The Ease of Paying Taxes Act, House Bill (HB) 4125, was unanimously approved with 250 votes from lawmakers during its third and final reading in the House of Representatives. It would standardize the procedures for filing simplified tax returns. According to the committee report, the approved bill aims “to modernize tax administration and improve its efficiency and effectiveness by providing mechanisms that encourage proper and easy compliance at the least cost and resources possible”.

 

Below are the salient features of the approved House Bill:

​

• Classification of Taxpayers

The bill permits the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, to establish reasonable criteria for classifying taxpayers. It should consider the taxpayer’s capacity to comply with tax rules and regulations, the amount and type of taxes to be paid, the gross sales and/or receipts of the taxpayer, inflation, the volume of business, wage and employment levels, and similar economic and financial factors.

• Removing the restrictions on payment venues

The bill removes the restriction that taxes can only be paid to physical offices and includes full digitalization of tax payments.

• Simplified VAT regulations

There is no longer a distinction between sales of goods and services that are subject to value-added tax (VAT). A VAT invoice is proposed to be the only document issued for every sale, barter, exchange, or lease of goods or properties, and services.

• Less burden on registration

The annual P500 taxpayer registration fee will be removed once the approved bill passes into law. Moreover, registration facilities should be available to taxpayers not residing in the country.

• Lowering of the penalties

The penalty for failing to file and pay taxes is lowered to 12 percent from 25 percent of the amount due.

• Taxpayer’s Bill of Rights

The approved bill mandates a Taxpayer’s Bill of Rights wherein it enumerated other fundamental rights in addition to the rights provided in the National Internal Revenue Code of 1997. The bill also creates a Taxpayer’s Advocate Office whose primary function is to ensure that the rights of taxpayers are protected and they are provided assistance as required.

​

Senate Bill No. 1346 or Ease of Paying Taxes Act is currently pending at the Senate where it also needs approval before it becomes a law. --- Elisha Sanchez

​

​

​