Business taxpayers in the Philippines will now enjoy relief from the annual registration fee, as announced by the Bureau of Internal Revenue (BIR) in compliance with Republic Act No. 11976, known as the Ease of Paying Taxes Act. Effective 22 January 2024, the BIR will cease collecting the annual registration fee, a move aimed at fostering a more business-friendly environment.
The Ease of Paying Taxes Act was signed into law by the president last 05 January 2024, marking a significant step toward modernizing tax administration and safeguarding taxpayer rights and welfare. Existing certificates of registration holders, which already include the registration fee, will see their certificates remain valid. However, they have the option to update or replace their certificates at the Revenue District Office where they are registered before 31 December 2024.
The Ease of Paying Taxes Act introduces various amendments to the National Internal Revenue Code of 1997, including the implementation of a taxpayer classification system and a risk-based classification for VAT refund claims. Taxpayers can now submit returns electronically or manually through authorized channels such as agent banks, Revenue District Offices, or authorized tax software providers.
To enhance digitalization efforts, the law mandates the BIR to adopt an integrated digitalization strategy, providing automated end-to-end solutions for the benefit of taxpayers. In addition, the agency is tasked with developing an Ease of Paying Taxes and digitalization roadmap to streamline tax processes and ensure ease of tax compliance.
Senator Win Gatchalian, author of the Senate bill, emphasized that the Ease of Paying Taxes Act is expected to boost foreign direct investments (FDIs) and improve the country’s competitiveness as an investment destination. The senator highlighted the importance of institutionalizing the BIR’s digitalization journey, ensuring its sustained implementation through regular reviews by Congress.
“Digitalization is the most important facet of this bill, and the measure seeks to mandate the Bureau of Internal Revenue to come up with its digitalization roadmap that will be submitted to Congress and updated regularly,” the senator said at the recently held 2nd SGV Tax Symposium.
The Ease of Paying Taxes Act, identified as a priority measure by the Legislative-Executive Development Advisory Council (LEDAC), aims to simplify tax compliance requirements, promote taxpayers’ welfare, and ensure sustained revenue growth. The legislation targets the simplification of tax filings for micro and small enterprises, electronic filing of taxes, and the acceleration of value-added tax (VAT) refunds through an invoice system.
“We have a bad habit in the country that with every change of administration, there is a change of plan, a change in roadmap, a change in projects. More often than not, this derails the implementation process because they completely change the system, the vendor, or the supplier that derails the project,” Gatchalian added.
In related news, foreign direct investments in the country experienced a 20.4% decline to US$3.911 billion in the first half of the year, according to data released by the Bangko Sentral ng Pilipinas. The decrease from the US$4.9 billion net inflows recorded in the first half of 2022 is attributed to investor concerns arising from persistent global uncertainties per the BSP.