People line up to file their income tax returns at the Bureau of Internal Revenue office in Intramuros, Manila, April 18. — PHILIPPINE STAR/ RUSSELL A. PALMA

THE Bureau of Internal Revenue (BIR) said on Monday that small taxpayers will not bear the brunt of its enforcement actions, adding that its efforts will be focused on medium-sized and large companies.

“In this administration, we will really focus on large taxpayers and medium taxpayers,” BIR Commissioner Lilia Catris Guillermo said at the Senate budget hearing for the Department of Finance (DoF). “The ease of paying taxes bill will segment taxpayers into small, medium and large, and the requirements for small taxpayers will be simplified.”

“We really will not hold anything against small taxpayers; instead, we will give them good service so that their businesses will grow – only then will we (exert more effort in) taxing them,” she added.

Senator Rafael T. Tulfo, speaking at the hearing, alleged that the bureau is placing undue burdens on pedicab drivers, tricycle drivers, thrift stores, and bloggers.

“Whenever the BIR needs to increase tax collection, it’s the poor that are being targeted,” he said. “If the BIR really wants to raise collections, why doesn’t it target the rich, like oil companies.”

Mr. Tulfo noted in particular the proliferation of smuggled oil products, which generate no taxes for the government.

“The basic principle of taxation is to be just and fair, so it’s not true that small taxpayers are our focus. In fact, we have (an agency) which is focusing on large taxpayers,” Ms. Guillermo said, referring to the BIR’s Large Taxpayers Service.

“Small taxpayers are not being singled out; everyone must issue receipts, whether small, medium or large taxpayers,” she added. However, she specified that the agency is not strict with pedicab drivers’ transactions.

Senate Minority Leader Aquilino Martin L. Pimentel III said “the impression is that we would rather squeeze… those who want to follow the law since they are the ones in our database.”

“But the brave syndicates who have not been paying tax for years remain out of the system, undetected, unfelt by the revenue collection agencies,” he added in a mix of English and Filipino.

Ms. Guillermo said taxpayers currently filing manually are slowly being incorporated into the database to allow them to be served more efficiently in the future.

Finance Secretary Benjamin E. Diokno said the efforts to collect such data are part of a broader effort to expand the tax base. “When you have a broader base, you can lower the tax rate because revenue is rate times base.”

Mr. Tulfo said he has been receiving many complaints from business owners, particularly Chinese-Filipinos in the provinces, who are visited by revenue agents presenting letters of authority (LoA) as a preliminary to an audit. 

“Most of the time, once a business is issued an LoA, this means money for the (official),” he said. “On the other hand, the big companies are often not (targeted). They will instead have discussions on the side (with the auditor)… where they can make arrangements. Sorry again for saying this, but this is the reality.”

Ms. Guillermo said the BIR’s digitalization efforts will resolve such issues.

“Our first program right now is digitalization, and new audits are currently suspended because our plan is for LoAs to become automated,” she said. “These can no longer be issued by auditors whenever.”

“We have a risk-based criteria (for determining which taxpayer to audit), and we are already preparing the program for this. What the auditors are doing now is clearing their backlog (of) prescribing… and that is being monitored properly using technology,” she added.

The DoF’s proposed 2023 budget allocates the most funding to three of the government’s leading money-generating agencies, with the BIR getting P13.1 billion, the Bureau of Customs P6 billion, and the Bureau of the Treasury P4.2 billion. — Alyssa Nicole O. Tan