Tax Articles

The Ease of Paying Taxes Bill

By Atty. Rodel C. Unciano

Another tax reform that is set to change the landscape of our tax system is House Bill No. 7881 otherwise known as “The Ease of Paying Taxes Bill” recently approved by the House Committee on Ways and Means. The bill aims to improve tax compliance by simplifying compliance procedures and enhancing the portability of tax transactions. The bill likewise seeks to strengthen the taxpayer’s bill of rights and create a Taxpayer’s Advocate Office.

One salient feature of the bill is the establishment of a reasonable criteria for classifying taxpayers, taking into consideration the taxpayer’s capacity to comply with tax rules and regulations, the amount and type of tax paid, the gross sales and/or receipts of the taxpayer, inflation, volume of business, wage and employment levels, and similar economic factors. The Secretary of Finance shall provide a classification for large and medium taxpayers and introduce additional classifications of taxpayers as may be necessary to achieve better service and tax administration.

For every classification of taxpayers, the Bureau of Internal Revenue (BIR) shall provide for a special unit to specifically cater to the needs of taxpayers under such classification. This is in recognition of the varying ability of taxpayers to settle their tax obligations. Simplified tax returns and processes shall be implemented for taxpayers not classified as medium or large.

Under the current system, the BIR actually maintains a division called the Large Taxpayers Service, specifically catering taxpayers classified as large taxpayers as defined under the regulations, however, as it stands now, there is practically no significant difference as regards the manner of tax administration and enforcement being applied for large taxpayers and other taxpayers not classified as such. The Ease of Paying taxes Bill seeks to simplify processes for taxpayers not classified as medium or large.

As to the registration requirements, the bill seeks to ensure that registration facilities would be available to taxpayers who are not residing in the country. The bill likewise seeks to remove the imposition of the annual registration fee currently imposed under Section 236(B) of the Tax Code. Also, under the bill, all persons who are engaged in business or practice of a profession can print receipts without a need of securing an authority to print from the BIR.

As to the invoicing and accounting requirements for VAT-registered taxpayers, the bill seeks to unify the requirement for VAT documentation, requiring only a VAT invoice for every sale, barter or exchange of goods or properties, lease of goods or properties, and for every sale, barter or exchange of services. Under the bill, the requirement for issuance of VAT official receipt for lease of goods or properties, and for sale, barter or exchange of services shall no longer be required.

The bill likewise seeks to strengthen the taxpayer’s bill of rights, in addition to the taxpayer’s rights and remedies already provided under the current Tax Code. Taxpayer’s rights that the bill intends to safeguard include the right to pay no more than the correct amount of tax, right to a fair and impartial appeal, right to timely and easy to understand information, right to quality tax education and service, right to privacy and confidentiality of information, and right to be protected and seek redress against malicious, excessive and wrongful assessments, among others.

To ensure that the rights of the taxpayers are protected, the bill seeks to establish a Taxpayer’s Advocate Office which shall be under the supervision and control of the Department of Finance and independent from the BIR. This is consistent with the declared policy of providing a healthy environment for the taxpaying public.

Ease in paying taxes coupled with guaranteed taxpayer’s rights against undue assessments will surely boost the BIR’s tax collection effort. If taxpayer’s find tax payments to be easy and simple, the BIR in the end will certainly find it easy as well to collect the much needed revenues.