Proposed Bill Seeks to Remove Outdated Tax Code Provisions in the Philippines
According to analysts, the proposed Ease of Paying Taxes Act can assist in improving taxpayer compliance and increasing government revenue, notwithstanding the bill’s contradictory and old provisions that need revisions.
The proposed House Bill (HB) No. 4125, also known as the Ease of Paying Taxes Act, amends sections of the Republic Act No. 8424, also referred to as the National Internal Revenue Code of 1997.
The HB is a priority measure of the administration passed by the House of Representatives last September. It seeks to modernize tax administration and boost collection efficiency by encouraging proper and effortless compliance.
HB No. 4125 also aims to apply best practices and replace outdated regulations, including restrictions on venue for filing and payment while personalizing policies for different kinds of taxpayers.
InvestEd Philippines Finance Executive Daniel C. Penkian cited in a text message, “Simplifying tax procedures will help lower taxpayers’ costs in time, money, and mental distress. This will promote compliance that will eventually be helpful in raising money to fund strategic projects.”
Penkian added, “Simpler taxation can improve compliance by reducing inadvertent non-payment of taxes. To some extent, taxpayers are unable to comply with the regulations because of complexities, which could have been remedied if our tax laws are as simpler.”
Penkian further explained, “Classifying taxpayers into large, medium, and small based on the taxpayer’s capacity to comply with tax rules, the amount and types of taxes being paid, gross revenue, the volume of transactions, wage and employment levels, and other economic and financial considerations is another form of efficiency.”
Tax Counsel of Gorriceta Africa Cauton & Saavedra Law Offices Froilyn P. Doyaoen-Pagayatan cited that the proposed bill would make tax administration “contemporaneous with economic conditions and more uniform.”
Doyaoen-Pagayatan discussed, “The proposal that taxpayers not classified as large or medium taxpayers are not required to withhold taxes would reduce the burden of tax compliance on these taxpayers, who will be allowed to focus on their operations. It would also allow the BIR to focus on large and medium taxpayers in the enforcement of withholding tax obligations.”
Doyaoen-Pagayatan added that the bill would “significantly lighten the burden of tax compliance, especially for taxpayers that are not large or medium taxpayers” if it was passed.