Ease of Paying Taxes to Support Diokno’s Push for Digitization in the Philippines

The Ease of Paying Taxes (EOPT) bill will let incoming Finance Secretary Benjamin Diokno push the digitization and modernization priorities for the tax agencies. 

House Ways and Means Committee Chair Joey Salceda cited in a statement that the EOPT is aligned with Diokno’s plans on prioritizing the digitization of tax process. 

The bill proposes to repeal numerous provisions in the Tax Code that require taxes to be paid in the Bureau of Internal Revenue (BIR) offices or banks within the jurisdiction of the taxpayer’s legal residence, principal place of business or principal office, giving taxpayers limited payment flexibility.

Salceda expressed, “EOPT has provisions that will remove the legal barriers to digitalizing every stage of the tax process. That very closely aligns with Secretary Diokno’s agenda for the BIR and BOC.”

Salceda cited that the bill will help Diokno improve the “labyrinthine” tax administration procedures by streamlining tax compliance, removing obsolete and unnecessary tax requirements, and lifting restrictions that prevent taxpayers from complying with tax laws remotely.

Salceda mentioned, “We can do much in Congress, but we also need the motive force of the Department of Finance on fiscal reforms. So, I hope Secretary Diokno will prioritize pushing for the Ease of Paying Taxes Act. I guarantee that the House of Representatives almost certainly will approve it again next time. The incoming Speaker Romualdez was keen on that bill as Majority Leader. But the Senate often acts on fiscal reforms only when there is executive support.”

Salceda stated that some of the biggest foreign and domestic business groups have called on Senate to approve the EOPT bill, which has already been approved by the House of Representatives, in a letter dated May 18, 2022.

The letter was signed by the following groups, namely, the American Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce of the Philippines, Bankers Association of the Philippines, Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, Financial Executives Institute of the Philippines, IT and Business Process Association of the Philippines, Makati Business Club, and Management Association of the Philippines, among others.

Salceda stated that the easing of the process of paying taxes is the most vital relief of doing business proposals pending in Congress. 

Salceda mentioned, “You need a pro-taxpayer tax reform before we can enact other tax measures that will result in higher taxes or higher compliance. You want people to find it easy to pay taxes first before you collect more taxes. That’s why EOPT is crucial.”

EOPT act proposes to revise the National Internal Revenue Code (NIRC) by introducing administrative reforms that will simplify tax compliance and strengthen taxpayer rights.

The proposal gives BIR the authority to create taxpayer classifications depending on the capacity to comply with tax rules and regulations; amount and type of tax paid; gross sales and/or receipts as well as inflation; the volume of business, wage and employment levels; and similar economic and financial factors.

EOPT also signals simplified tax rules and regulations implementation for more streamlined compliance. 

Salceda cited that in order to simplify value-added tax (VAT) administration, the EOPT aims to eliminate the distinction between the documentation and basis of sales as against services subject to VAT.

In addition, Salceda noted “At present, sales subject to VAT should be evidenced by invoices while services subject to VAT should be covered by official receipts. EOPT makes the basis and documentation uniform to just be VAT invoices.”

The bill also proposes to add a provision that the ₱3 million VAT threshold, which was increased by the TRAIN law, may be adjusted to its present value not later than January 31, 2021, and every after three years based on the consumer price index that was published by the Philippine Statistics Authority. 

Salceda stated, “This would allow small businesses to grow without worrying about having to register for VAT if they are still unable to.”

Furthermore, EOPT proposes to allow the payment of the taxes prior to their due date. This impliedly permits payment of tax, not necessarily simultaneously with the filing of the return.