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Features of Ease of Paying Taxes (EOPT) Law

WITH the aim of modernizing and simplifying the mechanism for payment and filing of taxes, Republic Act 11976, or the "Ease of Paying Taxes (EOPT) Law," was enacted.


One of the notable provisions of the law is the introduction of taxpayer classification based on taxpayers' gross revenues that is different from the classification of businesses via assets and liabilities in the case of Securities and Exchange Commission.


These are micro-entities with less than P3 million gross revenues; small taxpayers with gross revenues from P3 million to less than P20 million; medium taxpayers with gross revenues from P20 million to less than P1 billion; and large taxpayers with gross income of P1 billion and above.


The classification may be considered more advantageous to the Bureau of Internal Revenue (BIR) as it allows for the implementation of different strategies and programs for each taxpayer type. However, it is worth noting that micro taxpayers are given certain privileges compared to other types of taxpayers.


These include a more simplified two-page tax return, exception from mandatory withholding of income under subsection B of section 57 of the National Internal Revenue Code and reductions of BIR fines and penalties translated to 90-percent reduction in civil penalties, 50-percent reduction in interest rate and a reduced fine of P500 as penalty for failure to file certain tax returns instead of the usual P1,000 penalty.


These reductions will undoubtedly provide significant assistance to micro-taxpayers who may struggle to keep up with rapid changes in compliance requirements from both national and local governments.


Starting Jan. 22, 2023, or 15 days after its publication, the P500 annual registration fee has been abolished. This development brings relief to small businesses still struggling with competition and adapting to new business norms, as well as to large corporations managing multiple branches, where each branch previously incurred its own annual registration fee.


Harmonizing taxes


The process for filing and timing payment of withholding tax on compensation has undergone a revision to harmonize with other types of withholding taxes, including expanded and final taxes. Under the updated system, the monthly filing of withholding tax on compensation will be filed within 25 days after the close of the quarter. Following the introduction of new withholding tax forms under the Tax Reform for Acceleration and Inclusion Law, it is anticipated that the BIR will adhere to a similar format. This may entail the introduction of new forms such as the payment form 0619C and the quarterly return 1601CQ to replace the current 1601C.


The EOPT Law ruled out that sellers must issue commercial invoice upon buyer request irrespective of transaction value. For value-added tax (VAT)-registered establishments, the issuance of receipts has become mandatory, regardless of transaction value or the previous P500 threshold provision. Furthermore, the business-style field no longer required information in VAT invoices.


The law also brings a significant change by unifying primary receipts. No longer will there be a distinction between sales invoices and official receipts, a source of confusion among taxpayers and a common issue during tax examinations.


Previously, goods relied on sales invoices for input VAT, while services used official receipts, creating discrepancies between the accrual and cash basis of accounting treatment for input VAT. This divergence led to extensive reconciliation efforts and monitoring of unutilized input VAT accounts.


With the new law, primary receipts will be uniform for both goods and services, streamlining VAT claims and eliminating this long-standing challenge.


The preservation period for books of accounts and other commercial records has been reduced from 10 years to five years. However, there may be exceptions in cases of fraud, empowering the BIR to conduct examinations within 10 years from the date of discovery.


Finally, according to the law's description, taxpayers can now file and pay with ease, either manually or online, at any authorized collecting bank, revenue district office (RDO), or authorized tax software provider. This removes the restrictions that taxpayers were previously only allowed to file and pay within their RDO jurisdiction. It provides taxpayers with more options for filing and paying taxes, nullifying the penalties associated with out-of-district filing and/or payment.


Specific implementing rules and regulations are currently being developed, with the BIR conducting public consultations. It's only a matter of time before specific policies and guidelines are provided to the public for the implementation of the law.

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Jeffrey Galang Salazar, ACPA, MBA, is a college professor and the managing owner of Salazar Accounting, Tax and Management Consultancy Services. He is one of the Filipino CPAs who hold the title Asean Chartered Professional Accountant, under the Asean Mutual Recognition Agreement. He is a member of Acpapp Laguna Chapter.



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