The Bureau of Internal Revenue (BIR)’s digital transformation program will be “fully functional and irreversible” to ensure the agency’s much improved services and highly efficient collection performance, Department of Finance secretary Carlos Dominguez III said Tuesday, Feb. 16.
Dominguez said the BIR’s digitalization initiative will not merely involve the implementation of a state-of-the-art data management system, but will also strive to apply the “cutting edge in the application of new technologies to achieve the best revenue performance.”
Dominguez said the grant agreement extended Tuesday by the United States to the Philippine government for the BIR’s Information Communication Technology Modernization Strategy and Data Center will provide much-needed financing assistance for pushing forward the revenue agency’s digital transformation.
“I thank the people and the government of the United States, represented here today by Chargé d’ Affaires John Law, for supporting our efforts to harmonize the Bureau’s information and communication technology infrastructure,” Dominguez said during the signing ceremonies for the grant agreement that was held at the DOF office in Manila.
The agreement for the $809,450 grant (equivalent to about P38.85 million) was signed by Dominguez for the Philippine government, and by Law of the US Embassy in Manila on behalf of the United States Trade and Development Agency (USTDA).
“Your support will make the BIR a more effective agency. It will keep the agency abreast with the rapidly advancing financial technologies. It will dramatically improve the agency’s organizational capacity and collection efficiency,” he added.
“This partnership for us illustrates our continued close collaboration on economic development and transparency, including, of course Philippine digital infrastructure modernization,” Law said. “The United States is proud and honored to be one of your partners in this effort.”
The US grant aims to assist the BIR in undertaking an in-depth technical assessment of its current ICT environment, developing an enterprise architecture roadmap/framework, and assessing the organizational framework of its Information System Group (ISG), including recommended restructuring and training programs.
Dominguez said the Philippines is looking forward to an enhanced cooperation with the US and other countries in the pursuit of the BIR’s comprehensive modernization effort.
“I assure you that the administrative reforms that we will be instituting in the Bureau of Internal Revenue, through your (the United States’) help, will be fully functional and irreversible,” he said.
Dominguez said the Covid-19 has underscored the importance of rapidly upgrading the country’s digital transactions system, as well as the government’s revenue collection effort, which was well into the process of digitalization when the pandemic struck early last year.
Even before the pandemic, the BIR’s digitization reforms helped it significantly improve the Philippines’ tax effort, with tax revenues as a share of gross domestic product (GDP) rising to 14.5 percent in 2019 from 13 percent in 2015.
This was the country’s best performance in more than two decades, Dominguez said.
He said the introduction by the BIR under commissioner Caesar Dulay of additional electronic channels has made the filing and payment of taxes more accessible and convenient for taxpayers.
As a result, total revenues collected through digital channels reached P1.83 trillion in 2019, representing 84 percent of the total collections of the BIR for that year.
The amount collected from digital payment systems in 2019 was 54 percent more than the sum collected through the same channels in 2015. Electronic tax filers were 58 percent of the total filers in 2019 versus 25 percent in 2015.
While revenue collections last year were understandably lower because of the pandemic-induced economic slowdown, the BIR still managed to surpass its adjusted collection target by taking advantage of the digital reforms it has been implementing to be able to collect taxes through electronic means, Dominguez said.
In 2020, 85 percent or P1.66 trillion of the total collections of the BIR was coursed through electronic channels, which was 44 percent higher than in 2015.
Also, almost 100 percent of the tax returns filed were done online last year.
“These figures are projected to dramatically increase in the coming years as the BIR accelerates its digital transformation,” Dominguez said.