December 1st, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) reiterated his push for the passage of the Ease of Paying Taxes before January 1, 2023 in his message to 6,000 attendees of the 77th Annual National Convention of the Philippine Institute of Certified Public Accountants (PICPA) in Cebu City.
In the Congressman’s remarks, relayed to the attendees, Salceda said that he is optimistic that the bill will be enacted into law before January 1, 2023, when most of the bill’s important provisions “could be implemented with the best possible timing.”
“TRAIN is cutting personal income taxes across the board by around 5% by January 1, 2023. So, we hope to couple that with a few other provisions.”
Among the provisions Salceda hopes to have implemented by the start of next year is the indexation of the VAT-exempt sales threshold to the annual CPI. The threshold is currently at P3 million.
“The threshold has not been updated for several years already, and no longer responds to the needs of businesses. The threshold for what is considered a “Small corporation” in the tax code is P10 million in sales. It doesn’t make sense that the VAT threshold stagnates.”
Salceda also hopes to unify documentary requirements for VAT into the sales invoice, as opposed to the current system of requiring official receipts for goods and sales invoices for services.
“It will reduce the documentary discrepancies and make electronic invoicing easier. Easier invoicing means faster VAT refunds. That makes our export sector more competitive.”
Under the current system, indirect exporters are liable to VAT but are expected to pass on their VAT to direct exporters who, in turn, can recoup their VAT costs through the 90-day VAT refund system. This, Salceda says, was supposed to address VAT leakages, “but could actually harm export competitiveness and actually reduce the volume of trade and downward linkages, and therefore, actually lead to lower tax collections.”
Salceda also asked the PICPA to help him “craft a better Taxpayer Bill of Rights,” which is part of the measure.
“You would know best how to operationalize the Bill of Rights and to identify which processes can be improved. As tax practitioners, your suggestions are most welcome and requested.”
Salceda also assured the PICPA that he will be inviting them to hearings on concerns with the 90-day VAT refund system and the imposition of VAT on indirect exporters.
“I will be inviting PICPA to the hearings. There is already a House resolution on the matter, and the House will act on the resolution,” Salceda added.