MANILA, Philippines – The Philippines is lagging behind its Asian neighbors in utilizing information and communications technology (ICT) for its tax administration.
Based on a report released by the Asian Development Bank (ADB), personal income tax statements that are electronically-filed account for only 0.3 percent of the total filed in the Philippines, as against Malaysia, (69 percent), Thailand, (45 percent), India, (26 percent) and Hong Kong (14 percent).
The Philippines is also behind Japan, (44 percent), New Zealand, (71 percent), Taipei, (82 percent), Korea, (87 percent), Australia, (92 percent) and Singapore, (96 percent).
For corporate income tax, a mere six percent is electronically-filed in the Philippines as against India’s 100 percent, Taipei’s 98 percent, Malaysia’s 49 percent and Thailand’s 10 percent.
Curiously, the value-added tax accounted for highest percentage of electronically-filed returns for the Philippines at seven percent but it is still the lowest among its Asian neighbors, Singapore (100 percent), Taipei (94 percent), Korea (79 percent) and Thailand (14 percent).
What may be the edge in the Philippines’ tax administration environment is the use of mobile phone technology for tax payments. In Quezon City, for example, real estate tax can be paid through a mobile platform introduced by telecommunications company (telco).
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“In the Philippines, individual taxpayers can pay tax through an electronic cash service provided by a mobile phone company. Under this electronic cash service, consumers without a bank account can deposit electronic cash at mobile phone shops or shopping center. This method can enhance tax payments among small taxpayers in developing economies,” Satoru Araki, the principal author of the report, said.
The ADB report, however, showed that the Philippines has practically all the available methods for tax payments as the rest of Asia, which include in-person transaction at tax offices, through agents, internet banking, direct debit through a partner bank, and through kiosk facilities. However, its full utilization is the lowest.
One of the reasons for the low utilization is the limited access for example to the Internet or computers, particularly for individuals, and the high cost of digital signature, which ensures the authenticity of taxpayer’s identity.
Region-wide, all tax administrations have embraced ICT as a tool to improve every aspect of tax administration, including taxpayers services, tax audit, tax collection, and other internal management processes.
The ADB report, which was assisted by the Organization for Economic Co-operation and Development (OECD), said the utilization of ICT helps improve the performance of tax administration bodies as well as reduce tax administration costs.
It also reduces taxpayers’ compliance costs and enhances interaction between taxpayers and tax administration entities.
“A tax information management system can deal with a huge amount of data related to taxpayers, not simply for storage but also for analysis,” the report said, adding that another benefit was information sharing between sections of the tax administrator as well as other government agencies.
ICT-based tax payment methods not only reduces the risk of moving around with a large amount of cash, it likewise reduces labor costs and time lost. Business hours are limited for both government and banks, which is surpassed by ICT-driven platforms.
“For tax administration bodies, handling cash at tax offices is not only labor and resources intensive, but also invites a risk of corruption,” the ADB report said.
