The Bureau of Internal Revenue’s (BIR) collections from its operations in the first three months of the year fell short of target by P47 billion, the Department of Finance (DOF) said in a statement yesterday.
The DOF said the P485.4 billion raked in by the BIR in the first quarter was 8.9 percent short of the goal set by the Development Budget Coordination Committee (DBCC), as businesses avail of the provision allowing outright crediting of their input value-added tax (VAT) on capital goods under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
The BIR said although the first quarter tax collection from its operations fell short of the DBCC target of P532.6 billion, this amount is still higher by P32.4 billion or 7.2 percent from the P452.9 billion collected in the same period last year.
Arnel Guballa, BIR deputy commissioner, reported that the shortfall was due to businesses deciding to fully utilize their input VAT credits on purchases available to them under Section 35 of the TRAIN Law.
Prior to January 1, 2022, the Tax Code requires that input VAT from purchased capital goods with an aggregate acquisition cost of P1 million and above must be spread out over a period of 60 months beginning the month of purchase.
With the outright crediting of input VAT by businesses, BIR incurred a shortfall of P17.4 billion in VAT collections and another P9.4 billion in income tax collections for the first quarter of 2022 alone as compared to the DBCC-set targets, Guballa said.
On the other hand, the bureau’s collections from its non-BIR operations from January to March 2022 reached P18.1 billion, bringing its total collection for this period to P503.5 billion.
The total collection is higher by P33 billion or 7 percent from last year’s actual first-quarter collection of P470.5 billion, but lower by P48.3 billion or 8.8 percent from the DBCC target of P551.78 billion for this period.
Meanwhile, over the weekend, the DOF also said the BIR, upon its orders, has suspended Revenue Special Orders (RSOs) and Operations Memoranda (OMs) creating special audit task forces to prevent duplication of functions of BIR offices and avoid confusion among taxpayers.
Through a memorandum issued by Marissa Cabreros, BIR officer-in-charge deputy commissioner, the RSOs creating the special audit task forces on real estate developers and direct selling/multi-level marketing, and the OMs creating task forces for Philippine offshore gaming operators and electronic sabong were suspended immediately on May 20, until further notice.
“The functions and responsibilities of the different units in the BIR are provided in revenue administrative orders (RAOs) issued by the secretary of finance, upon the recommendation of the commissioner,” Carlos Dominguez, DOF secretary, said.
“The issuance of the RSOs and OMs has distorted this and even caused uncertainty for some taxpayers,” he added.
The DOF also reiterated in the directive to the BIR that all existing audits and investigations under the RSOs and OMs shall be handled by the revenue district offices or unit/s in the BIR where the concerned taxpayers are registered.
“We are working with the BIR to review these issuances and ensure these do not create redundancies and cause taxpayer confusion,” Dominguez said.
“If found to be in violation of our RAOs, these issuances should ultimately be revoked by the BIR,” he added.
Relative to this order, all field audit and other field operations under the task forces authorized to conduct examinations and verifications of taxpayers’ books of account, records and other transactions were also ordered suspended.
As such, no field audit, field operations or any form of business visitation in execution of any letter of authority/audit notices, letter notices or mission orders should be conducted by the task forces.
The RSOs and OMs allowed revenue officers to secure and conduct examination of books of accounts, papers, records and other documents, and issue letters of authority in connection with the task force’s audit or investigation.
