BIR collections fall short of DBCC targets by P47-B in Q1

Collections by the Bureau of Internal Revenue (BIR) from its operations amounted to P485.4 billion in the first quarter, about P47.2 billion or 8.9-percent short of the goal set by the Development Budget Coordination Committee (DBCC) as businesses avail of the provision allowing outright crediting of their input value-added tax on capital goods under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

In a report to Finance Secretary Carlos Dominguez III, the BIR said that although the first quarter tax collection from its operations fell short of the DBCC target of P532.6 billion, this amount is still higher by P32.4 billion or 7.2 percent from the P452.9 billion collected for the same period last year.

BIR Deputy Commissioner Arnel Guballa reported that the shortfall was due to businesses deciding to fully utilize their input VAT credits on purchases available to them under Section 35 of the TRAIN Law.

Prior to January 1, 2022, the Tax Code requires that input VAT from purchased capital goods with an aggregate acquisition cost of P1 million pesos and above, must be spread out over a period of 60 months beginning the month of purchase.

With the outright crediting of input VAT by businesses, the BIR incurred a shortfall of P17.4 billion in VAT collections and another P9.4 billion in income tax collections for the first quarter of 2022 alone as compared to the DBCC-set targets, Guballa said.

On the other hand, the Bureau’s collections from its non-BIR operations from January to March 2022 reached P18.1 billion, bringing its total collection for this period to P503.5 billion.

The total collection is higher by P33 billion or 7.0 percent from last year’s actual first-quarter collection of P470.5 billion, but lower by P48.3 billion or 8.8 percent from the DBCC target of P551.78 billion for this period.

However, compared to last year’s actual collected amount of P97.9 billion for the first quarter, the BIR’s collection this year of P113.5 billion from VAT is P15.6 billion or 16 percent higher, Guballa said.