Philippines Government Loses P242 Billion Yearly Through Tax Evasion

by Mary Swire, Tax-News.com, Hong Kong

23 November 2001

The Department of Finance in the Philippines recently presented a new study to Congress which revealed that corporations and individual tax evaders are cheating the government out of around P242 billion per year.

According to the DOF findings, which were based on data collected over the past three years, approximately 69.85 billion pesos are lost each year in leakage from the value added tax system. Corporate tax evasion accounts for the loss of P59.3 billion, and P98.95 billion is lost from government revenues as the result of individual tax evasion.

The Finance Department found that in nearly all areas of tax collection there were leaks and loopholes which allow Filipino citizens and companies to evade taxes, and in addition to the areas mentioned above, also revealed shortfalls in excise tax, documentary stamp duty, withholding tax, fringe benefits tax, gross receipts tax, and insurance tax collections.

Speaking to the Inquirer News Service in the Philippines, a ranking DOF official said that individuals and corporations were avoiding paying the full amount of tax by under-declaring income, failing to file income tax returns, and by overstating allowable deductions. 'If only the government could collect these revenue losses, then we do not even have to worry about the (budget) deficit,' he said wryly.

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