The call for the adoption of the law on the “ease of paying taxes” is supported


Calls by foreign and domestic business groups to pass the proposed “ease of paying taxes” bill received “strong” support from House Ways and Means Committee Chairman Joey Sarte Salceda.

In a statement, Salceda said the passage of the measure will allow incoming Secretary of Finance Benjamin E. Diokno to pursue his digitization and modernization priorities for tax agencies.

“We can do a lot in Congress; but we also need the driving force of the Ministry of Finance (DOF) on tax reforms. So I hope that Secretary Diokno will prioritize the promotion of tax easement law,” Salceda said.

The lawmaker added that he guarantees that the House of Representatives “will almost certainly approve it again next time”, noting that the new president [Ferdinand Martin G.] Romualdez was keen on passing this bill as majority leader.

“But the Senate often only acts on tax reforms when there is executive support,” Salceda said.

The lawmaker explained that he believes the bill, if enacted into law, will help Diokno “modernize tax administration’s labyrinthine procedures by simplifying tax compliance, removing redundant and outdated tax requirements, and lifting restrictions that prevent taxpayers from complying with remote tax laws“.

Top of the list

IN a letter to the Senate dated May 18, 2022, chambers of commerce and business groups, including the Financial Executives Institute of the Philippines, called for the passage of several bills that have already been passed or approved in the Lower House and which simply require the approval of the Senate. counterparty approval.

The Tax Ease Bill, of which Salceda is the main author, was at the top of the list of measures proposed in the letter.

The letter was signed by the American Chamber of Commerce in the Philippines, the Australian New Zealand Chamber of Commerce in the Philippines and the Bankers Association of the Philippines. Other signatories include: Canadian Chamber of Commerce in the Philippines; Philippine European Chamber of Commerce; the Institute of Financial Executives of the Philippines; Philippines Information Technology and Business Process Association; Japanese Chamber of Commerce and Industry of the Philippines Inc.; Philippine Korean Chamber of Commerce Inc.; Makati Business Club; Management Association of the Philippines; Regional Headquarters Inc. of the Philippine Association of Multinational Enterprises; and the Semiconductor and Electronics Industries of the Philippines Foundation Inc.

“You need taxpayer-friendly tax reform before we can pass other tax measures that will lead to higher taxes or better compliance. You want people to find it easy to pay taxes first, before collecting more taxes. This is why the EOPT [Ease of Paying Taxes law] is crucial,” Salceda said. “And that’s even more crucial given issues like the Megaworld Corp. incident, which highlighted the need to protect taxpayers’ rights.”

Reduced burden

The lawmaker also explained that at its core, the Ease of Paying Taxes is the single most important Ease of Doing Business proposal pending in Congress.

“Taxes are often the hardest part of doing business. So you remove that difficulty, you take a lot of the burden off of businesses, especially small ones.

The EOPT Act, which was sent to the Senate in September last year, proposes to amend the National Internal Revenue Code (as amended) by introducing administrative reforms that will simplify tax compliance and strengthen taxpayer rights.

The proposal gives the Bureau of Internal Revenue the authority to create classifications of taxpayers relating to the following: ability to comply with tax rules and regulations; amount and type of tax paid; gross sales and/or receipts as well as inflation; volume of business, level of wages and employment; and similar economic and financial factors.

Simplified rules

THE proposed EOPT bill also calls for the implementation of simplified tax rules and regulations to facilitate compliance.

In order to simplify the administration of the value added tax regime, the proposed EOPT law aims to eliminate the distinction between documentation and the basis of sales versus services subject to VAT. At present, sales subject to VAT must be supported by invoices while services subject to VAT must be covered by official receipts. The EOPT invoice standardizes the basis and the documentation to be only VAT invoices.

The EOPT Act also proposes to add a provision that the VAT threshold of 3 million pesos, which was increased by Republic Act 10963 (Train Act), may be adjusted to its current value no later than on January 31, 2021, and every three years thereafter, based on the Consumer Price Index published by the Philippine Statistics Authority.

“It would allow small businesses to grow without worrying about having to register for VAT if they still can’t,” Salceda said.

Scan process

The EOPT bill also proposes to allow taxes to be paid before they are due. This implicitly allows the payment of the tax not necessarily simultaneous with the filing of the declaration.

Salceda said he considers the proposed EOPT law to be aligned with Diokno’s priority of digitizing the tax payment process.

To enable the complete digitalization of the taxpayer experience, the EOPT Bill proposes to remove various provisions of the tax code that require taxes to be paid at offices of the Internal Revenue Office or banks under the jurisdiction of the taxpayer’s legal residence, principal place of business or principal office, thereby giving taxpayers payment flexibility.

The proposed EOPT bill also seeks to introduce taxpayer rights provisions into the tax code and create a taxpayer advocacy office.

Salceda said that “by design, we really had small and medium taxpayers in mind when we were developing this proposal.”

“Paperwork, face-to-face contact with tax authorities, audit issues and compliance costs for MSMEs will be significantly reduced through EOPT,” he said. “Removing the need for the annual P500 taxpayer registration fee will alone be a savings for smaller businesses.”

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