Finance Secretary Carlos G. Dominguez III called on tax management professionals to help build trust among taxpayers and encourage them to pay the right amount of taxes instead of finding “loopholes” for their clients to get away and avoid tax obligations.

Dominguez said that although the government was able to surpass its 2021 revenue targets, with 9 percent growth in collections against 2020, the numbers showed that the effective tax rate for the value-added tax (VAT) remained at five percent against the legal rate of 12 percent.

The effective rate for the corporate income tax (CIT) before the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law took effect last year stood at only nine percent against the legal rate of 30 percent, Dominguez also noted.

Dominguez traced such “yawning discrepancies” between the actual legal rate and the effective tax rate to the practice of tax evasion and avoidance resulting from expert “tax management” by professionals for their taxpayer-clients.

While these “tax management” practices might serve to improve the profit margins of taxpayers, such schemes prevent the government from collecting enough to invest in productive projects, he said.

“Had the government been able to collect all taxes due, we would have had more funds to cover our economic investments, debt service, and COVID-19 response expenditures,” Dominguez told members of the Tax Management Association of Philippines (TMAP).

“We would have borrowed less. The government would have been better able to invest in building the prosperous future our people deserve. In sum, the government needs all the revenues it can get to meet the challenges of the time,” he added..

“I, therefore, urge the TMAP to help the government fill in this revenue gap and not widen it further. Tax management should mean raising funds sufficient to allow investment in public goods,” Dominguez said.

Dominguez pointed out that for “some professionals, tax management means finding the loopholes and uncovering the means for tax avoidance. This is probably the more lucrative side of your profession. But it is not the most patriotic.”

He reminded TMAP that better infrastructure, peace and order, rule of law and good governance attract more investments than fiscal incentives as these public goods make conditions better in the long run for businesses to thrive.

In this difficult time, Dominguez said “there is virtue in putting patriotism first,” to help build a better and stronger economy for Filipinos.

Dominguez, at the same time, commended TMAP for its work “in engaging our taxpayers and supporting the modernization of our tax policies.”

"Without your help, we would not have been able to achieve even half of what this administration has done," Dominguez said.