Duterte urges Congress to adopt gross taxation

FILE: President Rodrigo Roa Duterte on November 20, 2019. ACE MORANDANTE/PRESIDENTIAL PHOTO

MANILA — President Rodrigo Duterte on Thursday called on Congress to adopt his proposed shift to a gross taxation system in the country from the present net tax collection scheme, to curb corruption at the Bureau of Internal Revenue (BIR).

In a chance interview, Duterte renewed his pitch for the computation of corporate taxes based on gross revenue rather than taxable net income, which is the current practice.

He reiterated that his suggested change in the computation of corporate taxes would remove the need for tax examiners.

“I’m challenging Congress now. Relay it to them now that if they want to stop corruption sa (in the) BIR, we adopt the gross instead of the net,” he said on the sidelines of an event at Malacañan Palace.

“Kasi ang gross, wala nang examiner. Pakita mo lang ‘yung resibo mo, kagaya sa value-added tax. Pakita mo lang nag-bayad ka, wala na. Kasi itong net, ‘yung may deduction, doon lalaro ang mga examiner. Kaya ‘yan, ‘yan silang yumayaman (There will be no examiner under the gross taxation scheme. Just show your payment receipt and then you’re done.

Under the net tax collection, there are deductions. That’s why examiners can earn money).

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The President earlier noted that the gross taxation system has already been adopted by several countries, such as Hong Kong, Singapore, and Japan.

Gross income tax is assessed against the money somebody earns and applies to income from a job, as well as to funds that are set aside in an estate or trust.

Net tax, on the other hand, is levied on production less subsidies received and is paid to the government less transfer payments.

In September, Finance Secretary Carlos Dominguez III said the government would form a group composed of top legal and economic officials who will look into Duterte’s proposal to adopt a new system of taxation.

However, changes in the country’s tax scheme would need Congress’ approval.

In his latest statement, Duterte guaranteed lawmakers that his proposed gross taxation system would end irregularities within the BIR “overnight.

”

“Kaya ako, challenge ko, (That’s why my challenge to) Congress and everybody — you want to end corruption in the BIR? We adopt the gross. Period. Tapos ang corruption overnight (The corruption will end overnight),” he said.