Ease of Paying Taxes
By Kathleen T. Guiang
After the much awaited Corporate Recovery and Tax Incentives for Enterprise Act (CREATE) was signed into law on March 26, 2021, lawmakers are now working on crafting measures which would improve tax compliance through simplifying compliance procedures, enhancing the portability of tax transactions, and protecting the rights of the taxpayers.
During its meeting on January 25, 2021, the House of Representatives Committee on Ways and Means approved House Bill (HB) №7881 or the “Ease of Paying Taxes Act”, which was later on substituted by HB №8942 on March 9, 2021, upon recommendation of the same committee.
The first notable amendment introduced in the proposed legislation is the creation of taxpayer classification based on the following considerations: (i) capacity to comply with tax rules and regulations, (ii) amount and type of tax paid, and/or (iii) the gross sales and/or receipts of the taxpayer.
In addition to the establishment of new classifications for taxpayers, the lawmakers intend to provide an ease of compliance to tax rules and regulations, and simplified tax returns and processes for taxpayers who are not classified as “medium” or “large taxpayers” by providing for a special unit to specifically monitor and cater to the needs of the taxpayers under such classification.
Another proposed amendment introduced in the bill is to relax the rules on filing of returns and payment of taxes. Under HB №8942, taxpayers will be allowed to file their tax returns with any authorized agent bank, Revenue District Office and Collection Agent, even outside of their registered district offices. The taxpayers will likewise be allowed to pay the taxes during the filing of the return or before it is due. This should encourage taxpayers to file their returns and pay their taxes on time.
Apart from the proposed amendments on the tax filing and payment procedures, the bill also seeks to amplify the rights and remedies of taxpayers under the National Internal Revenue Code of 1997, as amended (the “Tax Code”). It is proposed that a new title be added in the Tax Code specifically on the fundamental rights of taxpayers.
Moreover, the bill also proposes that there be a unified invoicing requirement for value-added tax (VAT) — registered taxpayers. Under the bill, only a VAT invoice shall be required to be issued for every sale, barter, exchange or lease of goods or properties, and for every sale, barter or exchange of service.
HB №8942 may look ambitious or “too-good-to-be-true”, but should the lawmakers manage to pass this into law, this is a welcome change to taxpayers, who will no longer be burdened by the complex tax compliance procedures. It would also be a welcome improvement if the lawmakers and their resource persons start to look into developing the digital/technology infrastructure of the Bureau of Internal Revenue.
Hopefully, with all these amendments, the Philippines may get a chance to improve its ratings in the Doing Business score, particularly the Paying Taxes index, through this move to ease the payment of taxes.
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Kathleen Guiang is a Junior Associate and a member of the Corporate, Tax, Technology Media and Telecommunication Groups of Gorriceta Africa Cauton & Saavedra (www.gorricetalaw.com). Kathleen’s practice area includes various practice areas of corporate, commercial and tax laws. She also assists in the regulatory compliance for publicly listed companies. contract review for corporate and celebrity clients, and preparing charter documents for the incorporation of legal entities.
