Timing is everything, even when it comes to legislation.
Economist-solon Joey Sarte Salceda used the occasion of the 77th Annual National Convention of the Philippine Institute of Certified Public Accountants (PICPA) in Cebu City to explain why the proposed Ease of Paying Taxes Bill must be enacted before Jan. 1, 2023.
In his speech at the event, Salceda said that he is optimistic that the bill will be enacted into law before the start of 2023, when most of the bill’s important provisions “could be implemented with the best possible timing".
“TRAIN is cutting personal income taxes across the board by around 5 percent by Jan. 1, 2023. So, we hope to couple that with a few other provisions," the Albay 2nd district congressman said, referring to the Tax Reform for Acceleration and Inclusion Act.
Among the provisions Salceda hopes to have implemented by the start of next year is the indexation of the value-added tax (VAT)-exempt sales threshold to the annual consumer price index (CPI). The threshold is currently at P3 million.
“The threshold has not been updated for several years already, and no longer responds to the needs of businesses. The threshold for what is considered a 'small corporation' in the tax code is P10 million in sales. It doesn’t make sense that the VAT threshold stagnates," he said.
Salceda also hopes to unify documentary requirements for VAT into the sales invoice, as opposed to the current system of requiring official receipts for goods and sales invoices for services.
“It will reduce the documentary discrepancies and make electronic invoicing easier. Easier invoicing means faster VAT refunds. That makes our export sector more competitive.”
Under the current system, indirect exporters are liable to VAT but are expected to pass on their VAT to direct exporters who, in turn, can recoup their VAT costs through the 90-day VAT refund system. This, Salceda said, was supposed to address VAT leakages, “but could actually harm export competitiveness and actually reduce the volume of trade and downward linkages, and therefore, actually lead to lower tax collections".
The Bicolano also asked the PICPA to help him “craft a better Taxpayer Bill of Rights", which is part of the measure.
“You would know best how to operationalize the Bill of Rights and to identify which processes can be improved. As tax practitioners, your suggestions are most welcome and requested," he told the estimated 6,000 attendees of the event.
Salceda, chairman of the House Committee on Ways and Means, also assured PICPA that he will be inviting them to hearings on concerns with the 90-day VAT refund system and the imposition of VAT on indirect exporters.
“I will be inviting PICPA to the hearings. There is already a House resolution on the matter, and the House will act on the resolution,” he added.