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Ease of Paying Taxes Act and other pending bills

By Euney Marie Mata-Perez on May 26, 2022

THE 18th Congress resumed session this week and is expected to adjourn on June 3, 2022. While legislators are understandably busy with the canvassing of votes to enable them to proclaim the winners of the May 9 elections, it is still hoped that, during its last few days at work, Congress will pass certain critical economic bills.

In a letter to the Senate dated May 18, 2022, business groups and business chambers, including the Financial Executives Institute of the Philippines, requested the passage of the following bills that have already been passed or approved by the House of Representatives and just require counterpart action:

– Ease of Paying Taxes Act (House Bill 8942);

– Open Access in Data Transmission Act (House Bill 8910);

– Philippine Creative Industries Charter (Senate Bill 2455);

– Promotion of Digital Payments Act (House Bill 8992);

– Tax Reform Package 3: Property Valuation and Assessment Reform (House Bill 4664); and

– Tax Reform Package 4: Passive Income and Financial Intermediary Taxation (House Bill 304).

The business groups were also looking forward to the ratification of the reconciled versions of bills currently under bicameral conference committee deliberation: the creation of the Philippine Transportation Safety Board (Senate Bill 1077 and House Bill 9030); and the Rural Agricultural and Fisheries Development Financing System Act (Senate Bill 2494).

Ratification of the Regional Comprehensive Economic Partnership (RCEP) agreement was also strongly recommended.

The Ease of Paying Taxes Act, which was transmitted to the Senate in September 2021, is critical. It proposes to amend the National Internal Revenue Code as amended (Tax Code) by introducing administrative reforms that will simplify tax compliance and strengthen taxpayer rights. Its proposed amendments are as follows:

– Classification of taxpayers. HB 8942 introduces provisions to establish reasonable criteria for classifying taxpayers, taking into consideration various factors. These include capacity 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, wage and employment levels; and similar economic and financial factors. It also proposes provisions to classify large and medium taxpayers and introduce additional classifications as may be deemed necessary and reasonable to achieve better service and tax administration.

– Simplified returns and processes. HB 8942 also calls for the implementation of simplified tax rules and regulations for ease of compliance.

– Value-added tax (VAT) invoicing. HB 8942 seeks to eliminate the distinction between the documentation and basis of sales as against services subject to VAT. At present, sales subject to VAT should be evidenced by invoices while services subject to VAT should be covered by official receipts. HB 8942 makes the basis and documentation uniform to just be VAT invoices.

– Adjustment of VAT exemption threshold. HB 8942 proposes to add a provision that the P3-million VAT threshold, which was increased by the Train Law, may be adjusted to its present value not later than Jan. 31, 2021 and every three years after based on the consumer price index published by the Philippine Statistics Authority.

– Payment of taxes before they are due. HB 8942 proposes to allow the payment of the taxes before they are due. This impliedly allows payment of tax not necessarily simultaneously with the filing of the return. For the first time, HB 8942 also introduces the definition of the terms “filing of return” and “payment of tax.”

– Flexibility of venue of payment of taxes. HB 8942 proposes to delete various provisions in the Tax Code that require taxes to be paid in the Bureau of Internal Revenue offices or banks within the jurisdiction of the taxpayer’s legal residence, principal place of business or principal office, thereby giving taxpayers payment flexibility.

– Taxpayer’s Bill of Rights and Taxpayers’ Advocate Office. Lastly, HB 8942 seeks to introduce provisions on taxpayers’ rights in the Tax Code and create a taxpayers’ advocate office. HB 8942 proposes the enumeration of additional fundamental rights to further promote fair treatment to taxpayers and puts in place protections against wrongful assessments. Meanwhile, the taxpayers’ advocate office is envisioned to ensure that taxpayer rights are protected and due assistance is provided.

With all of the above, it is clear that the passage of HB 8942 will provide a healthy taxpaying environment for the reason that it is designed to protect and safeguard taxpayer rights while improving the efficiency and effectiveness of a modernized tax administration.

With very few session days left, it is a tall order to expect the passage of HB 8942 and the other bills enumerated above. However, the business community is still hopeful for their passage, especially with respect to bills at the bicameral committee level or just waiting for Senate approval.

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Euney Marie J. Mata-Perez is a CPA-lawyer and the managing partner of Mata-Perez, Tamayo and Francisco (MTF Counsel).

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