BIR, BoC upbeat on revenue targets

The Philippine government’s main revenue-generating agencies are confident of meeting their revised full-year targets, after posting higher collections in the first half of the year.

Bureau of Internal Revenue (BIR) Commissioner Charlito Martin R. Mendoza said faster economic growth in the second half of the year will boost tax collection.

“Hopefully, our infrastructure spending will improve, and our economic activities will accelerate in the coming months,” Mr. Mendoza told reporters last week.

“We are hoping for a higher gross domestic product growth in the coming months because it really has an impact on value-added tax, percentage tax and other business taxes,” he added. 

The Philippine economy expanded by a slower-than-expected 2.8% in the first quarter, the weakest growth since the pandemic and well below the 5.37% expansion in the same quarter a year earlier.

The Department of Economy, Planning, and Development earlier said the lingering effects of last year’s corruption scandal and the escalation of the Middle East conflict may have weighed on growth in the second quarter. However, it expects a recovery in the second semester amid a pickup in public spending.

Tentative data from the BIR showed that it collected PHP 1.65 trillion in the first six months, up 5.33% from PHP 1.567 trillion a year earlier.

“But it is still very tentative… We are still reconciling; it is not final yet. But definitely higher (than last year). Although our growth rate for June is not as high as that of May, which was 15%,” Mr. Mendoza said.

“But you have to understand that in June last year we had the deadline for the estate tax amnesty. So, the revenues from the estate tax amnesty came in,” he added.

The BIR’s first-half collections accounted for 48.6% of the Development Budget Coordination Committee’s (DBCC) downwardly revised PHP 3.393-trillion collection target for 2026.

Mr. Mendoza admitted the revised collection target remains a “tall order.”

“The target is around PHP 3.4 trillion. We collected PHP 3.1 trillion last year. That is still close to a 10% growth, so it is still a tall order, but we are doing our best to meet our target,” he said. “So far, we are still on track especially with the PHP 38-billion reduction in our target.”

Mr. Mendoza said the agency hopes to book strong collections from nonresident digital service providers and excise taxes, among others.

Higher BOC target

Meanwhile, Bureau of Customs (BoC) Commissioner Ariel F. Nepomuceno said the DBCC may have considered recent foreign exchange (forex) movements and other macroeconomic factors when it hiked the agency’s collection target by P7.2 billion.

The DBCC raised the BoC’s 2026 revenue target by 0.7% to PHP 1.011 trillion from PHP 1.003 trillion previously. This as it adjusted the peso-dollar exchange rate assumption to PHP 60-PHP 62 this year from PHP 58-PHP 60 previously.

The peso traded above PHP 61 per dollar in July. It closed at PHP 61.587 against the dollar on Friday, strengthening by 3.3 centavos from its PHP 61.62 finish on Thursday.

“Primarily, it is the changes in peso-dollar exchange rate and other macroeconomic factors, plus they foresee the growth of the economy,” Mr. Nepomuceno told reporters last week.

“But we can still achieve it, but our surplus of PHP 11.8 billion will just be used to cover for that additional PHP 7 billion,” he added, referring to the amount by which first-half collections exceeded the agency’s target.

In the first half, BoC collections rose by 7.2% to PHP 491.75 billion from PHP 458.77 billion a year earlier. Collections also exceeded the P480.27-billion target for the period by 2.4%.

“There is still more room for improvement, such as the rate of assessment or the total collection over the total value of imports,” Mr. Nepomuceno said.

The Customs chief said his review of average assessment rates over the years showed that the ratios at some ports were low and could be improved without departing from the transaction value regime.

“There are specific imported items that I know if we increase the rate of assessment, we will lift the collections. But you have to do that incrementally,” he said.

“Remember, we are in a transaction value regime, meaning we have to honor what they claim, based on their documents, are the actual prices they paid for their imports. We have reference values, but we will respect their documents,” he added. — Justine Irish D. Tabile