BIR goes after rich individual taxpayers

Published August 12, 2022, 11:01 AM

by Jun Ramirez

The Bureau of Internal Revenue (BIR) will extensively use the so-called net worth method of investigation to unearth the untaxed wealth of individual taxpayers once the ban on audit is lifted.

Money/File (Manila Bulletin article)

According to BIR, this was disclosed by some Metro Manila revenue regional directors and district officers who said that it is a common knowledge that many businessmen and government workers are spending more than what they reported in their tax returns.

Basically, the audit scheme calls for the matching of income and expenses, and expenses which can’t be supported with documents will be considered hidden wealth subject to tax.

A revenue regional director who requested anonymity further explained that the tax liability is determined by deducting the cost of expenses from income earned.

This way, he said taxpayers who have ostentatious lifestyle like sending their children to expensive schools, living in big houses, buying luxury vehicles and frequently travel abroad but pay minimal taxes can be identified.

He said this audit tool can be easily implemented when the bureau’s operations are fully digitalized as envisioned by BIR Commissioner Lilia Catris Guillermo.

“But we have to do it now to compel taxpayers to report correct income and pay the corresponding taxes to raise more money and restore the pandemic devastated economy,” he said.