The Bureau of Internal Revenue (BIR) posted a record-breaking collection of 2.5 trillion last year, but fell short of the target due to adjustments in value-added tax (VAT) filings and deadlines.
On the sidelines of the national tax campaign kickoff on Thursday, Feb. 8, BIR Commissioner Romeo Lumagui Jr. stated that the changes in VAT compliance prevented the achievement of the projected revenue of P2.64 trillion in 2023.
However, last year's total revenue haul was seven percent higher compared to the 2022 collection of P2.34 trillion.
“Kasi dahil dun sa pagbabago ng VAT compliance na naging from monthly to quarterly, malaki-laki yan kasi previously nung 2022, monthly ang VAT payment na naging quarter so isang quarter na VAT ang di pumasok for 2023,” Lumagui told reporters.
[Because of the change in VAT compliance from monthly to quarterly, it had a significant impact. Previously, in 2022, VAT payments were made monthly, but in 2023, they became quarterly, resulting in one quarter's worth of VAT not being accounted for.]
The VAT during the fourth quarter was not collected in 2023 and was instead put in January this year.
“We were not able to collect it [fourth quarter VAT] because it’s quarter, yung VAT nun, January pumasok,” he said.
The BIR last year issued an order that VAT-registered taxpayers are no longer required to file a monthly VAT declaration to make it easier for businesses to comply with their tax filing requirements.
The P2.5 trillion in revenues collected last year was the highest in the bureau’s history and is 7.5 percent higher than the P1.24 trillion collected in 2022.
Adjustments to make way for improvement
Lumagui said that new tax progressive policies, such as the implementation of the Ease of Paying Taxes Act and the removal of annual registration fee collections, may hinder the collection performance but it will make way for more investments to come in.
“As we want to grow the economy, we’ve been giving mga incentives, we’ve been lenient on those, in the hopes that we will be able to attract more investors… syempre may mga nawawalang revenues in the meantime,” he said.
Despite not reaching the target, the BIR chief ensured that the government will achieve the target of P4.3 trillion through new taxes such as the withholding tax on online transactions.