The Bureau of Internal Revenue (BIR) has launched a digital tax payments system allowing Filipinos to conveniently pay their taxes online using the electronic funds transfer service PESOnet, in line with the Duterte administration’s goal to cut red tape and improve the ease of doing business to better serve the public and attract more investors.
Finance Undersecretary Antonette Tionko said the recent launch of the PESOnet-enabled tax payments service marks the start of the use of interoperable digital bills payment for taxes and other utilities in the country.
“Under this initiative, the BIR is the first government biller institution to pilot and adopt the interoperable digital bills payment service for tax collection,” Tionko said. “This will help achieve the Duterte administration’s goal of financial inclusion for all Filipinos while improving the ease of doing business in the country.
She said the Department of Finance (DOF), under the leadership of Finance Secretary Carlos Dominguez III, is providing the necessary support to the BIR and the Bureau of Customs (BOC) to improve the ease of doing business through the digitalization of these two revenue agencies.
Dominguez pointed out that this push for online tax payments is “in step with President Duterte’s goal of improving the lives of all Filipinos by making it easier for them to accomplish their official transactions and at the same time improve the ease of doing business, which, in turn, will attract more investments and create more jobs.”
“The goal of the PESOnet-enabled project is to set up an interoperable digital bills payment service that is safe, reliable, efficient, and will benefit a greater number of Filipinos,” Dominguez said.
According to Tionko, PESOnet will not only improve the efficiency of the collection of tax and non-tax revenues for the government, but will also facilitate sales for businesses because the service will make it more convenient for the public to pay their bills at lower transaction cost at any time of the day.
A Household Payments Baseline Survey conducted in 2016 showed that 73 percent of Filipinos pay their household bills (e.g. utility bills), and about 9 percent of them pay the government directly for taxes, social security contributions, business permit fees and licenses, and permit fees.
Both businesses and individuals make 4 million monthly payments to the government for taxes, business permit fees, licenses, and social security contributions with an estimated value of US$3.87 billion, the same survey showed.
Tionko said that with the soft launch of the digital tax payments service, the BIR will be the pilot “biller,” while the tax collection/payment will be the pilot “bill.”
The Land Bank of the Philippines (LandBank) and the Rizal Commercial Banking Corporation (RCBC) are the pilot participating banks that will process the electronic collections of the taxes.
Tionko said the DOF is working with the BIR to increase the number of participating banks that will process tax payments via PESOnet.
“The success of the pilot will allow the BSP to confidently approve the expansion of this service to all interested financial and commercial institutions,” Tionko said.
PESOnet is under the National Retail Payment System (NRPS) framework instituted by the Bangko Sentral ng Pilipinas (BSP).
The BIR’s digital tax payments service is part of the E-PESO project of the BSP, the Philippine Payments Management, Inc. (PPMI), and BSP-supervised financial institutions (BSFI) that is being implemented with assistance from the United States Agency for International Development (USAID).
Through the E-PESO project, the USAID is also assisting government institutions adopt digital payments for revenue collection and disbursement.
BIR Commissioner Caesar Dulay said that with the launch of the PESOnet-enabled service, the bureau “will able to service more taxpayers and comply with the mandate of the law on the ease of doing business.”
“And with great hope, we will be able to transition from a ‘Triple B Plus’ (credit rating) to perhaps an ‘A’-graded economy,” Dulay said at the soft launch of the PESOnet-enabled tax payments service last week.
Dulay was referring to the Philippines’ highest credit rating so far that it got from Standard & Poor’s Global Ratings (S&P), which is now at “BBB+.” This rating is two notches higher than the minimum investment grade of BBB and only a step away from the “A” rating accorded the world’s most stable economies.