President Rodrigo Duterte on Thursday called on Congress to adopt his proposed shift to a gross taxation system from the net tax collection scheme to curb corruption at the Bureau of Internal Revenue.
He renewed his pitch to compute corporate taxes based on gross revenue rather than taxable net income, which is the practice now.
He said his suggested change would remove the need for tax examiners.
“I’m challenging Congress now. Relay it to them now that if they want to stop corruption in the BIR, we adopt the gross instead of the net,” Duterte said.
“There will be no examiner under the gross taxation scheme. Just show your payment receipt and then you’re done,” Duterte said.
“Under the net tax collection, there are deductions. That’s how examiners earn money.”
Duterte earlier said the gross taxation system had already been adopted by countries such as Hong Kong, Singapore and Japan.
Gross income tax is assessed against the money someone earns and applies to income from a job, as well as to funds that are set aside in an estate or trust.
Net tax, on the other hand, is levied on production less subsidies received and is paid to the government less transfer payments.
In September, Finance Secretary Carlos Dominguez III said the government would form a group composed of top legal and economic officials who will look into Duterte’s proposal to adopt a new system of taxation.
But any change tax scheme will need Congress’ approval.
In his latest statement, Duterte guaranteed that his proposed gross taxation system would end the irregularities within the BIR “overnight.”
“That’s why my challenge to Congress and everybody is, you want to end corruption in the BIR? We adopt the gross. Period,” Duterte said.
