Gov’t entitled to around P7.5B in taxes from PS-DBM deals, says Drilon

MANILA, Philippines — The government is entitled to collect an estimated P7.5 billion in income taxes from the P42 billion worth of supply contracts awarded by the Procurement Service of the Department of Budget and Management (PS-DBM), Senate Minority Leader Franklin Drilon said.

“We should not forget that P42 billion was transferred by the Department of Health to PS-DBM which was flagged by the COA (Commission on Audit). We assume that the P42 billion was totally disbursed and paid to the suppliers to purchase face masks, face shields, PPEs (personal protective equipment) and other medical supplies,” Drilon said during Thursday’s Senate blue ribbon committee hearing.

“How much income taxes were paid by the suppliers who got a total of P42 billion in supply contracts from the government? In my computation, there is a potential tax intake for income of approximately P7.5 billion,” he added.

Drilon said his computation is still subject of further verification but stressed the need to look into the taxes paid by the suppliers tapped by the PS-DBM.

“I’m not saying that this is the tax due, I am just saying that potentially, there is an income tax of P7.56 billion as a result of P42 billion contracts awarded by PS-DBM,” he added.

Drilon explained how he arrived at the amount of potential income taxes that the government should have received.

“How did we arrive at that? P42 billion, if you deduct from P42 billion 40 percent, which is the optional standard deduction allowed by the BIR (Bureau of Internal Revenue) for corporations, you would have a presumptive net taxable income of P25.2 billion,” Drilon said.

“At a 30-percent income tax rate, 30 percent of P25 billion is P7.5 billion,” he added.

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