President Marcos has signed Republic Act (RA) No. 11976, or the Ease of Paying Taxes Act, to boost the economy and safeguard taxpayer rights while improving revenue collection through digitalization initiatives.

Marcos signed the measure on Friday, Jan. 5. It was one of his priority legislation mentioned in his State of the Nation Addresses (SONA) in 2022 and 2023.

In a statement, Malacañang said the new law significantly contributes to achieving the administration's 8-Point Socioeconomic Agenda by collecting more taxes to enhance economic and social development.

The law's implementing rules and regulations (IRR) shall be promulgated 90 days from the Act's effectivity after the Finance Secretary's consultation with the Bureau of Internal Revenue (BIR) and the private sector.

RA No. 11976 takes effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.

Tax administration

RA 11976 will modernize and increase the efficiency and effectiveness of tax administration, strengthen taxpayer rights, and allow the government to capture as many taxpayers as possible into the tax net by streamlining the system and minimizing the burden on taxpayers, increasing the country's revenue collection in the long run.

The new law likewise introduces administrative tax reforms and amendments to several sections of the National Internal Revenue Code of 1997. It also aims to update the Philippine taxation system, adopt best practices, and replace antiquated procedures.

Among the law's salient features include the following:

• Classification of taxpayers into micro, small, medium, and large
• Electronic or manual filing of returns and payment taxes either to the BIR, through any authorized agent bank or authorized tax software provider;
• Option to pay internal revenue taxes removal to the City or Municipal Treasurer
• Elimination of the distinction between documentation and basis of sales of goods and services; and classification of value-added tax (VAT) refund claims into low, medium, and high-risk

It also features ensuring the availability of registration facilities to non-Philippine resident taxpayers; promoting and assisting taxpayers in tax processes and streamlining; and reducing documentary requirements, and digitalizing BIR services, through the development of the Ease of Paying Taxes and Digitalization Roadmap by the BIR.

At the same time, the Ease of Paying Taxes Act imposes 180 days to act on claims for refund of erroneous or illegal tax collection; increases the amount from P100 to P500 for the mandatory issuance of receipts for each sale and transfer of goods and services; and reducing the number of income tax return (ITR) pages from four to two pages.

The law introduced amendments to Sections 21, 22, 51, 56, 57, 58, 76, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115, 116, 117, 118, 119, 120, 128, 200, 204, 229, 235, 236, 237, 238, 241, 242, 243, 245, 248, and 269, as well as repealed Section 34(K) of the National Internal Revenue Code of 1997.


Digitalization strategies

It also mandates the BIR to adopt an integrated digitalization strategy by providing end-to-end solutions for the benefit of taxpayers.

Among the digitalization initiatives that should be carried out include:

• Adopting an integrated and automated system for facilitating basic tax services
• Setting up electronic and online systems for data and information exchange between offices and departments
• Streamlining procedures by adopting automation and digitalization of BIR services
• Building up BIR's technology capabilities