BOC to generate bulk of VAT revenues

The Bureau of Customs (BOC) is expected to generate the bulk of incremental revenues from the value-added tax (VAT) coming mainly from imported oil and petroleum products.

The VAT collection targets of the Bureau of Internal Revenue (BIR) and the BOC have been revised by the Development Budget Coordinating Committee (DBCC) to factor in the expansion of the BOC’s tax base.

Based on the original targets set by the DBCC, the BIR was expected to generate the bulk of incremental VAT revenues as the rate was adjusted from 10 to 12 percent.

However, since incremental revenues would mostly come from imported petroleum products, the DBCC said the BOC’s collection target should actually be higher than the BIR.

The government was expecting to get at least P75.79 billion in incremental taxes from the VAT rate adjustment and only about P28 billion was expected to come from the BOC.

However, prodding from Congress persuaded the DBCC to reconsider its targets for the BIR and the BOC.

During the DBCC meeting, Rep. Joey Salceda said the BOC’s target collection should be higher than projected since most of the new sectors now covered by the VAT were imported petroleum products.

As a result, the BOC was now expected to generate P55.43 billion of the total P75.79 billion incremental revenues resulting from the VAT rate adjustment.

On the other hand, the BIR was only expected to generate P20.36 billion of the incremental revenues from the new law.

By 2007, the revised DBCC targets showed that the government would generate incremental revenues of P89.42 billion, and P60.75 billion would come from the BOC, while P28.67 billion would be from the BIR.

In 2008, the BOC would generate P65.1 billion of the projected P98.41 billion total incremental revenues, and the BIR would generate P33.31 billion.

The BOC’s target incremental VAT collections was set at P70.3 billion in 2009 and the BIR’s was set at P24.78 billion of the P95.16 billion total.