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Taxpayers’ prayer on Philippine tax reforms

Atty. Olivier D. Aznar Atty. Olivier D. Aznar

Dear Heavenly Father,

We praise You, we glorify You, and we thank You for the countless blessings and guidance that You continuously provide us.  In our daily prayers, you probably hear us more often in our roles as parents, as sons or daughters, or as workers.  This time, kindly allow us to come before You in our role as taxpayers.

As taxpayers, we would like to thank You for the recent changes that suggest benefits and hope to us.

Thank You that the individual income tax brackets have finally been adjusted after 20 long years of waiting. The take-home pay and consequently, the purchasing power, of many of us have been augmented. Hopefully, the increase in take-home pay coupled with the government’s promise of other forms of support would be sufficient to counter the increase in prices of commodities due to the imposition of other additional taxes.   

We are likewise grateful that the legislature issued reforms on the refund process on input value-added tax (VAT) related to zero-rated sales. From the previous 120 days of review by the Bureau of Internal Revenue (BIR), the period is now reduced to 90 days. In addition, we are glad that there is no more “deemed-dened” rule, which will now prevent the BIR from not acting on the taxpayer’s application for VAT refund. We trust that the BIR will render sound decisions within the shortened period of review. We are also happy that, the government is setting aside a portion of the government’s VAT collections to back up the VAT refund process.

Thank You that there are also indications that our tax authorities seem to recognize the sentiments of the taxpayers. These could be seen in the recent Revenue Regulations (RR) No. 06-2018 relative to the requirements for deductibility of expenses in relation to withholding taxes, and RR No. 07-2018 relative to the due process requirement in the issuance of a deficiency tax assessment.

Although there are some questions in the minds of the taxpayers on how the BIR would actually implement the above two regulations, at least, we are thankful that the government now realizes that, the rule — saying that despite paying the withholding tax deficiencies during a BIR audit, the related expenses will still be disallowed for income tax purposes — is too onerous and unfair a penalty on the part of the taxpayers. In addition, the revival of the informal conference (infocon) stage prior to the BIR’s issuance of a preliminary assessment notice (PAN) to the taxpayers appears to be promising — that way, before a PAN is issued to the taxpayer, unnecessary and baseless findings will be weeded out in the discussions.  We pray that the infocon stage will be utilized effectively and fairly, in addition to the quality audit procedures that BIR examiners carry out during their audits.

Many taxpayers are also pleased about the recent news reports saying that the legislature is continuing the discussions on the general tax amnesty and estate tax amnesty bills. These bills, if passed into laws, could encourage the taxpayers to avail of the amnesty, and to have a clean slate and start fresh moving forward. Recent publications also mention about the possible reduction, subject to certain conditions, of corporate income tax rates from 30% to 25% in the near future, which is also, generally, a welcome development.

The above positive sides of the Philippine tax reforms offer optimism to the taxpayers and could renew trust in the government.

On the other hand, Heavenly Father, there are several matters in the tax reform efforts that are considered by many as contentious. Some of these relate to issues on tax incentives, recent tax advisories, and draft regulations, among others, that many taxpayers consider to be not within the spirit of the laws intended to be implemented. We hope that You guide all the concerned stakeholders in clarifying and resolving these matters justly. Hopefully, the contentious issues would be immediately settled in order not to derail the steadfast progress that the Philippine tax reforms aim to have.

Nonetheless, we are thankful that, the government is putting significant effort into trying to improve the tax system. We pray that the succeeding developments will continue to be geared towards a new Philippine tax system that will be considered by many, if not by all, as fair and equitable.

Heavenly Father, please continue to guide our lawmakers, policy makers, and us, taxpayers, that we may fulfill all our roles harmoniously and in accordance to Your will. Amen.

Sincerely,

Your children as taxpayers

Olivier D. Aznar is a partner of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.

 

As published in BusinessWorld, dated 06 February 2018