BIR mulls VAT on tollways

MANILA, Philippines - The Bureau of Internal Revenue (BIR) is determined to slap the controversial value-added tax (VAT) on tollways which has been deferred by Malacañang.

BIR Commissioner Joel Tan-Torres said the BIR still wants to pursue the tax, saying that this would generate an estimated P2.5 billion in revenues yearly.

Malacañang has deferred the imposition of VAT on toll firms, following a similar action in 2005.

Tan-Torres said there is legal basis in slapping the VAT on toll firms, citing Section 108 of the Tax Code which said that a 10 percent VAT must be levied on the sale or exchange of services, including the use or lease of property.

However, the BIR chief could not yet determine when it can fully implement the toll VAT given the hiccups encountered in implementing it.

At present, the Manila North Tollways, majority owned by Metro Pacific Investments Corp., operates the North Luzon Expressway while the South Luzon Expressway is run by the Philippine National Construction Cor.

Both operators said VAT on toll firms would translate to higher toll fees for motorists.

The BIR, citing Section 108 of the Tax Code, released in 2005 a regulation imposing a 10 percent VAT on tolls but this was never implemented. The agency was also even supposed to increase the toll fees in November 2005 but this also did not take effect.

A VAT on toll firms is one of the measures the BIR is looking at to boost state coffers.

Last year, the BIR’s full-year revenues amounted to P742.55 billion, still P55 billion short of the revised 2009 target of P798 billion.

In December alone, the BIR generated P61.55 billion during the month or higher by P1.52 billion.

This year, the government is tasked to collect P830 billion or higher than the previous goal of P875 billion.