BIR to fast-track system to detect ghost receipts

New algorithm developed with Ateneo

MANILA, Philippines — The Bureau of Internal Revenue (BIR) has teamed up with the Ateneo de Manila University to expedite the detection of ghost receipts amid the continued proliferation of fake transactions in various businesses in the country. 

In a briefing Tuesday afternoon, BIR Commissioner Romeo Lumagui said the agency and Ateneo’s Math Department created an algorithm that would identify ghost receipts with remarkable accuracy.

This is part of BIR’s campaign against ghost receipts and tax fraud through the use of mathematics and data analytics.

Lumagui said the BIR and Ateneo developed a model and looked at the behavior of about 30,000 known buyers and sellers of ghost receipts and extracted certain attributes. These will be used to compare companies that are being investigated or are alleged to be using ghost receipts. 

“We will have more basis now because of the data analytics and we will have a bigger probability (of being correct),” Lumagui said.

“The magnitude by which ghost receipts have become part of the economy is alarming, due to the lack of detection and enforcement for the past decades,” he said.

Further, through the partnership with Ateneo, the BIR does not need to conduct raids to continue its program. 

The BIR earlier estimated that the government is losing at least P370 billion in revenues from the proliferation of fake transactions.

Over the past years, some P1.3 trillion in ghost receipts were issued by both small and large businesses.

Based on the income tax rate of 25 percent and value-added tax of 12 percent, such transactions have meant at least P370 billion in forgone revenues.

BIR’s Run After Fake Transactions program aims to investigate and prosecute buyers, sellers and certified public accountants involved in the use of fake receipts.