Philippine’s Tax Compliance Raised by Media Exposure Program

April 29, 2011 Taxation in Philippines

Tax evasion in the PhilippinesAn anti-evasion program that is running in the Philippines is proving to be highly effective at encouraging public tax compliance, by putting high-profile instances of tax fraud in the media spotlight.

The Run After Tax Evaders (RATE) program currently being operated by the Bureau of Internal Revenue (BIR) of the Philippines is showing evidence of raising public tax compliance practices, and has led to numerous high-value tax evasion charges being filed.

The RATE program was initially conceived by the government in 2005, and put into action soon after. The initiative’s primary goal is to investigate large-scale violations of the national tax rules, and aid in the prosecution of tax criminals. Unlike typical investigation run by tax authorities, the RATE program is specifically aimed at exposing and pursuing high profile tax evasion cases, with an emphasis on media exposure and generating a deterrent effect.

Since July 2010 the RATE program has been responsible for 42 separate tax fraud and tax evasion cases being brought to court. Most recently, on April 28th four gold traders were charged with tax evasion, after failing to accurately declare their incomes, leading to approximately PHP 4.758 billion (approx. USD 110.167 million) in lost tax revenues. Earlier in April the RATE program led to the charges being laid against Jose Miguel Arroyo, son of the former President of the Philippines Gloria Macapagal-Arroyo. It was alleged that Jose Miguel Arroyo made intentional omissions on his tax returns, in order to evade payment of PHP 73.85 million (approx. USD 1.710 million) in taxes.

Last week BIR Commissioner Kim Jacinto-Henares announced that preliminary estimates of tax filing numbers for the first quarter of 2011 showed that there was a marked increase in the amount of taxpayers filing their Individual Tax Returns (ITR). She suggested that the public exposure of prosecutions stemming from the RATE investigations has certainly been an effective deterrent from tax evasion in the Philippines.

Photo by Doun Dounell