eBIR / Digital tax filing helps minimize errors & paperwork. Support the call for online tax systems to improve compliance.
The issue of tax non-compliance has been a perennial problem in the Philippines. Studies estimate that the tax gap, which refers to the difference between potential tax revenues and what is actually collected, is around 30-40% of total tax liabilities.
This represents billions of pesos in lost government revenue that could have been used to fund infrastructure, social services, and other public programs.
A major factor contributing to low tax compliance is the prevalence of a traditional and manual tax administration system. Processes like tax filing, payment, auditing and monitoring still rely heavily on paper documentation and face-to-face transactions.
This makes compliance difficult and inefficient for both taxpayers and tax authorities.
Transitioning to a digital tax administration system can help address these pain points and increase tax compliance. Here are some key ways how:
- Streamlined e-filing and e-payment / eBIR – By allowing taxes to be filed and paid online 24/7 through digital portals and platforms, the process becomes significantly more convenient for taxpayers. E-filing also minimizes errors and does away with paperwork.
- Data-driven risk profiling – A digital system allows the government to consolidate taxpayer data from various sources and analyze it using data analytics and AI. This enhances risk profiling so audits and investigations can be targeted at high-risk cases.
- Real-time monitoring and verification – Automated notifications and alerts through email, SMS and other channels can be used to remind taxpayers of deadlines, follow up on payments, and flag discrepancies or under-declaration early on. This closes monitoring gaps.
- Mobile apps and interfaces – Developing tax apps and mobile-friendly platforms allows taxpayers to access services and manage compliance even on-the-go through their smartphones or devices. This further expands reach and accessibility.
While transitioning to digital tax administration entails upfront investments in ICT infrastructure, platforms, and capability-building, the benefits of increased revenues, transparency, and taxpayer empowerment are significant.
The Ongoing Digital Transformation of BIR
The Philippines needs to ramp up its digitization efforts, drawing lessons from other countries that have successfully leveraged technology to strengthen tax compliance. A digital tax administration is ultimately an investment towards a more robust and resilient economy.
The digitalization of tax compliance procedures in the Philippines is slowly but surely underway. The Bureau of Internal Revenue (BIR) has been transitioning to online systems for filing taxes, paying dues, and other compliance activities.
For individual taxpayers, the eBIRForms facility allows electronic submission of tax returns like the annual income tax and other eBIR forms.
The Electronic Filing and Payment System (eFPS) and ePay channels enable online payment of taxes by individuals and corporations.
While online tax payment facilities are now widely available, e-filing adoption has been slower. Many taxpayers still manually file hard copies of tax returns through over-the-counter channels. But the BIR is encouraging gradual shift to e-filing.
How to support BIR’s digitalization drive
As taxpayers, we can support the BIR’s digitalization objectives by taking advantage of available online tax services. E-filing and e-payment will not only make compliance more convenient for us but also helps the BIR streamline its processes and reduce administrative costs.
Transitioning to fully digital may pose some initial challenges but the long-term benefits are immense. Online filing minimizes errors, speeds up processing, and enables real-time tracking and monitoring for the BIR. Let us embrace these digital channels and be partners in reforming our tax system.