With the Ease of Paying Taxes Bill set to be signed into law, it is important to understand what it is about and how it affects businesses in the country.

Did you know that the Philippines was once ranked as one of the countries with the most complicated tax systems in the world? In 2017, the World Bank revealed that it actually takes about 185.6 hours to file taxes here in the country. Fortunately, there is good news: the Ease of Paying Taxes bill is set to be signed into law. 

The Ease of Paying Taxes bill (Senate Bill 2224) aims to amend provisions in the current Tax Code. It is likewise introducing specific regulations that will benefit both local businesses and foreign investors. 

The Ease of Paying Taxes Bill: Registration, Filing, and Payment

A number of changes are currently being proposed by the bill. When the Ease of Paying Taxes bill is signed into law, it will remove the annual registration fee of PHP 500. It will likewise remove any information about the business style currently seen in the registration requirements.

Filipinos will also be able to file and pay manually or electronically. This can be done through any revenue district office (RDO), authorized agent bank, or authorized tax software provider. Registration facilities will also be made available to all taxpayers, even non-residents. 

Ease of Paying Taxes Bill’s Regulations on Business Taxes

As for business taxes, a report by the Philippine Star notes that “Generally, gross sales will be the only basis of transactions, shifting from cash to accrual.”

“In accrual, recognition arises when the income is earned rather than received, and the sale is supplied or rendered rather than paid,” the report adds. “Also, the PHP 3,000,000 threshold will be adjusted to its present value every three years.”

As for value-added tax (VAT), the word “prominently” as “a manner of showing in the invoice whether the transaction is VAT-exempt or zero-rated” will also be removed once the bill becomes law. Purchasers will also be allowed to claim input tax despite the invoice lacking information. However, this only applies if the information does not pertain to the following:

• Sales and VAT amount
• Name and TIN of purchaser and seller
• Description of the transaction
• Date

It should also be noted by businesses that sales allowances and discounts that are granted by VAT-registered individuals may now be deducted from gross sales for the quarter.

Pay Taxes Lawfully and on Time

With the government making the effort to make paying taxes easier, there should be fewer hindrances for businesses to pay taxes on time. Businesses should always remember to follow the procedures and processes that are required by law in order to file taxes.