President Marcos has signed the Ease of Paying Taxes (EOPT) Act, also known as Republic Act No. (RA) 11976, last Jan. 5, marking a significant step in the modernization of the Philippine tax system and the reinforcement of taxpayer rights. 

Here, the Department of Finance outlined the potential impact of the EOPT law on Filipino businesses of all sizes. 

Under this new legislation, taxpayers will be categorized into micro, small, medium, and large groups based on their gross sales, with the aim of establishing a tax system that is tailored to the specific needs of each segment. 

To provide further clarity, micro-enterprises will encompass those with gross sales of less than P3 million, small enterprises will range from P3 million to less than P20 million, and medium-sized enterprises will fall between P20 million and less than P1 billion.

Lastly, large enterprises will comprise those with gross sales of P1 billion and above.

Filing tax returns and making internal revenue tax payments will be simplified through various channels, including electronic or manual methods facilitated by authorized agent banks or approved software providers.

Moreover, the option to remit internal revenue taxes to the city or municipal treasurer has been eliminated to encourage the transition to electronic payment platforms. 

Additionally, provisions have been made to ensure that non-resident taxpayers have access to registration facilities.

The law also standardizes the value-added tax (VAT) treatment of goods and services sales, mandating the issuance of sales invoices for both. 

Furthermore, the minimum amount for which receipts must be issued for the sale and transfer of goods and services has been increased from P100 to P500.

VAT refund claims are also now categorized as low-, medium-, or high-risk based on factors such as the amount of the refund claim, tax compliance history, and frequency of filing. 

An invoice system will also be introduced to expedite VAT refunds.

The EOPT Act also establishes a 180-day period for the Bureau of Internal Revenue (BIR) to process general refund claims related to erroneous or illegally collected taxes. 

Additionally, the BIR will develop an Ease of Paying Taxes and Digitalization Roadmap to simplify tax procedures, reduce documentation requirements, and digitize its services, thus aiding and encouraging taxpayers.

Meanwhile, Finance Secretary Benjamin E. Diokno welcomed the enactment of the EOPT Act.

“We are off to a good start this 2024. By making the tax system more taxpayer-friendly through simplified tax filings and protecting taxpayers’ rights, we will achieve our goal of encouraging and improving tax compliance” Diokno said.

RA 11976 will encourage more taxpayers to enter into and comply with the tax system by streamlining processes and minimizing the burden on taxpayers, thereby increasing the country’s revenue collection.