The Bureau of Internal Revenue (BIR) is stepping up its efforts to combat the fraudulent use of fake Person with Disability (PWD) identification cards (IDs), which resulted in an estimated P88.2 billion in lost tax revenue last year.
In a statement, BIR Commissioner Romeo D. Lumagui Jr., said on Thursday, Dec. 12, that this move comes in response to a recent Senate probe that revealed the alarming extent of the scheme and its impact on government coffers.
Lumagui said he ordered all BIR officials to coordinate with other government agencies to address this issue.
"People who sell and use fake PWD IDs are not only committing tax evasion, they are also disrespecting legitimate and compliant PWDs. The discount given by law to PWDs is for the improvement of their well-being and easing of their financial burden,” Lumagui said.
“It is not some common discount card that is accessible to the general public. Expect the BIR to run after fake PWD ID sellers and users," he added.
The 1987 Constitution of the Philippines recognizes the rights and needs of PWDs. Republic Act (R.A.) No. 7277, as amended by R.A. No. 10754, provides PWDs with a 20 percent discount and exemption from Value-Added Tax (VAT) on specific goods and services upon presentation of a PWD ID.
However, Lumagui noted that this system has been exploited through the sale and use of fake PWD IDs.
On Dec. 5, the Senate Committee on Ways and Means conducted a public hearing on Senate Resolution No. 1239 to address the issue of fake PWD IDs.
The hearing emphasized the negative impact on businesses and the government due to the widespread misuse of these fake IDs.
The BIR expressed gratitude to the Senate for its efforts to stop this scheme.
"The BIR recognizes the harmful effects of the widespread use of fake PWD IDs on the economy, as the government loses revenue that should be collected and used to finance various projects," the agency noted.
Revenue Regulations No. 5-2017 provides guidelines on the availment of tax privileges granted to PWDs, including penalties for violators.
The BIR will conduct tax audits on transactions involving PWDs reported by establishments. Establishments must provide records of sales to PWDs, including the name of the PWD, ID number, disability, and the amount of discount and VAT exemption given.
The BIR will then verify the legitimacy of the PWD IDs.
If PWD ID numbers are found to be illegitimate, the BIR will disallow the deductions claimed by the establishments and assess deficiency VAT, including penalties and interest, on VAT-exempt sales linked to fake IDs.
The bureau will also intensify its coordination with relevant government agencies, including the Department of Health and the National Council on Disability Affairs, to verify the legitimacy of PWD IDs.
The BIR's intensified efforts aim to minimize fraud, ensure that benefits reach legitimate PWDs, and protect the integrity of the government's tax system. (With report from Derco Rosal)