STRONGER economic growth in the second half will be vital for the country’s two main revenue agencies to meet their recalibrated collection targets this year, even as both remain on track in the first semester.
‘We’re hoping for a higher GDP [gross domestic product] growth in the coming months because it significantly impacts VAT [value-added tax], percentage tax and other business taxes,’ Internal Revenue Commissioner Charlito Martin R. Mendoza told reporters last week.
To recall, the Development Budget Coordination Committee (DBCC) lowered the Bureau of Internal Revenue’s (BIR) revenue target by P38 billion to P3.393 trillion, while increasing the Bureau of Customs’ (BOC) goal by P7.2 billion.
Separately, Customs Commissioner Ariel F. Nepomuceno told reporters that the higher target took into account the weakening of the peso against the US dollar, expectations of economic growth and other macroeconomic factors.
‘But we can [reach the target],’ Nepomuceno said, noting that the BOC’s extra revenues of P11.8 billion could make up for the additional P7.2 billion needed from the bureau. ‘There’s still a lot of room for improvement.’
Revenue drivers
Mendoza said the BIR is banking on digitalization initiatives and taxpayer education programs to make tax compliance easier.
‘The idea is we want to make compliance easier for them. So when compliance is easier, it is easier for them to pay taxes and that translates to better revenue collection,’ the commissioner said.
‘Hopefully, [the government’s] infrastructure spending will improve and economic activities will accelerate in the coming months,’ he added.
The issuances of the contested letters of authority (LOAs) have also been reduced in the first semester since the suspension on its issuance was lifted in January.
‘I do not look at LOAs as primary revenue source. It should not be like that. I still look at voluntary compliance as our primary revenue source,’ Mendoza said. ‘If we can have less audits, less enforcement, that is better because that means our taxpayers are properly and voluntarily complying.’
Although the BIR’s lower revenue target would make it easier for the bureau to collect what’s due, Mendoza said the target itself is already a challenge because it is still high.
The goal still represents nearly a 10-percent growth from the P3.1 trillion the BIR collected last year, he noted.
‘It’s still a tall order, but we’re doing our best to meet our target. So far, we’re still on track,’ Mendoza said.
For the BOC, Nepomuceno said the bureau is reviewing the rate of assessment, or collections relative to the value of imports, as some ports may be applying assessment rates that are lower than warranted.
‘We can increase it without disregarding the transaction value regime right now,’ the BOC chief said, noting that any adjustments would be implemented gradually to avoid disrupting trade.
Misclassification, undervaluation and smuggling remain as key threats to the BOC’s revenue collections, although he said the agency has measures in place to address these leakages.
From January to May 2026, the BIR has raised P1.420 trillion, or 41.85 percent of its full-year target.
The BOC, meanwhile, collected P491.748 billion in the first half of the year, making up 48.63 percent of its goal for the year.
The DBCC lowered this year’s revenue target from P4.824 trillion to P4.807 trillion, of which the remaining P365.1 billion will come from non-tax revenues.
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