BIR Commissioner Kim Henares. INQUIRER FILE PHOTO
There were around 1.7 million self-employed professionals in the country who paid a total of P9.8 billion in taxes in 2010, or an average of only P5,764, according to Revenue Commissioner Kim Jacinto-Henares.
Henares said in 2011 that professionals, based on their income levels, should each be paying P100,000 in taxes on the average, indicating a 90-percent tax evasion rate among doctors, lawyers, accountants, engineers, architects and entertainers, among others.
Ideally, the Bureau of Internal Revenue (BIR) should be collecting P100 billion in taxes annually from these professionals, she said.
The discrepancies prompted Henares to issue in February 2011 Revenue Memorandum Order No. 3-2011 ordering lawyers, doctors, engineers and other taxpayers rendering professional services to be the first to be subjected to an audit to determine whether they paid the correct taxes in 2010.
Perennially undertaxed
She said the BIR would embark on a “name and shame” drive to get the country’s highest-paying and perennially “undertaxed” professionals to pay the correct taxes.
President Aquino cited the BIR figures in his 2011 State of the Nation Address and said that, “(I)f this is true, then they each must have earned only P8,500 a month, which is below the minimum wage. I find this hard to believe.”
“Today we can see that our taxes are going where they should, and therefore there is no reason not to pay the proper taxes. I say to you: ‘It’s not just the government, but our fellow citizens, who are cheated out of the benefits that these taxes would have provided,’” he added.
In March, Aquino made the same admonition before a group of businessman at the annual meeting of the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. in Pasay City as he expressed shock that only 105 of the FFCCCII’s 207 member firms and organizations had tax identification numbers (TINs).
Pay up
“I wonder what happened to the others,” the President said. “Of these 105 firms, only 54 filed tax returns. To make matters worse, 38 firms and organizations actually filed returns with zero tax due. That means that only 16 of the 207—or only around eight percent—of your member organizations paid taxes. The 6.6 [percent economic] growth rate did not seem to affect your members.”
As a response, FFCCCII president Tan Chin said in a message to the Inquirer, “In light of the good governance program led by our President, the federation will ask the entire Chinese community to be very diligent in paying their tax obligations.”—Inquirer Research