Announcement of Philippines to Computerize Tax Regime on May 12, 1993

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 93/91EAP Contact: Erin Burns (202)458-2210 External Affairs - EAPVP PHILIPPINES TO COMPUTERIZE TAX REGIME WASHINGTON, May 12, 1993--The Philippines,is embarking on a program to integrate and computerize its tax system in order to increase government revenue. The program follows a number of procedural reforms in the tax system implemented since 1986. The World Bank is providing a loan of $63 million to help finance the tax computerization project. The project will focus on providing modern, computerized tax systems for the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), which together account for most tax collection in the Philippines. The new systems will decentralize the processing of tax returns, improve access to tax information and services and provide taxpayer records. It will also allow the two Bureaus to cross-check information, thus increasing tax compliance and will accelerate the processing of taxes and returns. The current tax system is slow and overburdened, and only a fraction of returns are computer- processed. Technical assistance during project preparation has already helped to improve tax procedures, regulations and legislation. Once fully implemented, tax computerization will increase government revenue by making it more difficult to avoid or underpay taxes. Currently, it is estimated that only 60 percent of potential tax is collected in the Philippines. Taxes account for 83 percent of total government revenue in the Philippines. Consequently, reducing the level of tax evasion would substantially increase government revenue, which is critical for the country's economic development. Increasing tax revenue would also help reduce the fiscal deficit and the debt burden faced by the government. Specifically, the project will provide the hardware, tax software, complementary equipment, training, initial operation support and technical assistance needed to establish a modern tax collection system. The project is modeled on a similar program in Thailand begun in 1991 and supported by a Bank loan of $32 million. The total cost of the project is approximately $106 million. Boc and BIR are providing $15 million and $28 million in project financing respectively. The Bank loan is for 20 years, including five years of grace, at the Bank's standard variable interest rate, currently 7.43 percent. NOTE: Money figures are expressed in U.S. dollar equivalent.