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Needed: A Magna Carta of taxpayer’s rights

By Euney Marie Mata-Perez on January 19,2023

It is about time that the Philippines adopts a taxpayer’s charter or bill of rights. We are currently taking steps in the right direction since several measures proposing to enumerate taxpayer’s rights are pending approval. The filing of these bills was historic but we of course look forward to their passage and approval.

The foremost of the measures is the House Bill 4125 or the proposed Ease of Paying Taxes Act, approved by the House of Representatives last September and now pending with the Senate Ways and Means committee. One of its main objectives is “[t]o provide a healthy environment for the taxpaying public that protects and safeguards taxpayer rights and welfare, as well as assures the fair treatment of all taxpayers”. It seeks to introduce a provision on fundamental rights to the National Internal Revenue Code (Tax Code).

There are also three Senate bills (SBs 1077, 1199, and 1309) that propose a separate “Magna Carta of Taxpayer’s Rights”. Each bill provides for a longer enumeration of taxpayer rights, even setting out separate lists of rights in civil and criminal cases. Like HB 4125, the bills propose the creation of the Office of the National Taxpayer Advocate to promote tax compliance and assist all taxpayers, whether individuals or juridical persons.

A tax system that is fair and just leads to tax compliance. Trust should be established between taxpayers and tax authorities and a taxpayer’s charter, setting out the basic rights and principles that will also protect taxpayers, is a cornerstone for earning such trust.

A fair tax system also assures investors and can boost the country’s attractiveness to foreign investors. It should be noted that most of our Asian neighbors have legislated taxpayer’s rights:

* Vietnam – Article 6 of its Law on Tax Administration enumerates the rights of taxpayers.

* Taiwan – Its Taxpayer Rights Protection Act was enacted in In 2016.

* Cambodia – The Finance Act of 1994, as amended, has a section on Rights and Obligations of Taxpayers and provisions on taxpayer’s rights in the section on Tax Administration.

* Laos – Articles 62 and 63 of its tax law, as amended, enumerates the rights and obligations of taxpayers.

* China – Chapter I of the Law of the People’s Republic of China on the Administration of Tax Collection enumerates the rights of taxpayers and agents.

* Korea – It has a taxpayer’s charter in its National Tax Basic Law that also obligates the Commissioner of the National Tax Service to promulgate a taxpayer’s bill of rights.

* Hong Kong – It has a separate taxpayer’s charter.

* India – The Union Budget 2020 inserted Section 119A to codify a taxpayer’s charter specifying taxpayer rights and obligations.

In a November 15, 2018 article, I mentioned that the Asia-Oceania Tax Consultants’ Association, Confédération Fiscale Européenne, and the Society of Trust and Estate Practitioners had collaborated on the development of a Model Taxpayer Charter. The purpose was to suggest a model charter that governments could adopt for legislation. The authors recognized that with increased cooperation from taxpayers and their requirement to be transparent with their fiscal affairs, there was also a need for assurance that they would be treated fairly, equally, and transparently.

Congress should thus pass HB 4125, which seeks to introduce a new “Title XIV” entitled “Rights of Taxpayers” in the Tax Code or adopt the “Magna Carta of Taxpayer’s Rights” proposed by SBs 1077, 1199 and 1309. It should be noted that the new Section 312 of the Tax Code as proposed by HB 4125 would read:

“Sec. 312. Taxpayer’s bill of rights. – In addition to the rights and remedies of the taxpayer provided in the National Internal Revenue Code of 1997, as amended, the taxpayer shall have the following set of fundamental rights:

* Right to pay no more than the correct amount of tax;

* Right to a fair and just tax system;

* Right to be given timely information that is easy to understand;

* Right to quality service and tax education;

* Right to the consistent and transparent application of the law;

* Right to have the classification of taxpayer considered whenever tax rules are prepared and enforced;

* Right to privacy and confidentiality of information unless authorized by the taxpayer or by law;

* Right to speedy disposition of cases, assessments, audits, investigations, and other similar actions;

* Right to finality of tax cases; and

* Right to be protected against malicious, excessive, and wrongful assessments and to seek redress for the same.”

All of the foregoing rights are fundamental. They highlight what should be protected. Thus, there should be no issue in making them part of the law of the land.

In any case, we will be discussing each of these rights in our next articles, starting with the right to be protected against malicious, excessive and wrongful assessments. More to follow.

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

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