Tax effort declined to 10.67% in 2020

    Thing of the past. Bulk of tax transactions were done online last year as lockdown measures prompted the agency and the taxpayers to switch to digital payment. (PNA photo)

    The Bureau of Internal Revenue’s (BIR) tax effort decreased to 10.67 percent in 2020, as tax collections fell due to the economic impact of the coronavirus disease 2019 (COVID-19) pandemic, according to a statement released by the Department of Finance (DOF) yesterday.

    Caesar Dulay, BIR commissioner, said the share of tax collections to economic output was lower compared to the 11.2 percent recorded in 2019.

    The DOF said based on preliminary data as of January 8, the total of P1.94 trillion collected by the BIR is 15.14 percent over the revised 2020 goal of P1.68 trillion set by the Development Budget Coordination Committee in July last year.

    However, it was about 11.23 percent less than the actual collection of P2.19 trillion in 2019.

    Carlos Dominguez, DOF secretary, said the decrease in BIR collections in 2020 compared to the previous year was understandable, considering the adverse economic impact of the pandemic and the contraction of the gross domestic product (GDP) by about 10 percent that year.

    “This coming year, I think, will be continuously challenging but I’m very happy the way BIR has responded to this crisis and had not given up,” Dominguez said following Dulay’s report on the BIR’s 2020 performance.

    “Basically, your collections went down almost exactly as the GDP contracted, around 10 percent. That’s about right. In other words, you haven’t let up on the pressure. The performance relative to 2019 is still the same even if the collections are lower. It was lower because the GDP dropped,” Dominguez added.

    A huge chunk of the taxes collected in 2020, as well as tax returns filed, were done online, thus the BIR was able to overshoot its revised collection target last year despite the limitations brought about by COVID-19 induced lockdown measures.

    The DOF said P1.67 trillion or 86 percent of the P1.94 trillion in total taxes collected by the agency were coursed through electronic payment channels.

    Of the total amount collected through e-channels last year, P4.98 billion of the payments were from the additional digital system PayMaya, Dulay said.

    He also said 21.5 million or 94 percent of the 22.86 million tax returns filed in 2020 were also done online, while only 1.38 million or 6 percent were filed manually, given the mobility restrictions imposed by the government since March 2020 to curb the spread of COVID-19.

    He added that in 2020, 4.37 million new business taxpayers registered with the BIR, representing a 6.15 percent increase from the previous year’s number of 4.11 million.

    Meanwhile, Dulay said he is optimistic the BIR this year “will do good,” based on the recent announcement by the Bangko Sentral ng Pilipinas that the country is on the road to economic recovery.

    “We will continue rowing and plowing and collecting these taxes,” Dulay said.