Bill on ease of paying taxes hurdles 2nd reading

MANILA – A measure seeking to modernize tax administration and improve tax compliance has hurdled second reading at the House of Representatives.

During Monday’s plenary session, the chamber approved through voice voting House Bill 8942, or the proposed Ease of Paying Taxes Act, which seeks to introduce administrative tax reforms by amending several sections in the National Internal Revenue Code (NIRC) of 1997.

The bill aims to simplify tax compliance procedures by segmenting taxpayers and better tailoring processes, enhance the portability of tax transactions, and legislate the Taxpayer’s Bill of Rights.

It proposes the creation of a Taxpayer’s Advocate Office in the Bureau of Internal Revenue (BIR) to act as the taxpayer’s recourse for issues with the Bureau.

The Joint Foreign Chambers has called for the passage of the measure, saying that the bill is “highly noteworthy” for harmonizing 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.

Albay Rep. Joey Salceda said the Department of Finance and BIR have significant and favorable inputs for the measure.

Key benefits of the proposal 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 said the measure would help consolidate the country’s 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.

Other key features of the bill are introducing a “medium” taxpayer classification and streamlined procedures for the “small” taxpayer; cancelling the BIR registration requirement, which will also cancel automatic BIR audits; removing the need to secure authority to print from the BIR before hard copy invoices can be issued; and ensuring taxpayer’s rights as the guiding principle in formulating and implementing tax policies and regulations.