MANILA - The Department of Finance (DOF) is urging the country’s large corporations to pay their taxes in advance to give the government funds for the necessary rehabilitation work after typhoons Ondoy and Pepeng hit the country.

As a sweetener, Finance Secretary Margarito Teves said the government will give early-bird discounts to those who would be paying their taxes in advance. However, the government, with Congress, has yet to iron out the details of the plan including the amount of discount to be given.

The DOF is essentially supporting the joint resolution filed by Quezon Rep. Danilo Suarez last Oct. 26 authorizing the Bureau of Internal Revenue (BIR) to collect 10% from the gross sales of all large taxpayers as advance payment of taxes for the next two years.

In the resolution, Suarez said proceeds “would serve as rehabilitation fund for all the provinces and regions devastated by the recent typhoons to help address the ballooning budget deficit and to prevent the government from incurring more loans.”

Suarez said the government may generate roughly P100 billion from these advance tax payments.

“It looks like a very attractive piece of proposal but it has to be ironed out carefully. Hopefully, it will be taken up with proponents of the proposal and hopefully President Arroyo will agree to take this up with members of Congress,” Teves said yesterday.

To determine the amount of taxes, Teves said companies may use the 2009 income figures for next year’s advance payments. Companies may also use the previous quarter’s tax figures to advance the current quarter’s tax obligations.

Teves said that if Congress approves the resolution this month, the government can start implementing it in the last quarter of the year.

“The advantage is we can get the cash earlier. If that happens, it will help reduce our amount of borrowings and will not be construed as advances in traditional way intended as window dressing because the taxpayer is provided a discount,” Teves said noting that local government units also do this.

Teves said that if the government gets at least P50 billion in advance payments, it would be a very significant amount that could help in the rehabilitation efforts.

Teves said the additional funds would also help ease pressure on the budget deficit which has already reached P237.5 billion as of end-September.

While Suarez’ resolution covers only large taxpayers, Teves said the discounts may also apply to individual taxpayers.