ACYTAXN: Ease of Paying Taxes

RA 11976

This is the Republic Act on the Ease of Paying Taxes Act.

Six (6) Months

The number of months taxpayers are given to fully comply with the amendments under Title IV on the VAT and Title V on OPT of the Tax Code.

Micro Taxpayers

Are taxpayers that have gross sales of less than P3,000,000.

Small Taxpayers

Are taxpayers that have gross sales of P3,000,000 to less than P20,000,000.

Medium Taxpayers

Are taxpayers that have gross sales of P20,000,000 to less than P1,000,000,000.

Large Taxpayers

Are taxpayers that have gross sales of P1,000,000,000 and above.

Penalties Applicable to Micro and Small Enterprises

A reduction rate of 10% for the surcharge imposed under Section 248 of the Tax Code.

Penalties Applicable to Micro and Small Enterprises

50% reduction of the interest imposed under Section 249 of the Tax Code.

Penalties Applicable to Micro and Small Enterprises

A reduced fine of P500 (instead of P1,000) for failure to file certain information returns under Section 250 of the Tax Code.

Penalties Applicable to Micro and Small Enterprises

50% compromise penalty applicable to violations of Sections 113, 237, and 238 of the Tax Code.

Amendment of Tax Remedies

Filing of returns and payment of tax, whether electronically or manually, ANYWHERE (no longer confined to the proper RDO having jurisdiction over the taxpayer). As such, the 25% surcharge for wrong venue is no longer applicable.

Amendment of Tax Remedies

The 2 year period from payment, to file a claim for refund for erroneously paid or illegally collected taxes, now applies only to administrative claim to be filed with the BIR (this used to apply also to the juridical claim for refund).

Amendment of Tax Remedies

The BIR has now 180 days to decide on the claim for refund (before, no period is provided for BIR to decide on claims for refund or erroneously paid or illegally collected taxes).

Amendment of Tax Remedies

In case of denial or inaction, the taxpayer may elevate the claim to the CTA within 30 days from either the receipt of the denial or lapse of the 180-day period, as the case may be.

Amendment of Income Tax

The withholding tax requirement for deductibility of expenses under Section 34(K) has been removed.

Amendment of Income Tax

The timing of withholding shall be when the income becomes payable (before, when it becomes payable, upon payment, or when it is recorded as an expense or asset, whichever is earliest).

Amendment of Income Tax

The Income Tax Return for individuals shall be a maximum of 2 pages in paper or electronic form.

Amendment of Income Tax

In case the taxpayer cannot carry over the excess income tax credit due to dissolution or cessation of business, the taxpayer shall file an application for refund or any unutilized excess income tax credit, and the BIR shall decide on the application and refund the excess taxes within 2 years from the date of the dissolution or cessation of business.

Amendment of VAT

The tax base for sale of services and lease transactions shall also be the gross sales similar to sale of goods (previously gross receipts).

Amendment of VAT

The value of services rendered for which allowances were granted by a VAT-registered person may be deducted from

the gross sales for the quarter in which a refund is made or a credit memorandum or refund is issued. Sales discount

granted and indicated in the invoice at the time of sale and the grant of which does not depend upon the happening of

a future event may be excluded from the gross sales within the same. (this used to apply to gross sales for sales of

goods only) quarter it was given.

Amendment of VAT

The tax base for the following percentage taxes shall now be the gross sales (previously, gross receipts):

a. 3% Other Percentage Tax under Section 116;

b. 3% Common Carrier's Tax under Section 117;

c. 3% Percentage Tax on International Carriers (for carriage of cargo) under Section 118;

d. 3% and 2% Franchise Tax under Section 119; and

e. 10% Overseas Communication Tax under Section 120.

Amendment of VAT

A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on

the next quarter, after the lapse of the agreed-upon period to pay:

a. Provided that the seller has fully paid the VAT on the transaction

b. Provided, further, That the VAT component of the uncollected receivables has not been claimed as allowable

deduction against gross income as bad debts.

In case of recovery of uncollected receivables, the output VAT pertaining thereto shall be applied to the output VAT of the taxpayer during the period of recovery.

Amendment of VAT

The VAT threshold of P3,000,000 shall be adjusted every 3 years using the consumer price index as published by the

Philippine Statistics Authority.

Amendment of VAT Invoicing

The supporting document for sale of service and lease of properties shall also be the "sales invoice" (no longer the VAT

official receipt)

Amendment of VAT Invoicing

The "business style" is no longer a required information in the sales invoice.

Amendment of VAT Invoicing

The VAT shall be allowable as input tax credit despite lacking information in the invoice, as long as the lacking

information does not pertain to:

a. Amount of sales;

b. Amount of VAT;

c. Name and TIN of both the purchaser and issuer/seller;

d. Description of goods or nature of services; and

e. Date of the transaction

Amendment of VAT Invoicing

Issuance of sales invoice will now be required if the transaction amounts to at least P500 (from P100) under Section

237 of the Tax Code, to be adjusted every 3 years using the consumer price index of the Philippine Statistics Authority.

Note, also, that an invoice is still required when the buyer so requires regardless of the amount of the transaction and

if the sales amount per transaction is below the threshold, the seller will issue 1 invoice for the aggregate sales amount

for such sales at the end of the day provided that the aggregate sales amount at the end of the day is at least ₱500.

Amendment of VAT Invoicing

VAT-registered persons shall issue duly registered sale or commercial invoices regardless of the amount of the sale and transfer of merchandise or for services rendered.

Amendment of Input VAT Refund

The VAT refund claims shall be classified into low-, medium-, and high-risk claims, with the risk classification based

on the following factors:

a. Amount of VAT refund claim;

b. Tax compliance history; and

c. Frequency of filing VAT refund claims, among others.

Medium- and high-risk claims shall be subject to audit or other verification processes in accordance with the BIR's

national audit program for the relevant year.

Amendment of Input VAT Refund

Upon inaction of the BIR to act on the claim for refund of unutilized input VAT related to zero-rated sales within the 90-

day period, the remedy of appeal to the CTA is now available (before only upon denial).

Amendment of Other Provisions

The annual registration fee of P500 is no longer required.

Amendment of Other Provisions

Preservation of books of accounts shall be 5 years, whichever is later between:

a. The deadline to file the return; or

b. The actual date of filing for the taxable year when the last entry was made in the books of accounts.