On 15 September 2021, the House of Representatives approved on third reading House Bill No. 8942 or the Ease of Paying Taxes Act ("HB 8942"). HB 8942 proposes amendments to the Tax Code that seek to modernise tax administration and improve its efficiency and effectiveness by providing mechanisms that encourage proper and easy compliance with the least cost and resources possible.
One proposed amendment is the classification of taxpayers based on their capacity to comply with tax rules and regulations, the amount and type of tax paid, and similar economic and financial factors. HB 8942 particularly mandates the creation of classifications for large and medium taxpayers and other additional classifications that may be necessary to achieve better service and tax administration. Acknowledging that different taxpayers have varying abilities to comply with their tax obligations, HB 8942 institutionalises a simplified process of filing tax returns for small taxpayers to facilitate ease of compliance to tax rules and regulations.
HB 8942 also abolishes the "pay as you file" system. Under this system, payment of tax is simultaneous with filing the return. However, under the proposed amendment by HB 8942, taxpayers will be given the option to pay the tax even before it is due.
To improve the portability of tax transactions, HB 8942 also removes venue restrictions in the filing of returns and the payment of taxes.
HB 8942 seeks to further simplify tax compliance through the removal of the distinction between sales invoices and official receipts for value-added tax ("VAT") transactions by prescribing the sales invoice as the uniform VAT documentation for both sale of goods and sale of services.
Other proposed amendments include:
- the establishment of registration facilities for non-resident taxpayers;
- abolishment of the annual registration fee;
- cancellation of the tax registration upon the mere filing of the registration update form, without prejudice to the Revenue District Officer's power to conduct an audit to determine any tax liability;
- the provision of the taxpayer’s bill of rights; and
- the creation of the Office of the Tax Advocate, which is an office independent from the Bureau of Internal Revenue mandated to ensure that the rights of the taxpayers are protected.
HB 8942 is currently pending before the Senate Committee on Ways and Means.
