Taxpayers and tax authorities should maximize the use of payment systems to help the government collect much needed taxes, especially at this time of the new coronavirus disease 2019 (COVID-19) pandemic, a study released by the National Tax Research Center (NTRC) said.
According to the tax research journal titled “The role of payment systems in Philippine tax administration” posted on the agency’s website, payment systems have proven to be an effective tool in improving the efficiency of transactions, as the digital economy grows over the years.
“The adverse effect of the COVID-19 pandemic, has, more than ever, highlighted the importance of a digitized tax administration not only to ensure the safety of tax authorities and taxpayers from the threat of the virus, but also as a means to effectively collect taxes,” the report said.
It said as of July 17, there are 98 operators of payment systems in the country with certificates of registration from the Bangko Sentral ng Pilipinas, while 25 have provisional licenses.
According to estimates published in a study by Better Than Cash Alliance in 2019, the monthly transaction volume of digital payments reached 472 million, accounting for 8 percent of estimated total monthly volume of payments in the country.
In terms of value, the estimated monthly amount of digital payments was P1.1 trillion, sharing 18 percent of the total value of estimated monthly payments, the report said.
“Based on the estimate of the Better Than Alliance, the monthly transaction volume or payment transactions on taxes through digital payment reached 360,000 sharing 30 percent of total monthly volume for tax payments,” the NTRC study said.
“In terms of value, the estimated monthly tax collection through digital payment reached P160.8 billion or 89.5 percent of the P179.6 billion total monthly tax collection,” it added.
The publication pointed out bottlenecks such as internet connectivity issues, the lack of reliable and secure payment infrastructure and lukewarm attitude of the general public towards digital payment as cited in the 2018 Government E-payments Adoption Ranking study and the Financial Technology.
“There is also a need to ensure the efficient and effective implementation of payment systems involving cross-border online transactions, to ensure that nothing escapes the country’s taxation,” the NTRC study said.
“In advanced countries, payment systems, such as those provided by banks, are used as tools to properly capture the sale of cross-border digital services to overseas consumers,” it added.
The report also cited the Department of Finance which said that with the lower revenue expectations due to the pandemic, the increased use of digital technologies, along with strong macroeconomic fundamentals, can help the government quickly return to high growth once the health crisis is over.