New Fight Against Tax Evasion and Smuggling in Philippines

January 10, 2011 Taxation in Philippines

Day 153 - PesosTwo revenue-raising departments of the Government of the Philippines are expected to begin operating with higher levels of cooperation in an effort to combat smuggling and tax evasion in the country.

On January 9th the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) of the Philippines announced that the two departments would soon begin cooperative efforts to eradicate tax evasion and smuggling in the country. The bureaus are expected to start a new tax compliance project in the near future to compare the tax records of the top 5 000 importers and the top 5 000 corporate taxpayers in the country. Explaining the reasoning behind the scheme, Finance Secretary Cesar Purisima said, “If you are among the top importers in the Philippines, then it follows that you would likewise be on the list of top taxpayers at the BIR.” He added that proven instances of illicit activity among importers is typically a strong sign of tax evasion. The new project is expected to be the initial step which ushers in a heightened level of cooperation between the BIR and the BOC, with additional future joint projects. Cumulatively, the BIR and the BOC are responsible for collecting nearly 90 percent of the revenues for the Government of the Philippines.

The Government has stated that it will not consider instating new taxes until the major weaknesses in the tax system have been addressed and rectified. In 2010 the tax authorities vowed to reign in corruption and smuggling, in an effort to address the two biggest revenue leaks faced by the Government. It is expected that the cooperation projects will eventually also aim to address the corruption and inefficiencies within the BIR and the BOC themselves.

Photo by margolove