BIR exec: Benchmarking can increase tax take

Benchmarking can help the revenue department to identify the companies’ performance in a certain industry, a factor that can help the department and the companies involve to increase their tax compliance.

According to the Bureau of Internal Revenue (BIR) in its report in the Regional Benchmarking Roadshow yesterday, benchmarking is a method adopted by the department to clearly determine the performance level of taxpayers in terms of tax compliance consistent with their line of industry.

The roadshow is instrumental in increasing the awareness among taxpayers on how they can contribute in reaching their targets as well as encourage them to keep up with, sustain or exceed the benchmark of their industry, said Nestor Valeroso, BIR deputy commissioner for operations, during the roadshow.

The BIR’s benchmarking roadshow was held at the Trade Hall of SM City Cebu and was attended by hundreds of taxpayers representing the various revenue districts in the province.

Through the method, the best practices of all the players in the industry are being gauged and compared to identify which practices are deemed best and useful in increasing tax compliance.

“We are here to make our taxpayers understand what their level is in terms of tax compliance. Also, we want to convince them (to remit exact taxes on time) because there is an (existing) deadline like the corporate quarterly income tax,” Valeroso said.

The best taxpayers are also identified through benchmarking by assessing these success indicators: profit margin rate, the net VAT due and the income tax due in relation to gross sales.

According to the report low-performing players or those taxpayers that consistently fail to meet and keep up with the approved benchmark in their industry are also identified. They are classified as high risk taxpayers (over 30 percent below the benchmark), middle risk taxpayers (16 to 30 percent below the benchmark) and low risk taxpayers (15 percent or less below benchmark).

These taxpayers will be the top priority and target of BIR’s enforcement actions.

Valeroso said he could not give the tax collections as of November because the department was still waiting for the quarterly corporate tax collections.
“We still can’t make any predictions because there are still other taxes (that) we have yet to collect. But our outlook (for this year) would be P1.620 trillion,” he said.