The Bureau of Internal Revenue (BIR) said it is committed to pursue its digitalization plans together with the Asian Development Bank (ADB), following a recent approval of a $400 million loan from the multilateral agency.
Last week, the ADB approved the loan to help the efforts of the Philippines and the BIR to modernize tax administration, systems and processes.
“The BIR commits to pursuing the digitalization and modernization of its services. We commit to being a service-oriented agency. We thank the ADB for being a partner in nation-building,” BIR commissioner Romeo Lumagui Jr. said in a statement.
Among the reforms pursued by the government is BIR’s Digital Transformation Initiative, which aims to modernize key taxpayer services, including online tax registration, return filing and payment.
This can potentially increase the ratio of actual tax revenues to tax potential, from 75 percent in 2020 to at least 85 percent by 2026.
In its statement last week, the ADB said the Domestic Resource Mobilization (DRM) Program Subprogram 1, its first policy-based loan dedicated to DRM reform, addresses the country’s need to tackle discrepancies in tax policy frameworks to boost tax compliance, reduce tax avoidance and raise more revenues from activities and products that have a major impact on the environment or contribute to climate change.
“The program recognizes that DRM reforms necessitate not only raising revenue, but also designing a revenue system that fosters inclusiveness, encourages good governance, promotes investments and job creation, reduces inequality and tackles climate change,” said ADB senior economist for public finance Aekapol Chongvilaivan.
“ADB supports the government’s DRM program, which will result in a higher tax-to-gross domestic product (GDP) ratio and ensure sustainable financing for the country as it sets out to achieve its goals under the Philippine Development Plan (PDP) 2023-2028,” Chongvilaivan added.
The Philippines wants to raise its tax-to-GDP ratio from 15 percent of GDP in 2020 to at least 15.9 percent of GDP by 2026, as stated in the PDP 2023-2028, to slowly narrow the gap with the 17.6 percent average ratio of its Asia and Pacific neighbors. – Angela Celis
