16.9-billion budget for this year. For its proposed 2026 budget, the BIR is asking a 6.5 percent increase to P18 billion. Lumagui is seeking funding to improve on its digital transformation facilities to enhance further the agency’s tax collection efficiency.

In particular, Lumagui asked for P150-million budget support for next year to finally put up and activate the BIR’s toll-free call center. As envisioned, he explained, the call center will enable the taxpayers to directly get assistance from the dedicated personnel of the BIR to attend to their inquiries and assist them in transactions via telephone calls, wherever they are in the Philippines.

“Because taxes are very technical and people tend to commit mistakes, so they go slow to comply,” Lumagui pointed out. Likewise, he disclosed, the BIR targets to establish more e-lounges and procure more computers in its district offices to attend to walk-in taxpayers asking assistance or making inquiries.

Lumagui’s performance in office did not go unnoticed. The courtesy resignation of the BIR chief was among those declined by PBBM two weeks ago. Lumagui was also among the first to submit his courtesy resignation, along with his immediate boss, Department of Finance (DOF) Secretary Ralph Recto.

The 46-year-old Lumagui is a lawyer by profession. He first worked in private law firms for 10 years before transferring to government service in 2016. As a tax lawyer, he had been designated to the project management and implementation service, which develops and oversees the implementation of the overall reform or modernization program of the BIR. He was first promoted as technical assistant to the BIR commissioner before being designated as tax fraud head for several regions. He was also deputy commissioner prior to assuming the BIR top post.

According to Lumagui, the BIR has been gradually implementing what he calls the “digital track and trace solutions app” to detect and go after tax evasion schemes. Through this app, he explained, the BIR will be able to monitor every stage of the transactions, all the way from the producer to the distributor, middlemen/trader down to retailers/sellers, wherever they may be holding office or doing business here or abroad.

Lumagui underscored several times the need for the 17,000-strong BIR men and women to “evolve” with the advancements in modern technology. Actually, he cited, the BIR needs more accountants and digital technology staff since the agency is authorized to employ 21,000 plantilla personnel. To this end, he has been pushing for the exemption of BIR personnel from the Salary Standardization Law.

Lumagui noted the biggest challenges remain the same: how to plug revenue losses due to tax-shaving and other tax evading schemes. Thus, the BIR’s tax-hunting must evolve.