Philippines Enacts New Tax Reform: The Ease of Paying Taxes Act

The Philippine government has taken a significant step in reforming its tax system with the signing of Republic Act No. 11976, also known as the “Ease of Paying Taxes Act,” by President Ferdinand “Bongbong” Marcos Jr. This new law is a crucial part of the administration’s 8-point socioeconomic agenda, aiming to streamline tax collection processes and enhance economic and social development.

A pivotal aspect of this legislation is its focus on modernizing and improving the efficiency of tax administration while safeguarding taxpayer rights. It is designed to simplify the tax system, thereby minimizing the burden on taxpayers and expanding the tax base. This approach is expected to result in increased revenue collection over time.

Key features of the Ease of Paying Taxes Act include the classification of taxpayers into various categories (micro, small, medium, and large), the provision for both electronic and manual filing of returns and tax payments, and the option to pay internal revenue taxes to city or municipal treasurers. Additionally, the law removes the distinction between documentation and basis of sales of goods and services and categorizes value-added tax (VAT) refund claims based on risk levels.

Further enhancements include the establishment of registration facilities for non-resident taxpayers, reduction of documentary requirements, and a push towards digitalization of Bureau of Internal Revenue (BIR) services. The law sets a 180-day period for acting on refund claims for erroneous or illegal tax collection and increases the mandatory receipt issuance threshold. Additionally, it mandates the BIR to adopt a comprehensive digitalization strategy to provide end-to-end solutions for taxpayers.

This law, expected to take effect 15 days after its publication, represents a significant move towards a more streamlined, efficient, and taxpayer-friendly system, potentially impacting the country’s economic landscape positively​​.