Digitally enhanced system boosts tax take

June 25, 2020

Finance Sec. Carlos Dominguez III has lauded the Bureau of Internal Revenue for its ongoing digital transformation efforts that has dramatically improved services to taxpayers while supporting the country’s strong fiscal position through a robust collection performance ahead of the coronavirus crisis.

Dominguez said the digitally enhanced administrative reforms being undertaken by the BIR are now beginning to pay off by wa2019 y of significantly improving the country’s tax effort from 13 percent of gross domestic product in 2015 to 14.5 percent of GDP in 2019, and encouraging the more convenient and efficient electronic filing of tax payments.

While the government expects lower revenue collections this year because of the economic devastation wrought by the coronavirus disease 2019  pandemic,

Dominguez said the country can count on its strong macroeconomic fundamentals and increased use of digital technologies for a quick return to the path of high growth once the global health crisis is over.

He said the BIR is well prepared for the onset of the “new normal” way of contactless transactions, with the digital transformation process it has set into motion serving as the standard for all other government agencies to emulate.

“The BIR has improved internal processes, raised efficiency levels, and delivered much convenience to our clients—the taxpayers. The men and women of the BIR deserve to be congratulated for all that has been achieved so far. I am confident that more improvements are in store because the Bureau has also demonstrated the ambition and commitment that are key to any successful digitalization reform,” he said during the Bureau’s awarding ceremony for the winners of its Hack-A-Tax Innovation challenge.

Led by BIR Commissioner Caesar Dulay, the Bureau launched the Hack-A-Tax Innovation competition in October last year among members of the information technology and software development community–including students, startups, and young developers–to come up with front-end applications that would facilitate digital taxpayer transactions with the Bureau.

The challenge for the competitors was to simplify and streamline frontline services, including taxpayer registration, filing, payment and customer service processes, that cater to micro and small enterprises, including self-employed individuals and professionals.

The BIR had received 175 proposals for the competition.

The DoF chief said the Hack-A-Tax challenge is “emblematic of the Bureau’s achievements in digital transformation and of how it seeks to continue to innovate to improve both tax administration and the taxpayer experience”.

He noted, for instance, that through the use of the electronic tax filing option, the BIR not only helped improve its collection performance, but it was also able to eliminate the long queues and large crowds jamming its offices during the annual tax payment deadlines.  

He noted that in 2019, tax payments collected through electronic channels amounted to P1.8 trillion in 2019, representing 84 percent of the total BIR collections for the year.

Payments collected through additional electronic channels targeted for small businesses and individual taxpayers amounted to P1.2 billion in 2019, representing a 94 percent increase from the previous year.

He said the government’s robust revenue performance in 2019 placed the country in a very good fiscal position by the time the Covid19 pandemic struck the country early this year.

“The experience of dealing with this contagion will definitely hasten our digitalization in many aspects of our national life. The Philippine government is gearing up for this,” Dominguez said.

He congratulated the participants and winners of the competition and thanked the BIR’s private sector partners in this initiative, namely, Paymaya, led by its founder and chief executive officer  Orlando Vea; and the United States Agency for International Development in the Philippines represented by mission director Lawrence Hardy II.

The top three winners of the competition, which were selected from a roster of 12 top finalists were ChatGenie, grand prize; eConnect, 1st runnerup; and Third Channel, 2nd runnerup.

The winners received the following: P300,000 for the grand prize, P200,000 for the 1st runner up, and P100,000 for the 2nd runner up.

ChatGenie also won P50,000 as recipient of the PayMaya Special Award.

The winners can also potentially be admitted to partner startup incubator programs or receive seed funding from venture capital partners.

During the event, Dominguez also thanked Developers Connect Philippines for sharing its expertise and resources to help the government address the Covid-19 emergency, particularly in coming up with the Rapid Pass system, the Relief Agad online platform, and the Hack-A-Tax challenge.

“In the coming years, we will look back to this initiative as an important leap in the use of web-based and mobile apps in making filing of returns and payment of taxes more efficient and convenient,” he said.

“The taxes that BIR collects are critical to fueling our economic recovery. These will help fund our massive infrastructure investments that will create jobs for our people and increase spending on education and health care to improve the competitiveness of our workforce,” he added.

The other private sector partners that supported the Hack-A-Tax initiative were Microsoft Philippines, Oracle Philippines, Amazon Web Services, Google Philippines, Talino Venture Labs, Union Bank of the Philippines, and Golden Arches Development Corp. (McDonalds Philippines).

Hack-A-Tax was also supported by the Tax Management Association of the Philippines, Center for Strategic Reforms Philippines, and the Ateneo de Manila University.