The Bureau of Internal Revenue (BIR) is set to issue a directive for doctors, lawyers and other professionals to post their rates in a prominent place in their clinics and offices.
The directive is aimed at promoting transparency and discouraging tax evasion among self-employed professionals, a sector notorious for its tax evaders.
The disclosure of rates charged by professionals is expected to aid in tax audits conducted by BIR personnel.
Memo circular
Internal Revenue Commissioner Kim Henares said the BIR memorandum circular requiring the posting of rates was being drafted.
“We will be issuing the memo soon. This is part of the overall effort to curb tax evasion,” Henares told reporters.
The BIR is zeroing in on professionals, among several other sectors, as it aims to boost revenue collection.
Henares said there was a serious need to implement stricter measures against tax evasion because foregone revenue from the illegal activity was significant.
She said that out of the estimated 1.7 million professionals registered with the Professional Regulation Commission (PRC), only about 400,000 are registered with the BIR as taxpayers.
Moreover, those who are registered with the BIR are believed to be significantly underdeclaring their incomes.
The BIR earlier released a report showing that the average annual tax payment by self-employed professionals stood at less than P6,000 each.
The BIR believes that an average self-employed professional should be paying at least P100,000 in annual taxes.
Teachers pay more
A Department of Finance ad published in newspapers last month showed that 54 percent of all self-employed doctors, lawyers and accountants in Makati City, the country’s financial district, paid less than P35,000 in taxes in 2012.
The amount was less than the P35,952 that the government collected every year from a public school teacher earning P21,500 a month.
Doc’s P10 tax
The ad showed that there were 318 accountants who paid taxes last year in Makati. The top taxpaying accountant paid P4 million, while the one at the bottom of the list shelled out just P120.
The ad also showed that one doctor paid P10 in annual income taxes last year. Another doctor paid P82.50 in taxes, less than the price of a cup of coffee in some shops.
Out of the 534 lawyers in Makati, one paid just P200 in taxes. Another paid P475, “a small amount compared to what lawyers usually charge their clients.”
Henares said the BIR had asked the PRC to help it in its drive against evasion. In particular, the PRC is asked to require the submission of income tax returns for the renewal of professional licenses.
PRC to require ITRs
She said the PRC was expected to soon include income tax returns (ITRs) in the list of its requirements.
Efforts to curb tax evasion have been introduced amid the BIR’s assignment to collect P1.253 trillion in taxes this year to help the government afford its rising expenditure requirements.
The BIR’s tax collection target for the year is higher by 18 percent than the P1.06 trillion it collected last year.
Its collection goal for the year is meant to help the government keep its budget deficit at or below the ceiling of P238 billion.
The BIR accounts for nearly 70 percent of the national government’s revenue collection.