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The tax department in the Philippines does not collect VAT (value added tax) and excise tax as these are collected by the Bureau of Customs.
The BIR is considered to be the main revenue “earning” agency for the government of Philippines. Annual the bureau collects practically 80 percent of the total generated revenue. The BIR has monthly and annual targets for collection and this is determined by the Development Budget and Coordinating Council, which is an inter-agency council headed by the Department of Budget and Management.
History of taxation in the Philippines is not that old. Self assessment system for individuals and corporations was introduced as early as 1934 when the first Philippine Tax Code was enacted by the parliament. This code was immediately applied to income tax, corporation income tax, and inheritance tax. Later on the area of application was expanded and other national internal revenue taxes were encompassed.
The Withholding Tax System was introduced and implemented in 1951. Even today, this system is the main method of collecting income.
Today tax payers can directly pay taxes either to the BIR using conduits like RDOs or authorized banks. In the Philippines, individual tax returns have to be filed by April 15 of the following year for the previous calendar year. There is the option of paying and filing taxes electronically using the Internet banking through Electronic Filing and Payment System (EFPS). This system was introduced in 2001.
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