“To improve is to change; to be perfect is to change often,” said Winston Churchill. The Philippine government has been proving this adage to be true, especially with the significant regulatory updates to Philippine taxation, with the most recent iteration being the Ease of Paying Taxes Law (EOPT Law). It would appear that we should continue to expect changes as Congress is continuously deliberating on new tax regulations, but change must not always be met with resistance; after all, change is a crucial element of progress. To the credit of the Philippine government and the Bureau of Internal Revenue, there have been significant efforts to improve the taxing system in the country, making tax compliance, including payment of taxes, easier for the taxpayers.
Taxpayers, on the other hand, must keep abreast of the tax developments not only to ensure compliance with their tax obligations, but also to be informed of how to go about compliance in the easiest way possible as allowed in recent regulations.
As the April 15 deadline for the 2023 Income Tax Filing draws near, it’s an appropriate time to be reminded of the latest developments on tax filing in the Philippines.
Tax Payment Venue
We begin with one of the most important updates introduced by the EOPT Law, which took effect on 22 January 2024. Taxpayers can now file their Annual Income Tax Returns (AITR), either electronically or manually, and pay taxes due thereon through any Authorized Agent Banks (AAB), Revenue District Offices, through a Revenue Collection Officer, or authorized tax software providers.
This above update must not, however, be confused with the requirement for taxpayers mandated to use the Electronic Filing and Payment System (eFPS) to file their AITRs electronically and pay the taxes due through the eFPS-AABs where they are enrolled, except in such cases where filing through eBIRForms is permitted.
Looking back, there was a time when taxpayers were required to do their filings in specific Revenue District Offices (RDOs) which have jurisdiction over their businesses, and we all witnessed the administrative and logistical challenges this system posed. Thankfully, we are now moving past this chapter.
In 2023, even before the EOPT Law, the BIR, through RMC 32-2023, had already begun to allow taxpayers to file and pay their income tax dues thereon through any AABs and RDOs anywhere. With the EOPT Law, the said approach has now been institutionalized as a law, allowing taxpayers to make efficient and most convenient plans for tax compliance.
Updated Electronic Filing Systems
Taxpayers are reminded of the availability of the Offline Electronic of Internal Revenues (eBIRForms) Package Version 7.9.4.2 that can be downloaded from the BIR’s official website, www.bir.gov.ph or www.knowyourtaxes.ph/ebirforms. Notably, the new eBIRForms provide BIR Form No. 1702-RTv2018C with additional alphanumeric tax codes (ATC) IC, such as IC 101, IC 190 and IC 191 for Regional Operating Headquarters (ROHQs), Offshore Banking Units (OBUs), and Foreign Currency Deposit Units (FDCUs), respectively. Updated 2023 income tax rates were likewise made on BIR Form No. 1700v2018, BIR Form No. 1701v2018, and BIR Form No. 1701A. Bug fixers were also added for BIR Form No. 1702-MXv2018C.
Meanwhile, BIR Form No. 1701A, otherwise known as the Annual Income Tax Return for Individuals Earning Purely from Business/Profession under the graduated income tax rates with Optional Standard Deduction as mode of deduction or has opted to avail of the 8% flat income tax rate, BIR Form No. 1702-EX January 2018 (ENCS) v2, or the Annual Income Tax Return for entities EXEMPT under Sec. 30 and Sec. 27 of the Tax Code, as amended, and other special laws with no other taxable income, and BIR Form No. 1700, or the Annual Income Tax Return for Individuals Earning Purely Compensation Income, are now available in the Electronic Filing and Payment System (eFPS).
As a precaution, taxpayers who are mandated to use eFPS are advised to check the RDO they are registered to make sure that the abovementioned returns are on the list of tax returns in their eFPS. If not, coordination with the BIR should be made as soon as possible to comply with the requirements of the concerned RDO for the uploading of the returns to the eFPS.
Mindful of the deadline to file the AITR, taxpayers are reminded that eBIRForms is required for taxpayers paying through the assistance of accredited tax agents/practitioners, accredited printers of principal and supplemental receipts/invoices, and those who shall file a “No Payment Return,” among others.
While eFPS applies to taxpayers such as large taxpayers, the Taxpayer Account Management Program (TAMP), Importers and Custom Brokers, taxpayers with fiscal incentives, the top 5,000 individuals, corporations with a paid-up capital stock of 10 million and above, and those with a complete computerized system, among others.
These recent changes are definitely a welcome development aimed at making the tax processes in the Philippines easier and consequently significantly affecting the ease of doing business as well, which is commonly a pain point not only for local businesses, but likewise for foreign investors.
The enactment of the EOPT Law and the recent improvements within the BIR systems are testament to the government’s commitment to modernizing the archaic processes of the past and making them responsive to the prevailing concerns of the present. Truly, while far from being perfect, it is now easier to comply with the tax filing and payment obligations.
Let's Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
As published in BusinessWorld, dated 02 April 2024
