The Senate has ratified the bicameral conference committee report on the disagreeing provisions of Senate Bill No. 2224 and House Bill No. 4125 or the proposed Ease of Paying Taxes Act.

The bill primarily seeks to amend provisions of the National Internal Revenue Code of 1997 to simplify the process of paying taxes and strengthen taxpayers’ rights. 

Sen. Sherwin Gatchalian, author of the Senate bill, said the bill will not only encourage taxpayers to pay their taxes truthfully and promptly, but also facilitate a more efficient tax collection to fund various government activities and programs.

The chairman of the Senate Committee on Ways and Means said the reconciled version provides for taxpayers segmentation, “file-and-pay anywhere” mechanism, exemption of micro taxpayers from withholding taxes, reduction of penalties for micro and small taxpayers, and exemption of overseas Filipino workers (OFWs) from the filing of income tax returns (ITR).

“The inclusion of these significant provisions is a testament to the bill’s main objective of providing ease and convenience for our taxpayers,” Gatchalian said during his motion to ratify the bill on Wednesday, September 27. 

With the aim of modernizing tax administration, removing antiquated procedures, and improving efficiency in tax compliance, the senator said the bill specifically proposes to include the following revisions to the tax system:

1. Option to electronically or manually register, transfer, and cancel registration without the need to pay P500 annual registration fee;

2. Adoption of the accrual method for sale of goods and services for value added (VAT) purposes;

3. Recovery of output VAT paid on uncollected receivables;

4. VAT invoice as the only proof of transaction, and removal of the term “prominently” in the phrase “written or printed prominently” found in the current provision;

5. Automatic indexation of the VAT threshold;

6. Implementation of audit risk assessment in the processing of VAT claims;

7. Fixing the period for processing of refund of erroneously paid taxes to 180 days from the date of submission of complete documents; and

8. Increase of threshold from P100 to P500 for transactions requiring official receipts, to be adjusted every 3 years using the Consumer Price Index.

Gatchalian also thanked his counterpart in the House of Representatives led by Rep. Joey Sarte Salceda, chairman of the House Committee on Ways and Means and head of the House panel for agreeing to use the Senate version as the working draft of the reconciled version of the measure.

The ratified version of the proposed Ease of Paying Taxes Act will now be sent to Malacañang for President Marcos’ signature.