Ghosting 101: How fake taxpayers vanish with billions

By Rosalie Aiza Llever

Halloween seems to have arrived early in the Philippines, not through costumes or trick-or-treating, but through the haunting presence of ghost projects and the rise of taxpayers using ghost receipts.

These schemes, often disguised as legitimate transactions, not only drain government resources but also undermine public trust in institutions.

The proliferation of fake taxpayers and fabricated receipts has become a pressing concern, prompting the Bureau of Internal Revenue (BIR) and the Department of Justice (DOJ to intensify its campaign against these deceptive practices.

The rise of so-called ghost receipts

Ghost receipts are falsified or fabricated documents that allow taxpayers to create false deductions, reduce taxable income, and evade taxes. Unlike ghost projects, which involve government funds for initiatives that never materialized, ghost receipts also pose equally damaging effects on national revenue that should have been allocated for essential public services such as education, healthcare, and infrastructure.

The BIR has revealed that billions of pesos are lost annually because of these fraudulent receipts. Taxpayers who engage in the fraudulent practice do not only undermine tax collection but also burden the honest taxpayers who dutifully pay their taxes. Worse, when such practice appears to go unchecked, compliant taxpayers may perceive dishonesty as the norm.

Behind ghost receipts are often fake taxpayers—individuals or corporations registered with the BIR for the sole purpose of issuing fraudulent receipts. These shell companies or nonexistent businesses create a web of fictitious transactions, making it difficult to trace the flow of funds.

In practice, businesses purchase ghost receipts to justify nonexistent expenses. The fake taxpayer issues the receipt, the buyer records it in their books, and the fraudulent deduction reduces taxable income. Once authorities begin investigation, ghost companies dissolve or disappear, leaving behind no assets, no employees, and no paper trail—effectively ghosting the government.

Chasing the ghosts: The government’s response

In recent years, the Philippine government has ramped up its efforts to go after fake taxpayers and ghost receipts. The BIR has launched campaigns, such as the Run After Fake Taxpayers program, aimed at identifying, auditing, and prosecuting fraudulent entities. The program targets not just the issuers of ghost receipts but also the businesses that use them.

Dozens of ghost companies have been identified, with cases now pending before the DOJ. Recent charges filed by the BIR Commissioner Romeo D. Lumagui Jr. before the DOJ include 23 corporations, 56 corporate officers, and 17 Certified Public Accountants (CPAs) involved in the use of ghost receipts to evade taxes of ₱1.41 billion in total.

Even well-known companies have not been spared and have been charged by the DOJ for using ghost receipts. The DOJ prosecution team has been taking swift and decisive actions against these ghost receipt users, as seen on a Facebook post by BIR Commissioner Lumagui. These initiatives send a clear signal that authorities are committed to cracking down on such practices, although the battle is still far from over. 

Strengthening the fight against ghost transactions

The exposure of ghost receipts and fraudulent tax practices has highlighted the urgent need for systemic reform. While enforcement efforts are crucial, preventing the proliferation of ghost taxpayers requires a holistic approach.

One of the most significant reforms is the rollout of electronic invoicing systems to minimize opportunities for fraud. Digital records are harder to falsify, and real-time monitoring allows suspicious transactions to be flagged quickly.

Data analytics can also help unmask these “ghosts.” By analyzing trends and cross-referencing transactions, tax authorities can detect patterns that point to fraud, like companies with expense profiles inconsistent with their industries. Just last year, the BIR teamed up with the Mathematics Department of Ateneo de Manila University in the creation of a sophisticated algorithm to identify ghost receipts through mathematics and data analytics.

Educating taxpayers about the risks and consequences of using ghost receipts is also vital. Many businesses, especially small and medium enterprises, may underestimate the legal and reputational damage involved in fraudulent practices.

Strengthening penalties for both issuers and users of ghost receipts will serve as a deterrent. Under Section 254 of the National Internal Revenue Code of 1997, as amended, any person who willfully attempts in any manner to evade or defeat any tax imposed may be punished by a fine of not less than ₱500,000 but not more than ₱10 million. Responsible officers may also face imprisonment of not less than six years but not more than 10 years.

Beyond penalties, building a culture of integrity and tax compliance is essential. This involves strengthening transparency in government spending, so taxpayers see that their contributions are being used responsibly.

Reclaiming public trust

The haunting presence of ghost receipts and fake taxpayers in the Philippines underscores the urgent need for vigilance and reform. While the government has taken notable steps to address the problem, much remains to be done to restore fairness in the tax system and rebuild public trust.

Ghost receipts are not just pieces of paper; they represent billions of pesos lost, opportunities wasted, and institutions weakened. By confronting this issue head-on—through stronger enforcement, digital innovation, and a renewed commitment to integrity—the Philippines can ensure that every peso collected serves its rightful purpose: advancing national progress and improving the lives of its people.

Rosalie Aiza Llever is a Business Tax Senior Manager with the Tax & Legal practice of Deloitte Philippines. As published in the Manila Times on 06 October 2025.