The Bureau of Internal Revenue (BIR)’s digital transformation program will be “fully functional and irreversible” to ensure the agency’s much improved services and highly efficient collection performance, which are both critical to the country’s sustainable recovery from the Covid-19 pandemic and President Duterte’s overriding goal of building the best possible future for Filipinos, Finance Secretary Carlos Dominguez III said Tuesday.

As a primary thrust of the Duterte administration, the BIR’s digitalization initiative will not merely involve the implementation of a state-of-the-art data management system, but will also strive to apply the “cutting edge in the application of new technologies to achieve the best revenue performance,” Secretary Dominguez said.

He said the grant agreement extended Tuesday by the United States to the Philippine government for the BIR’s Information Communication Technology Modernization Strategy and Data Center will provide much-needed financing assistance for pushing forward the revenue agency’s digital transformation.

“I thank the people and the government of the United States, represented here today by Chargé d’ Affaires John Law, for supporting our efforts to harmonize the Bureau’s information and communication technology infrastructure,” Dominguez said in this morning’s signing ceremonies for the grant agreement that was held at the Department of Finance (DOF) Office in Manila.

The agreement for the US$809,450 grant (equivalent to about P38.85 million) was signed by Secretary Dominguez for the Philippine government, and by Mr. Law of the US Embassy in Manila on behalf of the United States Trade and Development Agency (USTDA).

“Your support will make the BIR a more effective agency. It will keep the agency abreast with the rapidly advancing financial technologies. It will dramatically improve the agency’s organizational capacity and collection efficiency,” Secretary Dominguez said.

Mr. Law, for his part, said he is “confident that this USTDA grant will lead to, as Secretary Dominguez said, further efficiencies, improved performance, increased security, reduced costs, and greater transparency–all of which are not only vital to the BIR’s tax administration duties, but are extraordinarily important in further strengthening the confidence of the public in its government institutions.”

“This partnership for us illustrates our continued close collaboration on economic development and transparency, including, of course Philippine digital infrastructure modernization,” Mr. Law said. “The United States is proud and honored to be one of your partners in this effort.”

The US grant aims to assist the BIR in undertaking an in-depth technical assessment of its current ICT environment, developing an Enterprise Architecture roadmap/framework, and assessing the organizational framework of its Information System Group (ISG), including recommended restructuring and training programs.

Secretary Dominguez said the Philippines is looking forward to an enhanced cooperation with the US and other countries in the pursuit of the BIR’s comprehensive modernization effort.

“I assure you that the administrative reforms that we will be instituting in the Bureau of Internal Revenue, through your (the United States’) help, will be fully functional and irreversible,” Secretary Dominguez said.

The modernization of the BIR, along with the Bureau of Customs (BOC), has been the administration’s main goal since President Duterte took office in 2016 to dramatically improve their services and boost collection performance, Secretary Dominguez said.

He said COVID-19 has underscored the importance of rapidly upgrading the country’s digital transactions system, as well as the government’s revenue collection effort, which was well into the process of digitalization when the pandemic struck early last year.

Thus, even before the pandemic, the BIR’s digitization reforms helped it significantly improve the Philippines’ tax effort, with tax revenues as a share of gross domestic product (GDP) rising to 14.5 percent in 2019 from 13 percent in 2015.

This was the country’s best performance in more than two decades, Secretary Dominguez said.

He said the introduction by the BIR under Commissioner Caesar Dulay of additional electronic channels has made the filing and payment of taxes more accessible and convenient for taxpayers.

As a result, total revenues collected through digital channels reached P1.83 trillion in 2019, representing 84 percent of the total collections of the BIR for that year.

The amount collected from digital payment systems in 2019 was 54 percent more than the sum collected through the same channels in 2015. Electronic tax filers were 58 percent of the total filers in 2019 versus 25 percent in 2015.

Secretary Dominguez said that with this robust tax effort, the government was able to sustainably fund the President’s flagship program “Build, Build, Build,” provide more and better social services to our people, and face the pandemic with strength on the fiscal front.

“President Duterte has said that taxes are the lifeblood of government programs and public services. In this critical time, we need to boost and keep our lifeblood flowing. Now more than ever, we need more revenues to fund not only our COVID-19 response, but also our economic recovery program,” Secretary Dominguez said.

“A highly efficient revenue collection system, therefore, is critical to help us recover strongly from this pandemic and build back the best possible future for our people,” he added.

While revenue collections last year were understandably lower because of the pandemic-induced economic slowdown, the BIR still managed to surpass its adjusted collection target by taking advantage of the digital reforms it has been implementing to be able to collect taxes through electronic means, Secretary Dominguez said.

In 2020, 85 percent or P1.66 trillion of the total collections of the BIR was coursed through electronic channels, which was 44 percent higher than in 2015.

Also, almost 100 percent of the tax returns filed was done online last year.

“These figures are projected to dramatically increase in the coming years as the BIR accelerates its digital transformation,” Secretary Dominguez said.

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