It's the most wonderful time of the year; not only do we have Christmas and New Year to look forward to, it's also time to explore our music year in review on this year's 2024 Spotify Wrapped! Who else clamored in excitement as we viewed our respective Wrapped stories? I believe we're all excited, as the well-known music app encapsulates our favorite artists, genres, and songs.
"You listened to 13,463 minutes and played over 478 songs this year." These statements dominated the first two weeks of December, as this year's Spotify Wrapped showcased our musical preferences and listening habits. How was your music evolution? Did you start the year with some “Pink Pilates Princess Strut Pop” and transition to “After Hours Pop” or “Heatwave Beach Reggaeton” in July? How about your top artists and genres? Are they what you expected after locking in your music preferences?"
Just as Spotify wrapped up our evolving music taste for the year, let's also take a moment to look back at the ever-changing tax landscape as we review several important regulations and clarifications issued by the BIR this year, primarily focused on the implementation of the Ease of Paying Taxes (EOPT) Act."
Ease of Paying Taxes (EOPT) Act
The EOPT (Ease of Paying Taxes) Act is a significant tax reform law aimed at improving the ease and efficiency of the tax compliance process for businesses and individuals in the Philippines. Below is a summary of the key highlights of the EOPT Act:
These highlights reflect the main objectives of the EOPT Act, which are to streamline and simplify tax compliance, enhance taxpayer services, and modernize the tax collection system to make it more efficient and accessible for businesses and individuals.
VAT on Digital Services
The VAT on Digital Services is a tax imposed on digital services that are supplied over the internet or other electronic networks with the use of information technology and where the supply of the service is essentially automated. This includes those digital services provided by non-resident digital service providers (NDSPs) to consumers in the Philippines. The law aims to equalize the tax obligation of digital service providers located overseas, particularly those engaged in entertainment, content creation, marketplaces, and cloud services. To meet this objective, the law imposes 12% value-added tax (VAT) on digital service providers (DSPs).
The law also introduced the registration with the of Bureau of Internal Revenue (BIR) of NDSPs who provide digital services consumed by the Philippines customers. If the customers of NDSPs are VAT-registered, the customer is liable to withhold and remit the VAT via reverse charging mechanism (withholding VAT) to the BIR. On the other hand, if the customers are not VAT-registered, the NDSPs has an obligation to remit the 12% VAT on its digital services. to
This move aims to ensure fairness in the tax system, improve revenue collection as the government targets additional billions in revenues over the next five years, and address the growing digital economy.
CREATE MORE
The CREATE MORE Act (Corporate Recovery and Tax Incentives for Enterprises – Maximize Opportunities for Reinvigorating the Economy) is a continuation of the tax reforms introduced under the CREATE Act (Corporate Recovery and Tax Incentives for Enterprises Act) in the Philippines. The law seeks to further promote economic growth, improve tax incentives, and encourage investments by enhancing the tax system for businesses and industries. Below is a summary of the key highlights of the CREATE MORE Act:
The CREATE MORE Act builds on the reforms of the CREATE Act, offering enhanced tax incentives, reducing the corporate income tax rate, rationalizing tax breaks, and simplifying tax administration. It aims to further drive investment and boost economic recovery.
BIR year-end tax compliance reminders
As the end of the year approaches, taxpayers need to be mindful of several key compliance requirements set by the BIR. Here are some important reminders for 2024:
1. Submission of Annual Information Returns and Alphalists, together with the Annual Alpha List of Employees/Payees
2. Submission of Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316)
Employers must provide BIR Form 2316, which details the income earned and taxes withheld for each employee, by January 31, 2025. Signed copies must be submitted to the BIR by February 28, 2025.
3. Submission of Inventory List and other reportorial requirements
Taxpayers maintaining inventories are required to submit soft copies of the annual inventory list and applicable schedules, accompanied by a notarized and signed sworn declaration, within thirty (30) days following the close of the taxable year.
Taxpayers are advised to prepare a reconciliation of the inventory list and other applicable schedules with their records so that they can explain any differences to the BIR upon tax audit.
4. Submission of Books of Accounts
Depending on the taxpayers’ registered books of accounts, the following shall be observed for subsequent registration:
a) Manual Books of Accounts
Further, please note that the registration does not need to be completed annually unless the old set of books is fully consumed.
b) Loose-Leaf Books of Accounts
These must be submitted annually, within 15 days after the end of each taxable year or within 15 days from the closure of business operations.
c) Computerized Accounting System (CAS)
These must be submitted annually, within 30 days from the end of each taxable year or from the closure of business operations.
Further, in compliance with the EOPT Act, the BIR set a deadline of December 31, 2024, for taxpayers to update their CAS to comply with the latest changes, including the issuance of invoices and generation of necessary reports in the format prescribed by the BIR.
This 2024, all books of accounts must be registered online via the BIR’s Online Registration and Update System (ORUS). The registration process now involves generating a QR code, which serves as proof of registration instead of manual stamping. The QR code includes various taxpayer details, such as TIN, registered name, and type of book.
These updates aim to streamline the registration process and ensure compliance with the BIR regulations.
In conclusion, we can say that the BIR’s incremental actions this 2024 are indeed noteworthy, as we have seen a variety of impactful issuances aimed at modernizing the tax system, improving compliance, and addressing the challenges of a growing digital economy, and taxpayers have felt a substantial improvement. As we look forward to 2025, we expect that the BIR continues to build rapport on the significant advancements and reforms it achieved this 2024.
As published in BusinessWorld, dated 17 December 2024
