Filipino businesses call for wider tax base

FILIPINO BUSINESSES feel the government is not taxing enough entities and are not including more people into the tax base, an international survey showed.

The Grant Thornton International Business Report, released yesterday, polled 100 Filipino executives in the first quarter, seeking their comments on the tax policies of the country.

"There are respondents who believe the current tax regime does not bring enough economic participants into the tax base: 62% of Filipinos polled [said] not enough people and entities are being taxed, compared to 49% globally," Grant Thornton, through its local partner Punongbayan & Araullo, said in a statement.

This number was also higher than the rest of the Association of Southeast Asian Nations (ASEAN) -- 45.5% of regional respondents felt governments were not expanding their tax base.

Some 58% of Filipino businesses said tax policies are heavily against the redistribution of wealth, again surpassing levels in the ASEAN and the rest of the world, at 39.4% and 41.3%, respectively.

The executives, however, are satisfied with most of the current tax regime of the Philippines, the survey showed.

Around 76% said tax laws and policies "are taxing the correct taxpayers at the correct levels, compared to just 28% globally; 68% believe these same policies are geared to stimulate economic growth, compared to just 31% globally."

Of those surveyed, 82% said current tax laws are working towards encouraging compliance.

There are an estimated 18.95 million taxpayers in the country, based on the Bureau of Internal Revenue (BIR)’s 2011 annual report, up by 9.65% from the 17.289 million taxpayers in 2010.

For its part, the BIR has been working to improve tax administration through a host of reforms.

The self-employed and professionals have been a focal point for the bureau, especially, since they declare their own income and taxes.

Simpler registration, filing and payment procedures seek to bring in more taxpayers into the fold.

Unregistered businesses have also been shuttered, while cases have been filed against tax evaders, including high-profile politicians, celebrities, lawyers and doctors.

SALES TAXES BACKED
Meanwhile, Filipino businesses were asked which type of tax should be the main source of revenue for the government.

Majority of respondents, at 28%, said sales taxes should make up bulk of government revenues, followed by the value-added tax (VAT) with 26%, and personal taxes, 20%.

Around 18% said corporate taxes must be the main source of income, while customs duties and taxes scored the least, at 8%.

Currently, income taxes -- both corporate and personal -- make up bulk of the BIR’s collections. They are expected to bring in P759.187 billion this year.

The VAT is estimated to add P268.631 billion, while excise taxes bring in P102.367 billion and percentage taxes, P60.732 billion. Other taxes top off the programmed collections this year with P62.762 billion.

TAX GUIDANCE SOUGHT
Almost all Filipino businesses, at 92%, also noted there is a need for the government to provide more guidance when filing taxes "even if this provided less opportunities to reduce tax liabilities across borders."

This went above and beyond results elsewhere, with only 86% of ASEAN businesses and 68% of global respondents saying there is a need for more tax guidance.

"The high percentage of Filipinos requesting for more tax guidance shows that taxpayers are at a loss when it comes to the various changes that are being implemented," Eleanor L. Roque, head of Punongbayan & Araullo’s tax division, said.

"Taxpayers would welcome more dialogue and consultation with the regulators. Compliance becomes difficult when there is not enough guidance available."

The government hopes to collect P1.746 trillion in revenues this year to help fund P1.98 trillion in expenditures.

The BIR accounts for about 70% of the revenue haul.

As of April, the bureau collected P393.09 billion, up 13.85% from P345.265 billion the year previous.

source:  Businessworld