Marcos signs into law Ease of Paying Taxes Act

MANILA. President Ferdinand Marcos Jr.
MANILA. President Ferdinand Marcos Jr.Photo by NIB-PNA

PRESIDENT Ferdinand “Bongbong” Marcos Jr. signed into law on Friday, January 5, 2023, Republic Act No. 11976 or the Ease of Paying Taxes Act, one of the priority legislations of the administration that is seen to improve the country’s tax collection processes through digitalization.

The newly passed law introduces administrative tax reforms and amendments to several sections of the National Internal Revenue Code of 1997 in order to update the Philippine taxation system, adopt best practices and replace antiquated procedures.

It includes amendments to Sections 21, 22, 51, 56, 57, 58, 76, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115, 116, 117, 118, 119, 120, 128, 200, 204, 229, 235, 236, 237, 238, 241, 242, 243, 245, 248, and 269, as well as repealed Section 34(K) of the National Internal Revenue Code of 1997.

It seeks to modernize and increase the efficiency and effectiveness of tax administration, strengthen taxpayer rights and allow the government to capture as many taxpayers as possible into the tax net by streamlining the system and minimizing the burden on taxpayers, increasing the country’s revenue collection in the long run.

Under Republic Act No. 11976, taxpayers will be categorized either as micro, small, medium and large.

It will also allow the electronic or manual filing of returns and payment taxes either to the Bureau of Internal Revenue (BIR), an authorized agent bank or authorized tax software provider and taxpayers will be given the option to pay internal revenue taxes removal to the City or Municipal Treasurer.

Also among the salient points of the law is the elimination of the distinction between documentation and the basis of sales of goods and services and the classification of value-added tax (VAT) refund claims into low, medium and high-risk.

The law also mandates the development of the Ease of Paying Taxes and Digitalization Roadmap by the BIR, aiming to reduce documentary requirements, digitalize BIR services, and ensure the availability of registration facilities for non-Philippine resident taxpayers. It further promotes and assists taxpayers in tax processes, emphasizing streamlining.

In terms of claims for refund of erroneous or illegal tax collection, taxpayers are given 180 days to file an appeal while the payment for the mandatory issuance of the receipts for each sale and transfer of goods and services was increased to P500 from P100.

The required number of income tax pages was also reduced from four to two pages.

The law also requires the BIR to adopt an integrated digitalization strategy by providing end-to-end solutions for the benefit of taxpayers and to improve their performance and efficiency.

Among the digitization initiatives that should be carried out include adopting integrated and automated systems for facilitating basic tax services, setting up electronic and online systems for data and information exchange between offices and departments, streamlining of procedures by adopting automation and digitalization of BIR services, and building up BIR’s technology capabilities.

Republic Act No. 11976 supports the administration’s 8-Point Socioeconomic Agenda through the collection of more taxes to enhance economic and social development. (SunStar Philippines)

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