Question & AnswerQ&A (Republic Act No. 11976)
Republic Act No. 11976 is titled the "Ease of Paying Taxes Act."
The policy of the State includes providing a healthy environment for taxpayers that protects their rights and welfare, modernizing tax administration for easier compliance, updating tax systems with best practices, and enacting policies appropriate to different types of taxpayers.
Taxpayers are classified into four groups: Micro (less than P3 million), Small (P3 million to less than P20 million), Medium (P20 million to less than P1 billion), and Large (P1 billion and above).
'Filing of return' means accomplishing and submitting the prescribed tax return, electronically or manually, to the Bureau of Internal Revenue or through authorized agent banks or tax software providers.
Overseas Filipino Workers (OFWs) and Overseas Contract Workers deriving income solely from abroad are not required to file an income tax return.
A civil penalty of 25% of the amount due is imposed for failure to file any return and pay the tax due, failure to pay deficiency tax within the prescribed time, or failure to pay the full or part of the tax due on or before the prescribed date.
Taxes may be paid either electronically or manually to authorized agent banks, Revenue District Offices through Revenue Collection Officers, or authorized tax software providers.
Concessions include a maximum two-page Income Tax Return, 10% penalty rate for civil penalties, 50% reduction of interest rates on penalties, a fine of only P500 for failure to file certain information returns, and reduced compromise penalty rates for specific violations.
The Commissioner can determine tax base adjustments, suspend business operations for specified violations, impose penalties, grant refunds or credits, and regulate filing/payment venues, including requiring use of authorized agent banks or software providers.
A VAT of 12% is imposed on gross sales of goods, services, and leases. VAT-registered persons must issue VAT invoices with detailed information. Certain sales under the P3 million threshold are exempt, and VAT-registered persons may claim input tax credits.
Generally, VAT returns are filed quarterly within 25 days after the end of the quarter. VAT-registered persons must pay monthly but, starting January 1, 2023, filing and payment are done quarterly within 25 days after the close of each taxable quarter.
The BIR is mandated to adopt integrated digitalization strategies for registration, TIN issuance, filing, payment of taxes and penalties, and secure data exchange to streamline procedures and improve taxpayer convenience.
Officers guilty of deliberate failure to act on refund applications may be fined between P50,000 to P100,000, suffer imprisonment of 10 to 15 years, and face perpetual disqualification from public office and election participation.
They must notify the nearest internal revenue officer, file a tax return (electronically or manually), and pay the tax due within 20 days after closing the business.