KPMG PH Insights: EOPT Series Episode 1 (Overview of the EOPT Act)

Summary

In the KPMG Insights EOP Series, Maria Carela and Leandro Ben M. Robiso discuss the Ease of Paying Taxes Act in the Philippines, signed into law by President Bongbong Marcos Jr. The Act simplifies tax filing and payment processes, introduces a classification system for taxpayers, and aims to modernize tax administration. It emphasizes the importance of stakeholder input in the creation of implementing rules and regulations, promoting a more inclusive and efficient tax system.

Takeaways

• 📜 The Ease of Paying Taxes Act (EOP), Republic Act No. 11976, was signed into law by President Bongbong Marcos Jr. on January 5, 2024, aiming to simplify and modernize tax administration in the Philippines.
• 📈 Taxpayers are reclassified into micro, small, medium, and large categories, with special provisions for micro and small taxpayers to ease their compliance burden.
• 🔍 The EOP Act introduces electronic and manual filing of tax returns and payments, allowing taxpayers to file with any Bureau of Internal Revenue (BIR) office or through authorized agents, eliminating the previous penalty for incorrect venue filing.
• 💼 The withholding tax requirement has been revised to be based on gross sales for both goods and services, instead of gross selling price for goods and gross receipts for services.
• 📄 The use of invoices has been standardized to substantiate both sales of goods and services, simplifying the documentation process for taxpayers.
• 🔄 The EOP Act has restructured the refund claim process into low, medium, and high risk categories and mandates the BIR to act on refund claims within 180 days of complete documentation submission.
• ⏳ An appeal to the Court of Tax Appeals must be made within 30 days from receiving the decision or from the expiration of the 180-day period for refund claims.
• 🏢 Registration with the Revenue District Office can now be done manually or electronically, and the annual registration fee of 500 pesos has been removed.
• 📊 The EOP Act emphasizes the need for the BIR to consider taxpayer size and ability to comply when determining procedures and documentary requirements, with a focus on prioritizing micro and small taxpayers.
• 📝 The implementing rules and regulations (IRR) for the EOP Act should provide clarity on electronic filing and payment processes, as well as the classification and concessions for different taxpayer categories.
• 🤝 The EOP Act encourages a partnership between the BIR and the private sector for effective consultations, promoting an inclusive approach to tax policy development.

Q & A

What is the purpose of the Ease of Paying Taxes Act (EOP Act)?

The EOP Act aims to protect and safeguard taxpayer rights and welfare, modernize tax administration, encourage proper and easy compliance, update the taxation system, and adopt best practices.

Who is Maria Carela and what is her role in the EOP Series?

Maria Carela is the Emperata Head of Tax of KPMG in the Philippines. She hosts the EOP Series, which provides insights on the EOP Act and its impact on taxpayers.

What significant changes does the EOP Act introduce to the National Internal Revenue Code?

The EOP Act introduces significant amendments such as classifying taxpayers into micro, small, medium, and large categories, allowing electronic and manual filing of returns and payment of taxes, and updating the timing of withholding taxes.

What are the special concessions provided for micro and small taxpayers under the EOP Act?

Micro and small taxpayers are given priority in terms of procedures and documentary requirements, with the EOP Act granting concessions such as a maximum of two schedules for income tax returns and reduced penalties during tax assessments.

How does the EOP Act address the issue of electronic filing and payment of taxes?

The EOP Act allows taxpayers to electronically or manually file or pay taxes to any BIR office or through any authorized agent bank or authorized tax software provider, removing the 25% surcharge for filing in the wrong venue.

What is the role of the implementing rules and regulations (IRR) in the EOP Act?

The IRR will provide clarity on the implementation of the EOP Act, including the electronic filing of returns and payment of taxes, and will consider inputs from the private sector for effective consultations.

What is the classification of taxpayers under the EOP Act based on?

Taxpayers are classified under the EOP Act based on their gross sales, with categories for micro, small, medium, and large taxpayers, each having different thresholds for gross sales.

How does the EOP Act change the timing of withholding taxes?

The EOP Act changes the timing of withholding taxes to when income payments become payable, basing it on gross sales for both sale of goods and services, instead of gross selling price for goods and gross receipts for services.

What is the impact of the EOP Act on VAT invoicing and registration?

The EOP Act removes the requirement for a business style in VAT invoicing and registration, and the annual registration fee of 500 pesos is removed. It also simplifies the cancellation of BIR registration.

How does the EOP Act address the issue of refund claims?

The EOP Act classifies refund claims into low, medium, and high risk, and mandates that refund claims of overpaid taxes should be acted upon by the BIR within 180 days from submission of complete documents by the taxpayer.

What is the significance of the EOP Act's provisions on the preservation of books?

The EOP Act stipulates that books must be preserved for a period of 5 years, which is important for record-keeping and compliance purposes.