BIR urged to create medium, digital taxpayer services

MANILA – The chairman of the House Ways and Means Committee on Monday requested the Bureau of Internal Revenue to create a Medium Taxpayer Service and a Digital Taxpayer Service in connection with ongoing efforts to tax foreign vendors of digital services.

During the committee hearing on the taxation of online transactions of nonresident foreign corporations (NRFCs), Albay Rep. Joey Salceda said a digital tax unit under the BIR may be necessary to cover mainly online transactions to consolidate all undertakings, information, and representation.

“Please relay my request to Commissioner (Caesar) Dulay that the BIR create a Medium Taxpayer Service for enterprises that are not large enough for the Large Taxpayer Services, but who do comprise a substantial amount of business taxes. I also hope to have a Digital Taxpayer Service to complement our efforts to impose VAT and other taxes on digital service providers,” Salceda told the BIR.

Salceda cited that the Singaporean tax authorities have a “vendor registration system” for digital taxpayers that also acts as a specialized tax service for them.

“The main appeal of digital services is that they are easier and faster. The tax collection on these services also has to be fast and easy. That is why a specialized tax service for them might be in order,” he said.

Salceda said the additional income from taxing online transactions can help support the country’s economy and the Filipinos.

BIR OIC-Assistant Commissioner for Legal Service Larry Barcelo reported that the BIR already has several issuances on the preferential rate or tax exemption availed by NRFCs, including streamlining the procedures and documents for the availment of these benefits and providing guidance on the filing of requests, tax relief applications, and tax-sparing applications.

For her part, BIR OIC-Assistant Commissioner for Collection Service Clavelina Nacar cited that they were able to collect PHP206.67 billion from online content creators and transactions from 2017 to 2021.

Full digitalization in BIR

During the same hearing, Salceda also requested the BIR to fully digitalize tax processes for most small taxpayers, including overseas workers.

He particularly suggested digitalizing the process for applying for a taxpayer identification number (TIN) so that OFWs can invest in the Philippines from abroad.

“Due to the requirement that taxpayer information be verified by personal appearance in the Revenue District Offices (RDOs), OFWs who are still abroad are unable to open stock brokerage accounts without their TINs—and because getting a TIN requires personal appearance, they are practically locked out of the market,” he said.

Salceda also requested the BIR to “end the inefficient practice” of charging an annual registration fee of PHP500 for taxpayers.