Bureau of Internal Revenue (BIR) Commissioner Romeo “Jun” Lumagui Jr. took office during a pivotal time when the Philippines urgently needed financial resources to maintain its rapidly growing economy, one of the fastest-developing in the world.

A seasoned tax lawyer, he previously served the BIR in multiple roles, including Deputy Commissioner, technical assistant in the Office of the Commissioner, and head of tax fraud divisions in regions such as Region 6 (Manila), Revenue Region 4 (Pampanga), and Revenue Region 7B (East National Capital Region).

Now taking the helm as head of the agency responsible for 70 percent of the national budget, Lumagui told the Daily Tribune that his top priorities and initiatives revolve around what he refers to as the four pillars of his administration.

“First and foremost is providing excellent taxpayer service. This includes simplifying processes, providing clear and timely guidelines making it easier for the taxpayers to transact with the agency,” he said during an interview in Daily Tribune’s Straight Talk.

The processes included providing efficient taxpayer service, the digital transformation of the BIR, integrity and professionalism of the institution and its employees and the fearless and aggressive enforcement activities where it implements robust measures to detect and prevent tax fraud.

When asked about the key challenges the Bureau currently faces in tax collection and enforcement, Lumagui quickly pointed out a long list of institutional problems.

In 2024, the BIR collected a record-breaking P2.85 trillion in taxes, surpassing its previous record of P2.52 trillion in 2023.

It marked the first time in two decades that the BIR exceeded its collection target, excluding 2020 when targets were adjusted due to the pandemic. “All credit belongs to the men and women of the BIR,” Lumagui said.

“BIR’s dedication to good governance reforms, manifested by the shift to a taxpayer-oriented agency, has increased voluntary tax compliance. This goes to show that if government agencies improve their services, processes, and programs, our countrymen will do the right thing and pay their proper share of taxes,” he added.

Last year, the Development Budget Coordination Committee (DBCC) set a P2.848-trillion BIR revenue collection target for 2024.

Although the BIR reached its collection goal last 2020, the collection target then was substantially lowered due to the dire economic effects of the pandemic.

It is only in 2024 when the full collection target was reached, for the last 20 years.

Lumagui vowed that the BIR would continue its cooperation with the private sector and taxpayers.

“The Bureau faces in the areas of tax collection and enforcement, but arguably the most persistent challenge is that of the attitude of taxpayers. Some have become creative in seeking ways to circumvent the law, while others are increasingly audacious in actually violating the law,” he said.

“The BIR has already made a wide range of eServices available to the public, and we have made it a point to consistently promote these eServices to the taxpayers,” Lumagui added.

Leveraging technology and data analytics to improve tax compliance and streamline tax processes, Lumagui emphasized that he sees to it that they have used data analytics to catch fraudulent transactions.

“The use of data analytics is still in its infancy stages at the Bureau. Nonetheless, the Bureau has embarked on its Data Governance and Data Management (DGDM) project, which is an integral part of the digital transformation program,” he said.

The DGDM Project’s primary objectives are the establishment of the Bureau’s Data Governance and Data Management Framework; and the development and implementation of data analytics solutions aimed at improving tax compliance, revenue collection, and taxpayer services. One of the deliverables of the project is the Data Analytics Manual and the development of data analytics solutions for three essential areas of the bureau’s operations: compliance; revenue collection and taxpayer services. If plans go according to schedule, the project will be completed in 2027,” Lumagui narrated.

To combat tax evasion and increase tax transparency, the BIR chief said evasion remains among the biggest hurdles to revenue collection.

Ghost receipts haunt collections

An avenue that tax evaders have increasingly exploited, according to Lumagui, is the falsification of receipts, which is the focus of one of the agency’s newest flagship programs called Run After Fake Transactions — or RAFT — program.

The RAFT Program’s primary objective is to prevent the proliferation of fake or “ghost” receipts by pursuing and prosecuting the buyers, sellers and accounting professionals involved in what is essentially a tax evasion scheme.

“We constantly encourage taxpayers to ask for receipts, and to report receipts that appear fake to the Bureau, for us to investigate the companies that produce them, and the companies that use them,” Lumagui explained further.

He added the BIR is determined to prosecute the campaign against fake transactions, and that business entities would do well to practice transparency in their operations.

“There is everything to be gained in observing the requirements of the law,” he said.

In addition to aggressive enforcement, Lumagui said BIR is also upgrading systems to ensure that several of the processes would be automated which makes it more difficult to manipulate data.

“All of these reforms demonstrate the BIR’s commitment to modernize the tax system and make it more business-friendly, especially for SMEs (small and medium enterprises), aligning with the global best practices.

“The BIR also actively monitors and assists online sellers, ensuring they comply with tax obligations like issuing invoices and paying the appropriate taxes (income tax, VAT, or percentage tax). Seminars/briefings conducted tax guide and other information materials to help them in their compliance,” he said.

Veteran tax man

Lumagui’s earlier roles at the bureau included overseeing the BIR’s project management and implementation services, which contributed to modernizing and reforming its programs.

His standout achievements include leading task forces that significantly boosted the BIR’s collection rate.

Lumagui highlighted recent successful initiatives that have markedly improved tax collection and enforcement in the Philippines, emphasizing his leadership in a multi-agency campaign targeting illicit trade, particularly exciseable products from the tobacco and alcohol sectors, as well as the underground economy.

Key programs include task forces like the Assets Recovery Task Force, which recovered P833.69 million, and the Task Force on Direct Selling/Multi-Level Marketing and Investment Scams, amassing P792.56 million in under a year, demonstrating effective crackdowns on tax evasion and boosting BIR revenue.

“I am pleased to note that our campaign against illegal trade has achieved significant success so far,” the toughest tax collector stated.

“As you know, the Philippines is tackling the impact of the ‘underground economy’ on our national economy. Generally, those in the ‘underground economy’ are unregistered entities that evade taxes, ignore regulatory requirements from government agencies, and fail to provide mandatory employment benefits to their workers.”

“In some cases, these unregistered entities generate income for organized crime syndicates or even terrorist organizations,” he continued.

“It is therefore critical that they be identified, prosecuted, and penalized,” he vowed, underscoring the urgency of dismantling these networks to protect the nation’s economic and social fabric.