Tax agency shutters small firms due to delinquencies

THE Bureau of Internal Revenue (BIR) said it shut the operations of 70 establishments, mostly small- and medium-sized enterprises (SMEs) nationwide, for failing to pay correct taxes.

“There are more than 20 [firms] scheduled for closure. We’re only waiting for [the] proper time. The commissioner will go to Davao to witness [the] closure, and I will go to Zamboanga for the same purpose,” Deputy Commissioner Nelson Aspe said in reference to Oplan Kandado, the bureau’s campaign to close business establishments that fail to comply with tax laws.

The Oplan Kandado so far has temporarily closed tax-delinquent business establishments all over the country, including restaurants, hardware stores, big groceries, tire supply and auto shops, night clubs and trading firms. Sales of many of the companies run into billions of pesos.

The BIR said foreclosed businesses include those without bureau registration, those registered but do not issue sales invoices or official receipts, those that issue invoices and official receipts but do not file value-added tax (VAT) returns, those that don’t pay VAT at all and those with VAT returns but declare only about 30 percent of what they are supposed to pay.

Aspe said the guilty parties were given a chance to settle their tax deficiencies with the agency.

“As to penalty, reports by regional directors showed that about P90 million were collected from these closures. But that is not the real effect of Kandado, [which] is more of increase [in the] voluntary compliance especially in [the] area of [VAT] collection,” he said.

Revenues in the seven-month period slipped 4.1 percent to P644.1 billion from last year’s collection of P671.4 billion. In July alone, revenues reached P98.4 billion, or 3-percent lower than last year’s P101.4 billion.

The government incurred a funding shortfall of P34.6 billion last month, or 124.4-percent higher than the P15.4 billion in the same period last year.

The BIR, which accounted for about 80 percent of tax revenues, collected P433.2 billion at end-July, or 4.4-percent lower than last year’s P453.2-billion.

The government aims to keep its fiscal deficit at or below a P250-billion this year, or 2.5 percent of gross domestic product (GDP).

An indicator of economic performance, GDP is the amount of final goods and services produced in a country, while the deficit-to-GDP ratio is a key measure of how sustainable is the government’s funding shortfall.

On August 14, President Gloria Arroyo issued Executive Order 827 creating the Office of Senior Deputy Commissioner, and appointed Joel Tan-Torres, a former SGV partner, to man the new post.

Tan-Torres will be second-in-command after Commissioner Sixto Esquivias 4th.

Tan-Torres said he was brought in to help the BIR formulate its own image enhancement measures. –Lailany P. Gomez, Reporter, Manila Times