August 15th, 2021
House unanimously approves Ease of Paying Taxes Act on 3rd reading; House tax chair says measure will help recover revenues post-COVID
The House of Representatives has unanimously approved on 3nd reading the Ease of Paying Taxes Act (House Bill No. 8942), principally authored by Rep. Joey Sarte Salceda (Albay, 2nd district) and a priority measure of Speaker Lord Allan Jay Velasco.
Receiving 193 yes votes and no negative or abstaining votes, the measure will now be sent to the Senate for its deliberation and approval.
The bill aims to (i) simplify tax compliance procedures by segmenting taxpayers and better tailoring processes, (ii) enhance the portability of tax transactions, and (iii) legislate the Taxpayer’s Bill of Rights. The bill also creates a Taxpayer’s Advocate office in the Bureau of Internal Revenue (BIR) to act as the taxpayer’s recourse for issues with the Bureau.
Earlier this month, the Joint Foreign Chambers also called for the passage of the measure, saying that “We find highly noteworthy in this bill that it harmonizes Value-Added Tax (VAT) recognition for goods and services, which in turn removes the official receipt (OR) requirement for payment of services that is unique to the Philippines.”
“Allowing a single document (invoice) to support proof of payment of goods or services will make the future e-invoicing process more efficient. Also, it conforms to the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 (RA 11032) that seeks to increase efficiency by reducing processing time, eliminating red tape, and curbing corrupt bureaucratic practices,” the chambers wrote.
In remarks following the passage of the measure in the chamber, Salceda also cited the support of the Department of Finance for the measure.
“The DOF and the BIR gave significant and favorable inputs to this measure. The JFC and other business groups strongly support this measure as well,” Salceda said.
Key benefits of the EOPT include allowing taxpayers to file for a Tax Identification Number (TIN) offsite, the removal of the required annual BIR registration, and harmonization of venue rules to allow fully-online filings with the Bureau.
Salceda: EOPT will help fiscal consolidation and recovery
In response to a letter from the JFC, Salceda said that the measure “will help us consolidate our fiscal situation and improve our recovery trajectory after COVID-19.”
“When you are paying down COVID-19 debts, you want your taxpayers to be as compliant as possible. If you make it easier for them to do that, then they will probably be more willing to pay the right taxes. Tax complexity creates tax arbitrage and even administrative corruption. If you make it easier to pay taxes, you make life harder for tax cheats and fixers,” Salceda said.
“I wrote this measure with the inputs of the Bureau of Internal Revenue, the Department of Finance, tax practitioners, and the local and foreign business associations. This is well-rounded bill, and I hope it gets the nod in the Senate as well. I am certain the House will approve it,” Salceda added.
“This was supposed to be a twin bill of the Tax Reform for Acceleration and Inclusion (TRAIN) Law. The core of this reform was the Tax Administration Reform Act (TARA). I principally authored both, and went around the country in a caravan called “TARA na sa TRAIN.” But the EOPT is an even better bill than the original TARA, because its focus is really easier tax experience,” Salceda also said.
Other key features of the bill are:
(1) Introducing a “Medium” taxpayer classification and streamlined procedures for the “Small” taxpayer
(2) Cancelling the Bureau of Internal Revenue (BIR) registration requirement, which will also cancel automatic BIR audits. The BIR shall decide whether or not to audit based on risk assessment evaluations.
(3) Removing the need to secure authority to print from the BIR before hard copy invoices can be issued. The business style requirement will also be removed.
(4) Ensuring taxpayer’s rights as the guiding principle in formulating and implementing tax policies and regulations. The taxpayer’s right to have the cost of compliance respected whenever tax rules are prepared and enforced shall be considered whenever the BIR prescribes new rules on the filing and payment of taxes.