Tax bureau targets P86-B collections this month

The Bureau of Internal Revenue (BIR) aims to collect P86 billion this month, but expects an uphill battle to meet the target due to the income tax impact of storm damage to businesses towards the end of 2009. "Our April goal is P86 billion," BIR Commissioner Joel L. Tan-Torres told reporters on Thursday. For this quarter, he said the bureau aims to collect P233.6 billion. The bureau usually sets a high target for April, since the middle of this month is the annual deadline for income tax collections. But Mr. Tan-Torres reiterated that it may be difficult to meet the collection target this quarter, which is higher than the January-March collection goal of P157.7 billion. "It will be difficult, that is why we need all (the revenues) that we can get such as the VAT (value added tax) on tollways, withholding tax on campaign expenditures, and the tax liabilities of local government units," he said. He particularly explained that business losses from the storms that hit Luzon, particularly Metro Manila, in the last quarter of 2009 may dampen April collections. Specifically, losses sustained by storm-hit businesses may result in foregone corporate income tax revenues worth P7 billion-P9 billion. "There is also the impact of revenue-eroding measures," he added. Citing the latest preliminary tally, Mr. Tan-Torres said on Thursday that the bureau collected P56 billion last month against a target of P53.4 billion, while collections for the first quarter reached P171 billion, also exceeding the target. The BIR aims to collect P830 billion this year. VAT ON TOLL FEES He added that a technical working group, composed of representatives from the BIR, the Toll Regulatory Board (TRB) and tollway operators, will be formed to recommend the best way to implement the VAT on toll fees. "We decided we will settle the matter by creating a technical working group to ensure the smooth implementation of the VAT on toll fees," he said. "Things that will be considered are the convenience of the tollway user and price impact." The technical working group, he said, will have to submit its recommendations before the month ends since imposition of VAT on toll fees for private vehicles was deferred only until April 30. "That should be enough time. The VAT on toll fees should be implemented by April 30," he said. Late last month, the BIR issued Revenue Memorandum Circular (RMC) No.30-2010 which imposed the 12% VAT on toll fees for private vehicles, effective April 1. This was deferred, as the Finance and the Transportation departments agreed to give the TRB a month to come up with the mechanics for the imposition. The tax was supposed to be implemented in 2005, when the BIR issued RMC 52. The TRB, however, held off toll fee hikes incorporating the VAT, pending determination of whether toll operators could charge the tax. In December last year, BIR issued RMC 72-2009 which reiterated the validity of RMC 52, but this was deferred by the Cabinet. Mr. Tan-Torres added that the date for the imposition of VAT on toll fees for public vehicles has yet to be determined. He said the BIR expects to collect P1.3 billion per year from VAT on all toll fees. -- LDD, BusinessWorld