SENATOR Juan Edgardo Angara on Monday said Senate's version the Tax Reform for Acceleration and Inclusion allows the self-employed individuals and professionals to choose between an eight percent flat tax on gross sales or receipts and the scheduled personal income tax rate with allowable deduction.
Angara, chair of the Senate committee on ways and means, said that the flat tax rate of eight percent can be filed only once a year is in lieu of the personal income tax, which is currently filed quarterly, and the percentage tax filed monthly.
The senator said that the flat tax regime will encourage payment of correct taxes because it is simpler and easier to comply.
He added Congress has recognized the need to really simplify the process and make it easier for taxpayers to comply and pay correct taxes.
Angara further said that Congress is making a distinction between the tax treatment of compensation income earners and self-employed individuals and professionals.
According to BIR data, self-employed and professionals only contribute 15 percent of the total income tax collection, while the 85 percent is shouldered by compensation income earners.
"Income taxes of compensation income earners—like our teachers, nurses, call center agents—are automatically withheld by their employers. On the other hand, self-employed and professionals—like owners of sari-sari stores and carinderia, and our doctors and lawyers—have to file their taxes on their own or with the help of accountants, which they can’t afford to hire most of the time. Kung kaya, marami sa ating mga self-employed at professionals and hindi nakakasunod nang tama sa mga regulasyon ng pagbubuwis," the lawmaker said.
Angara expressed his belief on the advantages of a developmental approach in tax rules where it aims to provide incentives for taxpayers to follow tax rules.
"That's why we introduced an eight percent flat tax for easier compliance. Padaliin na natin and sistema lalo na para sa mag maliliit na negosyante," he added.
[Let's simplify the system especially for small entrepreneurs]
Moreover, with higher income tax exemption, marginal income earners will be exempt from paying income taxes. These include farmers and fisherfolk, sari-sari store owners, carinderia owners, market vendors, and tricycle drivers.
The value-added tax (VAT) threshold is also raised from P1.9 million to P3 million, thus exempting small businesses with total annual sales of P3 million and below from paying VAT.
Angara said this would provide them due tax relief that would encourage them to grow, and generate more and better jobs for Filipinos. (SunStar Philippines)