Accountants told: Pay taxes, don’t abet cheating

Finance Secretary Cesar Purisima: Don’t cheat

MANILA, Philippines—Finance Secretary Cesar Purisima has challenged accountants in the country to enhance the integrity of the accounting profession by paying the right taxes and avoiding selling their signatures to tax-cheating corporate entities.

Purisima, who used to be in the accounting profession prior to his stint in government, said that government records show that there is a small number of accountants filing income tax returns. Moreover, a significant number of those paying taxes are believed to be underdeclaring their incomes.

“You have a noble profession. I used to practice the same profession and it’s time for us to work together to bring this profession to a higher level,” Purisima, who was chairman and managing partner of renowned accounting firm SGV & Co., said in a speech during the induction ceremonies for the country’s new certified public accountants.

Purisima said the government remains confronted with the problem of rampant tax-cheating among self-employed professionals, including accountants.

He cited data from the Department of Finance showing that only 297 accountants in Makati City filed income tax returns and paid taxes in 2012. He believes there are significantly more accountants in the city than 297.

He said that of these taxpaying accountants in Makati City, more than half, or around 170, paid less than P60,000 in taxes each for that year.

Purisima also raised the suspicion that many accountants help facilitate the underdeclaration of income by tax-cheating corporate entities.

He blamed tax evasion and underdeclaration of incomes for the still low tax effort of the Philippines.

The Philippines’ tax effort, the ratio between tax and import-duty collection and the economy’s gross domestic product, currently stands at 13 percent, which Purisima said is one of the lowest in Southeast Asia.

Although tax and import-duty collection rises year after year in terms of absolute amount, the tax effort has hardly improved over the years because the growth in collection of taxes and import duties sometimes fails to catch up with the growth of the economy.

Purisima said the government has a goal of increasing the tax effort, a closely watched indicator of creditworthiness, to 16 percent by 2016. Prior to the Asian crisis of the late 1990s, the country’s tax effort stood at 17 percent.